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Last 61 Ships Blocked By The Suez Canal Crisis Will Cross It On April 3 – Global Container Backlog Expected To Last Up To Three More Months

Last 61 ships blocked by the Suez Canal crisis will cross it on April 3 – global container backlog expected to last up to three more months

Port Said, Egypt (PortSEurope) April 3, 2021 – The last 61 ships blocked by the six days grounding of Ever Given, one of the largest container ships in the world, in the Suez Canal are expected to cross the channel on April 3 clearing a traffic jam involving over 420 ships, according to Osama Rabie, chairman of the Suez Canal Authority (SCA). He expects 85 ships
in total to pass through one of the busiest waterways of the world on April 3. The Canal operates with an increased capacity and around the clock since March 29 when the 224,000 tonne Panama-flagged Ever Given was refloated. On April 2, 80 ships crossed the channel, including the nuclear-powered US Navy aircraft carrier USS Dwight D. Eisenhower. The Ever Given is detained in Great Bitter Lake, part of the Suez Canal, awaiting agreement on compensations payments due to the blockage which is expected to be over $1 billion and the largest container ship compensation case ever. It is expected to take some three months for the delayed containers due to the six days blockage of the Suez Canal by Ever Given to return to the global shipping turnover. Ever Given, ran aground on March 23, blocking the planet’s busiest waterway. More than 5% of the world’s containers were delayed due to the crisis on both sides of the blocked 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. When these containers reach their destination with a delay of 10 and more days, this is going to create additional pressure on exporters, shippers and above all on ports. This can already be seen in container prices. Ports worldwide are bracing for a tsunami of delayed on ships 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 weeks and months ahead is “vessel bunching,” when ships go off schedule and arrive too close together, filling up anchorages. This will happen first at European ports, then at the U.S. East Coast ports. As a result, container ships will have to skip ports and cancel sailings. The Mediterranean ports are already operating at the top of their capacity and face the delayed containers which will start reaching them as of next week. 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. But producing 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. 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 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 now forecasted to have terminal congestion and vessel backlogs during the next three or more 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 over 100 days from up to 60 days previously because of COVID-19-related handling capacity cuts in Europe and the U.S. Copyright (C) PortSEurope. All Rights Reserved. 2021

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