Congested US rail system threatens ‘nationwide logjam’
Los Angeles and Long Beach reported record high volumes in June. But disruptions in the inland supply chain threaten to set back work done to ease congestion. According to Gene Seroka, executive director of Port of Los Angeles, the US needs to solve the issues with its congested railway system to avoid further supply chain congestion during the peak season for containerized freight imports. “All eyes are focused on improving our rail product, but we now have 29,000 rail containers on our docks,” he told an online briefing. “That should be more in the 9,000 unit range. Rail cargo is sitting an average of 7.5 days. This should be two days of dwell time, and nothing should be reaching the nine-day-plus mark, but we have 20,000 containers in that aging category right now.”
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European ports facing multiple challenges
A combination of congestion and geopolitics, a slowing macroeconomic outlook, and labor disruption puts pressure on Europe’s container ports. The newly combined port of Antwerp-Bruges saw box volumes slide by 6.2% to 6.7m teu during the year’s first six months as disrupted schedules, vessel delays, and high import volumes led to operational challenges. In Valencia, container volumes were also down, driven mainly by diversions of transshipment cargoes due to congestion. In Germany, container terminals are preparing for disruption after the latest round of negotiations over pay rates between trade union ver.di and the Central Association of German Seaport Companies failed to reach an agreement.
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Container equipment market faces 6m teu surplus
The container shipping sector will have as much as 6m teu of excess equipment in its collective fleet. But the arrival of new vessel deliveries and a slowdown in sailing speeds will likely prevent a situation of overcapacity. Figures from Drewry show the global equipment pool rose by 13% to almost 50m teu in 2021 as carriers ordered record new containers and retired fewer older units.
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China port congestion risks further disruption
China’s ports are suffering from congestion against bad weather and high yard density. A further shutdown in Shanghai could add to supply chain woes. Rising numbers of positive test cases for coronavirus in Shanghai have raised fears of a new draconian lockdown in the city, which could negatively affect global supply chains. Shanghai has seen the daily number of new positive test cases rise to more than 50, sparking fears that authorities may reintroduce heavy-handed zero-Covid measures to halt the spread.
Shanghai port volumes bounced back in June from the disruption caused by the two-month COVID-19 lockdown that shuttered factories and warehouses in China’s commercial capital but are still down compared with earlier this year. Shanghai International Port Group (SIPG) said the Shanghai terminals handled about 3.8 million TEU in June compared with 3.4 million in May and about 3.1 million TEU in April. By comparison, Shanghai handled about 4.1 million TEU in March, the month before a COVID-19 outbreak closed the city as people were ordered to stay home, with workplaces shut and trucking operations heavily curtailed.
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US containerized imports at record highs
US ports continue to set records in throughput ahead of the peak season, with demand expected to stay strong even as the economy shows signs of cooling. Ports saw a surge in activity this spring as a slowdown in cargo from Chinese factories closed by draconian lockdowns gave them a chance to clear built-up congestion, according to the National Retail Federation’s Global Port Tracker report. In addition, it said that shipments brought forward to avoid any issues related to the US west coast labor contract negotiations may have also contributed to volumes.
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Regulations threaten to reduce containership capacity further
The IMO’s environmental regulations next year could see between 10%-20% of container fleet capacity removed from the market before sufficient new building tonnage is delivered to replace it. The move will likely bring further frustrations to shippers, who already suffer from unreliable schedules and see only over a third of ships arrive on time.
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Hapag-Lloyd and DHL join forces on biofuels
Hapag-Lloyd has signed an agreement to see DHL Global Forwarding ship 18,000 teu a year using the German carrier’s biofuel option. DHL and Hapag-Lloyd want to demonstrate the scalability of sustainable transport and the relevance of sustainable fuels. Hapag-Lloyd has a target of net-zero emissions by 2045 and DHL by 2050.
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Box lines battle for additional capacity
Container lines have been on a capacity acquisition spree for the past two years, but not all have been equally successful in growing their fleets. Data from Alphaliner shows that Mediterranean Shipping Co has been the most aggressive in building up its capacity through large-scale secondhand purchases, adding 220 ships since August 2020. But Maersk was among four carriers whose capacity decreased during the year’s first half as they returned chartered ships but could not find affordable replacements.
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The US tops the league table for detention and demurrage fees
US shippers are paying the highest detention and demurrage fees worldwide despite repeated efforts to lower the burden through regulatory pressure. US ports make up the top five globally in terms of fees charged for detention & demurrage, with New York leading the pack, followed by Long Beach, Los Angeles, Oakland, and Savannah, a container positioning platform, Container xChange’s study shows.
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US government faces call to support west coast labor negotiations
Union and employers say there will be no interruption to cargo operations as talks continue. But groups representing companies that rely on the ports want President Biden to ensure an agreement is reached. More than 150 organizations have called on President Joe Biden to continue working with both sides of the US west coast labor negotiations to reach a new agreement. The letter to the president calls on the administration to work with the negotiating parties to extend the current contract until a new one is reached and to commit to remaining in negotiations. It should also seek an agreement that neither side engages in any activity that would disrupt cargo flows at ports.
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ILWU study proposes surcharge penalties for LA-LB port automation
The cities of Los Angeles and Long Beach should establish a “displaced worker impact fee” on any new automation projects at the LA-LB port complex to offset the public costs resulting from dockworker job losses caused by automation, according to a report commissioned by the International Longshore and Warehouse Union (ILWU). The report also suggests that the San Pedro Bay ports levy a surcharge on containers that are returned empty to overseas ports rather than being filled with export cargoes, with the revenues to be used to offset public costs that result from the underutilization of California’s export capacity.
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