No Post-Lockdown Cargo Boom as China's Port Congestion Improves

Port congestion in China is easing as the anticipated post-lockdown cargo boom in Shanghai did not take place. Despite a sudden return to lockdown last weekend, the city’s container supply chain recovery was unimpeded.

A global forwarder said operations had returned to normal and only shippers with facilities in quarantined areas would be impacted. “The backlog of containerships created during the lockdown period is under control and is systematically being cleared, while some carriers have cancelled or delayed their sailings in the last week of June from Shanghai to the U.S.,” the forwarder said. 

Shipping analyst Linerlytica noted the easing congestion was not limited to Shanghai and that overall Chinese port congestion was down. “All three main port regions have registered declines in berthing delays, and vessel queues are falling. Improved weather conditions in eastern and northern China helped to reduce berthing delays, while the reopening of Shanghai has seen improved labor availability,” Linerlytica said. 

Higher-than-usual inventory levels in the West may also be taming the market ‘bullwhip’ effect. Illustrating this was the report that Samsung had asked multiple suppliers to delay or reduce shipments, including components and final products, due to “swelling” inventories and inflation concerns. 

Meanwhile, airfreight operations at Shanghai Pudong are also reaching near-normal levels of activity. Shanghai International Airport said that among the 34 chinese and foreign all-cargo airlines operating at Pudong, around 80% were doing so at more than 50%, while nearly half of them were operating at more than 80% capacity. 

Source: The Loadstar 

Different Opinions Over Congestion: TOC Europe

When port and cargo supply chain professionals met at the TOC conference in Rotterdam held on June 15-16, opinions differed on whether congestion challenges faced by terminal operations would end anytime soon.

Eleanor Hadland, senior ports & terminals analyst at Drewry, told attendees “shippers don’t expect port congestion to improve until the second half of 2023, while freight rates are never going to return to pre-pandemic levels”, according a recent survey the consultancy conducted.

Secretary general of the Federation of Private Port Operators (Feport), Lamia Kerjoudj-Belkaid, agreed it would take until next year before congestion in European ports would begin to lessen. She said, “The ports are still worried about the bulk of ships coming from Shanghai since its lockdown ended,” and pointed out a wave of vessel were headed to Europe to fully occupied yards.

However, Johan-Paul Verschuure, project director at Rebel Group, believes congestion levels have peaked. He suggested the worst of the congestion could be behind the industry and warned it could be entering a “dangerous new period of overcapacity”. Verschuure said, “It is surprising how quickly the congestion hot spots can change – last autumn congestion was spread out across north-west Europe, but today it is heavily focused on Bremerhaven and Hamburg, which have been hit by strikes in recent days.”

Hadland suggested the congestion would only ultimately be cleared by improving the flow of information which accompanied the cargo. “We need the infrastructure to enable the handling of data and finance to be as good as the physical handling of goods.”

Hadland also noted that the physical capacity of Europe’s ports had been hard hit as the number of containers moved per vessel call has increased exponentially. “There has been a steep reduction in port connectivity – the carriers have streamlined their schedules, and in the first quarter of this year, throughput has been down, but vessel calls are down by even more and, as a result, average exchanges have gone through the roof, which represents a huge peaking factor. It now takes longer to handle 1,000 TEU than it did in 2019. In Hamburg, it takes 32% longer, in Antwerp 31% and Rotterdam 7% – and the capacity of ports has been pushed by the peaking and higher exchanges,” she explained.

Source: The Loadstar 

Asian Imports to U.S. Climb in May

A new monthly record was set for U.S. imports from Asia in May despite more than two months of pandemic-related lockdowns in China and rising inflation in the U.S. Asian imports totaled almost 1.74 million TEU in May, up 5.7% y/y and 25.1% over pre-pandemic May 2019, according to PIERS. 

West Coast ports regained their market share of Asian imports, climbing from 57.1% in April to reach 60% in May. Dan Smith, partner in the transportation consulting firm Tioga Group, speculated that some shipments that should have arrived in April were delayed because of port congestion in the U.S., and shipments that normally would have exited Shanghai experienced delays as they were shipped through other ports in China.

Gene Seroka, executive director of the Port of Los Angeles, said during a virtual press conference on Tuesday that Los Angeles did not experience a huge drop in imports from Shanghai in May. He also said shipments from Shanghai had exited other Chinese ports such as Ningbo, where exports were up 25%.

The surge was almost entirely linked to Los Angeles-Long Beach. Asian imports to the Northwest Seaport Alliance of Seattle and Tacoma declined -11.5% percent in May. Oakland’s imports from Asia increased just 1%. The East Coast’s share of U.S. imports from Asia dropped to 33.5% in May from 35.9% in April, while the Gulf Coast’s share dropped to 6.3% from 6.7%, according to PIERS.

Smith said congestion and vessel backlogs in a number of East and Gulf Coast ports demonstrated those gateways have a finite capacity for cargo diversions from the West Coast. 

Source: Journal of Commerce

Shipco: U.S. Trucking Capacity Update

Carriers have warned the Tran-Atlantic’s low schedule reliability in April will continue to persist through the rest of the year. 

“We do not expect an improvement in schedule disruptions through the end of the year,” Matthew Hill, head of the North America import market for Maersk, told “The primary issue will be the continued erosion around schedule reliability and general operational limitations we see across the supply chain on both sides of the ocean.”

A Hapag-Lloyd spokesperson held a similar view and said, “We do not expect any improvement in the operating business in the short term. We still see a strong market on the Trans-Atlantic, especially in Northern Europe.”

With congestion on both sides of the Atlantic, carriers have been hard pressed to improve schedule reliability. On-time performance of 20% on the headhaul Westbound Trans-Atlantic in April was the highest so far this year, while schedule reliability on the trade averaged 17.4% over the first four months. That compares with 28.6% from January through April 2021 and 60% over the same period in early 2020, according to Sea-Intelligence Maritime Analysis.

Carriers have been blanking sailings on North Europe-North America and Mediterranean-North America in efforts to bring back some schedule integrity. By the end of July, they will have canceled 117 sailings on those trades, data from Drewry shows.

Hill said Maersk was expecting U.S. demand out of Europe to remain stable in the coming months, but the ocean supply chain was so disrupted that the volume would continue to erode schedule reliability. “This will be potentially exacerbated by terminal dwell in the U.S. caused by the growing inventory problems, closures related to the Atlantic hurricane season, and the slower winter crossing associated with the colder months as we head towards the end of the year,” he said.

U.S. East Coast import volumes from Europe in May were up 42% y/y at 167,961 TEU, according to data from PIERS. 

Source: Journal of Commerce 

PMA, ILWU Say West Coast Port Strike Not on Cards

The two parties involved in West Coast port labor talks issued a joint statement on June 14 saying while discussions are likely to last beyond their contract’s expiration on July 1, cargo operations would continue.

“Neither party is preparing for a strike or a lockout,” according to the statement by port employers represented by the Pacific Maritime Association (PMA), and the International Longshore and Warehouse Union (ILWU), who are negotiating on behalf of more than 22,000 dockworkers at ports on the U.S. West Coast. “The parties remain focused on and committed to reaching an agreement,” the joint statement said.

The two sides have now been at the table for over a month. If West Coast ports were to shut down or slow down further due to labor actions such as a strike or lockdown, it could compound existing supply chain issues at ports like poor rail service and shifting vessel schedules.

Source: Supply Chain Dive 

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