Blocked Suez Canal to exacerbate containers’ shortage

in 2018 and operated by Taiwanese company Evergreen Marine, ran aground and became lodged sideways across the channel at 07:40 local time. The ship is 400 m long and 59 m wide, and can carry up to 20,000 TEUs. Some 30% of the global container ship capacity passes through the Suez Canal. About 12% of world trade (by volume) passes through the channel connecting Europe and Asia. The red-hot container market with sky-high rates and a huge freight demand mostly due to the coronavirus pandemic will continue well into the summer and some experts predict that the major bottlenecks in global supply chains will not be eliminated until early next year. Even if demand for goods normalises by the end of summer, in the autumn the pre-Christmas rush for goods starts in both United States and Europe. The Covid-19 pandemic initially caused a huge drop in containers’ demand, followed by an unprecedented surge in demand, exacerbated by the shortage of containers. The most severe congestion in the trans-Pacific container shipping system is around the U.S. gateway ports of Los Angeles and Long Beach, which are forecast to have terminal congestion and vessel backlogs during the next two to three months. The slow return of containers to Asia, particularly to China, has led to container shortage, leading to accumulation of goods in China’s ports and a significant increase in containers’ rates. The main issue is how quickly the empty containers could be redirected to where they are most needed. Ports around the world are still operating in coronavirus quarantine mood and this contributes to containers’ shortages due to a slow pace of loading, unloading, and transporting the containers there. Average container turnaround times have ballooned to 100 days from 60 days previously because of COVID-19-related handling capacity cuts in Europe and the U.S. A growing number of ships have gathered near the two entrances of the Suez Canal, waiting for it to be unblocked and some are blocked inside. Asia-Europe container flows are picking up again after the Chinese Lunar New Year and if the container ships must go via the alternative route (via the Cape of Good Hope) it will prolong their journey by a week. During 2020, some 19,000 ships passed through the channel. Further PortSEurope reading: Be prepared for containers’ shortages until year-end Copyright (C) PortSEurope. All Rights Reserved. 2021