Global Container Pool of 6 Million TEU Surplus “Expected to be Absorbed”

The global pool of shipping containers increased by 13% to almost 50 million TEU (mTEU) in 2021, three times the prior growth trend, according to maritime research consultancy Drewry. This came about as lessors and ocean carriers were ordering a record number of containers in 2021, while retiring fewer ageing units as congestion across global supply chains rendered containers less productive by an estimated 15% to 20% than in pre-COVID times, according to Drewry’s Container Census & Leasing Annual Review & Forecast 2022/23 report.

Drewry estimates that each container averaged 18.1 lifts in 2021 compared with 19.2 in 2020 and between 19.5 and 20.6 in the 2010s. The number of containers per slot of vessel capacity increased by 8% in 2020 when the pandemic started and remained at this level throughout 2021. Drewry estimates that as many as 6 mTEU of surplus containers now exist in the global equipment pool. While this number is historically large, Drewry considers the surplus to be manageable for the industry.

“The delivery schedule of new ships is very strong with slot capacity expected to increase by 3.6 mTEU in 2023 and by over 3.9 mTEU in 2024,” said Drewry’s head of container equipment research John Fossey. “With new IMO emissions regulations coming into force in January 2023 forcing some ships to sail slower, much of the surplus equipment currently in service is expected to be absorbed. In addition, there is evidence to suggest that some carriers are planning to have more buffer stock in their equipment pools, while fewer new containers will be built in the next two years,” he added.

Drewry forecasts that output in 2022 and 2023 will be much lower than last year, at 3.9m TEU and 2.4m TEU respectively, with replacement accounting for most of the orders. While newbuild and secondhand prices will fall, a return to the very low prices of 2019 is not anticipated as manufacturers are expected to manage their capacity and pricing strategies very carefully.

Source: Drewry,

Nine of World’s top 20 Container Ports Forecasted to be in China at end of 2022

Of the world’s top 20 container ports, nine ports will be in China by the end of 2022, according to a forecast report published by the Chinese Academy of Sciences (CAS). The forecast quoted by the China Science Daily, added that many of China’s container ports have a growing demand for shipping services, especially in Ninbo-Zhoushan, Qingdao and Tianjin port.

Shanghai is expected to top the list, handling throughput of 48.2 million TEU, a 2.5% y/y increase. Ningbo-Zhoushan port is forecast to rank third due to a rapid rebound in total container throughput, likely reaching 33.4 million TEUs in 2022, marking a 7.5% y/y increase.

China’s ports global rankings are buoyed by its trade data. China’s foreign trade rose 8.3% y/y to 16.04 trillion yuan (US$2.38 trillion) in the first five months of this year, said China’s General Administration of Customs. The country’s exports grew 11.4% on a yearly basis to 8.94 trillion yuan, while imports increased 4.75 from last year to 7.1 trillion yuan.

“Ports are an important part of international logistics and play a vital role in global trade. China is the world’s largest manufacturer as well as the biggest country for trade in goods. The country’s huge trading activity creates great demand for container ports,” said CAS professor, Xie Gang.

Source: Hellenic Shipping News

Port Workers in Northern Germany go on two-day Strike

Approximately 12,000 dockworkers at the German seaports of Emden, Bremerhaven, Bremen, Brake, Wilhelmshaven and Hamburg went on strike from July 14-16, paralyzing Germany’s busiest ports after a collective bargaining dispute failed to reach a successful conclusion between union ver.di and the Central Association of German Seaport Companies (ZDS).

The latest round of industrial action by German dockworkers is the third ‘warning strike’ and the longest so far. It will further exacerbate port congestion at Hamburg’s container terminals where yard density already stands at 90%. Ships idled in the German bight are stacking up with berthing delays, even before the stoppage, extending to up to 14 days.

Meanwhile, ocean carriers are looking at their options and depending on the stowage of their ships, are amending the rotations of their fleets in order to defer calls at Hamburg, Bremerhaven and Wilhelmshaven. Where they can, carriers may overland some German cargo at Gdansk, Zeebrugge or Felixstowe (where congestion has eased significantly) for a later relay operation, but Rotterdam and Antwerp terminals are already heavily congested and would likely refuse to allow discharge of German import containers for transshipment.

At a time when major European ports are grappling with critical congestion levels, increased berthing delays and slow-ship working on severely jammed quays will result in carriers announcing a high number of blanked sailings from Asia in August and September.

Source: The Loadstar

ILWU-PMA Could Reach Contract Agreement in August-September Sources Say

Sources close to the West Coast longshore labor negotiations believe that a deal could materialize in August or September with little disruption on the docks. Those who agree with this sentiment said recent joint statements from the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) to keep cargo moving and operations normal at the ports “until an agreement can be reached” had eased concerns.

Others are skeptical and unconvinced the process will proceed smoothly despite intense pressure on both labor and management from the Biden administration to get a deal done without further slowing container flow through West Coast ports.

More than 150 trade associations wrote in a July 1 letter to President Joe Biden, “Even with the recent joint statement, supply chain stakeholders remain concerned about the potential for disruption, especially without a contract or an extension in place. Unfortunately, this concern stems from a long history of disruptions during previous negotiations.”

Among sources close to the talks however, there is a growing consensus that that the potential for large-scale disruption is fading as the two sides proceed deeper into the negotiations. Stakeholders are also reassured by ongoing, intensive engagement by Biden administration officials.

Risks do remain but optimistic stakeholders are assuming that major issues including automation and compensation can be resolved at the negotiating table.

Source: Journal of Commerce

Warnings of ‘Nationwide Logjam’ in U.S. as Railroad Cargo Backs up

Port of Los Angeles’ Executive Director, Gene Seroka, has warned of a major risk to the U.S. supply chain if rail service is not improved. The pileup of containers at Southern California terminal yards sitting for nine days or more is now higher due to the lack of rail service to handle import cargo. “All eyes are focused on improving the rail product. Full stop. The bottom line is that we must take action on this issue immediately to avoid a nationwide logjam,” Seroka warned.

Los Angeles reported the highest-performing June on record. Year-on-year (y/y/), it was up less than 1% but compared to the prior five-year average for the same month, volumes were up 15%. Imports were down -5% y/y but up 12% from the five-year average. Compared to May, June imports were down -11% however, ships with a total capacity of 91,664 TEUs were waiting in Los Angeles’ offshore queue at the end of June (see Figure 1).

Asked during the press conference whether the decline in June imports versus May was due to rail issues that limited terminals’ capacities and their ability to unload ships faster, Seroka replied, “If we’re not moving in sync, we’ve got to handle containers more than once and that takes time and money and it takes efficiencies out of the system. So, if we have these 20,000 aging rail containers [dwelling nine days or more] on the ground, sure, it causes problems.”

Seroka said that current conditions for terminal congestion is “nowhere near the inundation of containers on these terminals in the fourth quarter [of 2021].” He emphasized that the long-dwelling containers are mostly bound for rail transport, which was not the case in Q4 2021. “The rail cargo sitting nine days or longer now makes up 75% of all our aging cargo, which is why I’m advocating that we need to kick it into gear to get this problem solved. Everyone has a role to play. Cargo owners must pick up their boxes at inland rail terminals faster than they are today. The railroads need to get crews and engine power and rail cars back to the West Coast faster. And the marine terminals, shipping lines and ports need to provide key data to help prioritize the evacuation of this cargo.”

Seroka expects peak season to be strong but ‘tapered’ version of last year. “The volume you’re seeing coming through right now was ordered about three or four months ago. The cargo that’s going to come over during the next couple of months is going to look different,” he said.

Source: American Shipper

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