skip to Main Content
Efficiency And Speed In Ports’ Handling Of Containers And Use Of Boxes Inland Can Greatly Ease Shortages

Efficiency and speed in ports’ handling of containers and use of boxes inland can greatly ease shortages

Source: PortSEurope
Piraeus, Greece (PortSEurope) May 5, 2021 – Shipping companies cannot keep buying ever more expensive containers; newly ordered container ships will start arriving after 2023; China is unable to manufacture many more containers. The solution for the red-hot container market with sky-high rates, huge freight demand, and long delays is in the efficiency and speed in ports’ handling of containers and the use of boxes
located inland. The new normal in the market for containers transport will be the high freight rates that could persist not beyond next year and well into 2023, straining the supply chains. Logistics companies and shippers will be able to generate higher profits, something that has been seen already in Q4, 2020 and Q1, 2021 results of the biggest companies. Global logistics powerhouse DSV Panalpina, CEO Jens Bjørn Andersen, was quoted as saying that supply chain congestion will most likely continue through the rest of 2021. The service level is worse than ever, and rates are at an all-time high. An unbelievably bad combination. Every year container ships move around 226 million containers. More than 5% of the world’s containers were delayed due to the crisis on both sides of the blocked for six days in March Suez Canal or on board of ships sailing around the southern tip of Africa, further exacerbating the shortage of containers and container ships. The total available containers in the world are estimated to be 25-30 million TEUs. Container shortages created additional pressure on exporters, shippers and above all on ports. This can already be seen in container prices. Ports worldwide are still facing a tsunami of delayed containers. They have to be unloaded, processed, stored, loaded on trucks or trains. But most ports are currently operating at the limit of their containers’ handling capacity, a situation aggravated by the coronavirus pandemic and its related restrictions. A key risk to ports in the months ahead is “vessel bunching,” when ships go off schedule and arrive too close together, filling up anchorages. As a result, container ships skip ports and cancel sailings. The Mediterranean ports are already operating at the top of their capacity and try to cope with delayed containers. But the real issue is the huge delay in the return of empty containers back to Asia, mostly to China. Container manufacturing is concentrated in China (some 97% of all containers are produced there), so there isn’t anything that authorities outside of China can do. Container makers have increased production since last quarter of 2020 and their capacity is fully booked until the end of June. This also led to an increase of the prices of new containers. To deal with the containers’ shortage German Hapag-Lloyd ordered 150,000 new containers for $550 million, the biggest order in the 51-year history of the company. Most of these containers have already been delivered, while the others, including refrigerated ones will join the fleet in the coming months. The company also ordered 8,000 special containers for oversized and dangerous goods. Producing more new containers is not going to solve the problem because the ports are congested and practically all container ships are in use at the moment. This is why shippers switched to railway and air cargo deliveries – two much more expensive options. And a lot of the airplanes are not flying at the moment… Even if demand for goods improves by the end of summer, in the autumn the pre-Christmas rush for goods starts in both United States and Europe. The only buffer left underutilised in the container transport system are the ports and their ability to speed-up the processing of containers. Production facilities that are using containers as temporary storage solutions should also try to release them faster. The major bottlenecks in global supply chains are mostly due to the slow return of containers to Asia, particularly to China, that 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 over 100 days from up to 60 days previously because of COVID-19-related handling capacity cuts in Europe and the U.S. United Nations Conference on Trade and Development (UNCTAD) said in a report in April that changes in consumption and shopping patterns triggered by the coronavirus pandemic, including a surge in electronic commerce, as well as lockdown measures, have led to increased import demand for manufactured consumer goods, a large part of which is moved in shipping containers. Q3, 2020 lessening of lockdown measures and varying speeds of recovery worldwide, as well as stimulus packages supporting consumer demand, inventory-building and frontloading in anticipation of new waves of the pandemic, contributed to leading to a further increase in containerized trade flows. At the outset, the disruptions resulting from the pandemic, trade imbalances and changing trade patterns led to shifts in the geography of container trade. Empty boxes were left in places where they were not needed, and repositioning had not been planned for. Moreover, as carriers introduced blank sailings, that is, skipped port calls, a mismatch between supply and demand for empty containers was exacerbated, as empty containers were left behind and failed to be repositioned. The container crisis is also a reflection of a slowdown in and delays across the maritime supply chain due to strains caused by the pandemic, such as port labour shortages, port congestions (also due to blank sailings) and capacity constraints in truck and other inland transport systems due, for example, to delays in undergoing necessary testing or delays by factories in returning containers. The situation was further exacerbated by the obstruction of the Suez Canal by a grounded container ship. As ships, and the containers on them, took longer to reach their destinations, the shortage of available empty boxes increased, including in Shanghai, China. As a result, freight rates increased not only on the routes passing through the Suez Canal but also on nearly all other routes. The trends culminated in freight rates reaching historical highs by end-2020 and early in 2021. The surge in freight rates spread across some developing regions such as Africa and Latin America, where it outpaced the surge observed on the main East–West routes. Compared with the medians, the early-2021 peak freight rates were higher on all routes. In comparison, the lowest relative increase in freight rates was recorded on the Asia–East Coast North America route (+63%), while freight rates from China to South America were 443% higher than the median for that route. The recent shortage in containers and maritime equipment took stakeholders by surprise. Monitoring of port calls and liner schedules, along with better tracing and port call optimization, are among the issues covered by the growing field of maritime informatics. UNCTAD is monitoring developments through the Review of Maritime Transport series, dedicated publications and online statistics. Policymakers need to promote transparency and encourage collaboration along the maritime supply chain, while also ensuring that potential market power abuse is kept in check or prevented. Copyright (C) PortSEurope. All Rights Reserved. 2021

To continue reading please subscribe or log in.

PortSEurope offers an English-language daily coverage from over 200 ports in the Mediterranean, Black and Caspian Seas as well as a fully indexed and easily searchable database with more than 15,000 articles.

Subscribe now
Back To Top