Detrimental Impacts of Port Strikes on Supply Chains and Seafarers

The rise in port strikes worldwide in the past year has created challenges for supply chain providers and seafarers who are being denied berths.

The number of protests and strikes affecting port operations has quadrupled to 38 in the past year, according to coast guard consultancy Crisis24. Consequently, labor shortages are forcing shipping companies to reroute or delay cargo globally.

Port strikes have surged in the early months of 2023, especially across Europe. Port strikes have taken place in the U.S., UK, France, Germany, Italy, Spain, Finland, Israel and Argentina in the current year alone. Nick Rowe, NorthStandard’s head of strike & delay, said the cost-of-living crisis has reached a critical point.

Andy Lane, a partner at container advisory CTI Consultancy, said port strikes always occur with minimal lead times. “Cargo is already in the pipeline and therefore it will get disrupted and delayed as a consequence. This is not good for consumers or exporters, or for inflation generally.”

The world’s 1.5m seafarers are also facing the fallout from industrial action at quaysides on multiple continents. Many seafarers are now being denied shore leave again by the rolling port strikes. “As seafarers have emerged from the trials and tribulations of the pandemic, they have now seemingly sailed into a new storm, that of port strikes and industrial action,” commented Steven Jones, the compiler of the Seafarers Happiness Index.


No Longer a Pressure on Global Supply Chains

New numbers from the Federal Reserve Bank of New York show that container freight and the flow of goods from A to B are returning to normal across global supply chains.

March 2023 figures provided by the US Federal Reserve Bank of New York report the Global Supply Chain Pressure Index (GSCPI) falling to -1.06 points. Since an index level of zero marks the historical average, a negative index reading indicates pressure on global supply chains no longer exists.

The index reached a peak in December 2021 at 4.31 points. At the time, the container market saw extreme activity with vessels bunched up outside the largest ports, which were facing immense congestion pressures.

“The GSCPI’s recent movements suggest that global supply chain conditions have largely normalized after experiencing temporary setbacks around the turn of the year,” writes the Federal Reserve Bank of New York.

Source: ShippingWatch

U.S. Imports Rising but Below Pandemic Highs

Import cargo volumes at the country's major container ports are expected to rise steadily this summer. However, according to the Global Port Tracker report released by the National Retail Federation and Hackett Associates, they will stay lower than pandemic peaks.

“This year won’t repeat that, but the numbers we’re expecting would have been considered normal before the pandemic. The priority at the moment, is resolving labor negotiations at the West Coast ports and avoiding any self-inflicted supply chain challenges on top of those we’ve faced the past three years,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said.

Following protracted negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association, many shippers have shifted cargo away from U.S. West Coast ports to avoid potential disruption. “Compared with last year, the flow of import containers on the West Coast continues to decline along with demand as carriers increasingly drop service to Los Angeles-area ports but stretch voyages to include other ports of call to help absorb excess capacity,” Hackett Associates Founder Ben Hackett said.

In February, 1.55 million Twenty-Foot Equivalent Units were handled by U.S. ports covered by Global Port Tracker, declining -14.4% from January and -26.8% year-over-year (y/y). Global Port Tracker projected volumes in the month of March to reach 1.68 million TEU, a drop of -28.2% y/y. April is forecast at 1.86 million TEU, down -18% compared to a year ago; May at 1.91 million TEU, down -20.1%; June at 1.99 million TEU, down -11.8%; July at 2.1 million TEU, down -3.9%, and August at 2.13 million TEU, down -5.9% (see Figure 1). The large year-over-year declines are because of exceptionally high volumes last year.


The first half of 2023 is forecast at 10.8 million TEU, down -20.2% from the first half of 2022. Imports for all of 2022 totaled 25.5 million TEU, falling -1.2% from the annual record of 25.8 million TEU set in 2021.


Source: American Journal of Transportation

Container Volumes Drop on Key Routes out of Asia

Carriers in February transported significantly fewer boxes on the main Westbound routes, Sea-Intelligence reported. According to the analysis, container volumes on the head-haul routes, in particular from Asia, decreased by -12.1% in February.

The calculations took into consideration distances as well to assess the demand. Sea-Intelligence pointed out that container carriers’ tonne-mile fell by -14.1% in February versus the same month last year. In comparison, global demand for container freight dropped by -5.5% during that period.

“This is particularly troublesome for the shipping lines, as the head-haul trades are the key drivers of profitability,” wrote Sea-Intelligence.

The decreasing demand for box freight services also means that ships are no longer fully loaded. According to Sea-Intelligence, this marks the only bright spot for carriers as it will lead to less imbalance across markets.

Source: ShippingWatch

Container Glut at China’s Container Depots

The slowdown in exports has China’s box depots facing a container pile-up.

The latest report from Container xChange suggests that Chinese container depots are working at 90% utilization. “Oversupply makes it harder for the depots to move boxes. And because depots make money by moving these boxes, as opposed to storing them, the current circumstances are rendering the depots inefficient in both operations as well as revenue generation,” said Christian Roeloffs, Container xChange’s CEO and co-founder.

The growing number of idle containers at terminals creates congestion at the ports, and the costs of repositioning empty containers have become more expensive and inconvenient. Subsequently, opening new markets globally becomes more challenging.

The oversupply of containers has reportedly prompted trucking companies to lay off drivers. According to sources, container movements in China’s busiest ports of Shanghai, Ningbo, and Shenzhen were less than 80% of pre-pandemic levels, resulting in less work for truckers.

A recent Freight Buyers’ Club podcast reported that uncertainty over China's role as a manufacturing center amid heightened tensions with the U.S. may cause manufacturers and retailers to reassess their sourcing options.

Source: The Loadstar

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