US flag and port

US east coast port congestion continues to build

Apr 21, 2022 | , ,

Reacting to fears of labour disputes and disruption at west coast ports, many US importers diverted cargo from Asia to the east coast – only to find that Atlantic congestion may be worse than on the Pacific.

Importers on the west coast are getting their cargo quicker than their peers on the Pacific coast, with wait times of less than four days at Los Angeles and under two days at Long Beach, but nine-ten days at Charleston and three-four days at Norfolk.

Ports on the US east coast have been battling waves of congestion for the past year, with overwhelmed terminals leading to intermittent vessel backlogs outside the ports of Charleston, Savannah, New York and New Jersey, and Virginia. This is despite government intervention and assistance in alleviating the issues which are now embedded throughout The USA.

The pile-up in the east began building in the second half of last year when eastern gateways received more mega-ships on their berths, as congestion on the west coast prompted shifts of imports. 

In February, carriers warned that dwell times had gone up at several east coast ports, including Newark, Virginia and Charleston, with delays expanding by several days and some expect the situation to deteriorate further, with expectations that the east coast could be the next hot spot for congestion.

The migration of imports from Asia to the east coast gained momentum as contract negotiations between longshoremen and terminal operators, due to start next month, have previously led to labour disputes that have disrupted cargo flows.

Analysts remain hopeful that the likelihood of a strike or shut-out in California is relatively low, given the pressure on the union from the Biden administration to avoid disruption.

The problem is that while ports on the eastern seaboard do not have labour contract negotiations looming, they face many of the same issues as the west coast and in particular the lack of space and labour shortages.

MSC informed customers this month it would temporarily stop calling at the port of Charleston on its route to South Asia because of extended wait times.

Traffic is moving from the east coast to the Gulf of Mexico, increasing container imports to Houston, which increased container volumes 27% in January, with observers noting it was already getting swamped with containers.

We would ask that customers shipping to, or importing through, the west coast speak to us at the earliest opportunity so that we can review their situation and prepare their supply chain.

We have set up contingency platforms for customers to ensure that product is delivered to market in the USA, without the delays experienced with alternative providers.

For further information please call your established account manager, who will share all current options. They will take you through the alternative services and solutions, that we are able to offer, to ensure that your product reaches its destination, within vital deadlines.

Shanghai lockdown 2

COVID update: Shanghai lockdown impact

Apr 21, 2022 | , , , ,

China’s economy grew faster than expected in the first quarter, expanding 4.8%, but the risk of a sharp slowdown over coming months has risen as Shanghai’s lockdown is extended indefinitely and further COVID-19 curbs may follow. 

Nearly all of Shanghai is now under lockdown, with most residents unable leave their homes, even for food, while some businesses are operating under “closed loop” conditions, where workers sleep on site.

Cargo deliveries into Shanghai Pudong Airport, meanwhile, are becoming backed up. Prior to the city’s lockdown, around 1,000 consignments would typically arrive each day, with a collection rate exceeding 80%, but because there is not enough trucking capacity, due to driver isolation rules and restrictions on vehicle access to the road infrastructure, that pick-up rate has slumped to just 10%.

In addition, many other airports throughout China, are becoming very congested and flights are having to be cancelled or diverted due to operational issues. Zhengzhou Airport (CGO) has effectively been closed for the next week, due to an influx of air freight, as a consequence to the issues in Shanghai and the surrounding region. This is having a huge impact on rates and available capacity, as well as carriers suspending inbound freight into China, due to 10-day backlogs in accessing the cargo once it has arrived. It really is quite a mess.

Cross-province road transport and the different restrictions and health requirements imposed locally, mean truck drivers are having to manage an array of policies and typically wait hours, each time they need to undertake Covid tests, with other cities becoming more reluctant to let trucks from Shanghai enter.

Shanghai International Port Group (SIPG) has denied there were more than 300 ships waiting to load or unload at the port earlier this month, insisting they are maintaining normal 24-hour operations and that the average berth waiting time for container vessels was less than one day. Real-time vessel tracking platforms tell another story!

While there has been no noticeable diversion of container ships from Shanghai so far, increasing quantities of cargo is being diverted to alternative ports, including Ningbo, Qingdao and Tianjin, and LCL shipments from Shanghai are under threat, due to cross-contamination fears in the warehouse.

Data reports in the press suggest that Shanghai container ports are experiencing “significantly reduced” volumes, with the seven-day average throughput now down 33% and as the supply chain situation in Shanghai continues to deteriorate, the container port is running out of capacity for some types of cargo, with Maersk ceasing bookings for refrigerated and dangerous cargo.

Shanghai factories that have been operating under ‘closed-loop systems’ may soon be forced to stop work due to a combination of material shortages or logistical challenges that make moving people and goods increasingly challenging, plus workers who have been contained for more than three weeks and need to be replaced.

Reduced land-side trucking capacity is expected to continue at all main ports, effectively reducing the capacity available for cargo collections and deliveries, which means factories may not meet planned delivery schedules. We recommend checking with your vendors, to clarify the status of your orders, and whether they have actually been manufactured.

We will continue to closely monitor the situation and will update as changes occur. When China does begin to lift lockdowns and supply chains start to flow freely again, we will share with all of our customers as quickly as possible, as the likely outcome after the situation is resolved, will be pent up demand for delayed goods reaching market and we suspect a congested environment from May onwards, as production is increased in line with lockdowns being lifted. More news to come…..

Metro’s cloud-based supply chain management platform, MVT, simplifies the most demanding global trading regimes, by making every milestone and participant in the supply chain transparent and controllable, down to individual SKU level. 

To discuss how our technology could support your supply chain, please contact Simon George our Technical Solutions Director or Elliot Carlile.

Moscow 1

April global logistics update; Five key supply chain disruptors

Apr 7, 2022 | , , ,

Since the early days of 2020, the COVID-19 pandemic has disrupted global supply chains, creating shortages of goods, even though ships, trains, trucks and planes continued to run, to the best of their ability.

The infrastructure that supports global supply chain operations has struggled to absorb the continuing impacts emanating from COVID-19; including the need for urgent PPE, sustained spikes in consumer demand, idled factories, COVID-safe working regimes and workers getting sick or forced to work from home, through localised lockdowns, globally.

The result has been shortages of shipping containers in the right places, carrier schedules that are completely disrupted by weeks, long delivery delays, a shortage of first mile/last mile truck drivers, a sustained period of soaring freight rates and, inevitably, higher prices for consumers. And now, we have the uncertainty created by Russia’s war in Ukraine and China’s zero-COVID strategy complicating trade in the region; both of which increase supply chain uncertainty and costs.

1. China’s zero-COVID strategy

China is the world’s most important manufacturing hub and home to six of the 10 largest container ports.

While most countries have decided to learn to live with the coronavirus, China has maintained its zero-COVID policy, where even small outbreaks can shut down large population centres and slow economic activity.

In Shenzhen, some of the country’s most important manufacturers had to temporarily shut in March, in Changchun, an industrial hub that accounted for about 11% of China’s total annual car output in 2020, automakers were forced to close and now Shanghai, China’s largest city of 26 million people, is in total lockdown, with no end in sight.

The concern is that continuation of the strategy is likely to have a dampening effect on China’s domestic growth, which will translate more widely as impact on global trade; 80% of which moves on container ships.

2. Russia’s war

Energy prices have soared since Russia’s invasion of Ukraine, increasing costs for every mode of transport, with rising prices and emergency surcharges.

Food supplies are under threat because both countries are big producers of wheat and fertiliser. They are also key exporters of industrial raw materials, including nickel, lumber and neon gas, which is vital for making semiconductors, a critical component in automotive manufacturing. 

More than 2,100 US companies and 1,200 European organisations have at least one direct supplier in Russia, and the total reaches 300,000 when indirect suppliers are included. With sanctions blocking commerce with Russia, companies are scrambling to find suppliers elsewhere, as well as sea and air routings that avoid the conflict zone altogether. That is before Ukraine manufacturers which are essential to many industries, such as the automotive sector, are considered as they are unable to operate in the current conflict.

3. The impact on freight rates

At the peak of the COVID supply chain strains in October 2021, ocean carrier spot rates had risen ten-fold on a year earlier on many global lanes, including the important Asia to Europe trade.

The FAK/ Spot market cost for a 40’ container on the Asia-North Europe route has fallen since then, in the first quarter of 2022, but that’s a typical move after CNY and rates are still more than double what they were a year earlier. Largely due to blanked sailings and carrier capacity adjustments, along with continued disruption to shipping line schedules, caused by a plethora of market dynamics.

The massive reduction in passenger (belly-hold) air freight capacity in the 1st quarter of 2020, has never recovered, because the restoration of long-haul passenger services, has been patchy - at best - and now the Ukraine crisis has removed another >10% of global capacity. The impact on rates is inevitable, and that’s without factoring in emergency fuel and war surcharges, which we have seen implemented by most scheduled carriers since the beginning of March, with charter aircraft costs doubling in a month on most global routes.

Any longer-term slide back on rates will be driven by weaker import demand or a seasonal adjustment. Either way, freight rates are still several times higher than 2019 levels and are feeding into price inflation. Air freight traditionally accounts for 40% of products moved globally by value, to put these statistics into perspective.

According to research by the International Monetary Fund, “when freight rates double, inflation picks up by about 0.7%, which implies that the increase in shipping costs in 2021 could increase inflation by about 1.5% in 2022.

4. The BIG three

The leading container shipping lines, mostly based in Asia and Europe, have enjoyed some of their highest-ever profits. And even though these profits follow decades of loss and investment, politicians across all continents have taken the opportunity to blame the concentration of power in the shipping industry for dulling price competition.

In 2017, the dozen biggest container shipping lines formed three  alliances to share ships, cooperate on routes and limit excess capacity - 2M | Ocean alliance | THE Alliance - in control of about 80% of the world’s shipping container capacity.

Critics claim the arrangement is an oligopoly, as some busy trade lanes might have several competitors, but smaller gateways for goods might have just one or two.

US and European regulators have raised questions about constrained competition, and while politicians might like to complain about the carriers, the global nature of the industry means it’s mostly beyond the reach of national regulators, who are unlikely to be able to do much to control prices. 

If there was action taken, in suspending carriers for their conduct, the impact would be even greater disruption and reduction in shipping availability, which would normally result in even higher prices due to the supply versus demand market dynamics. It’s a dilemma at best, that is difficult to address, resulting in carriers being in the driving seat.

5. Why containers matter

There are about 25 million standard shipping containers, that move globally on around 6,000 container ships. They move within a fragile network of ports, terminals, inland transport and warehouses that are designed to stay synchronised.

They are the backbone of globalisation and globalised supply chains worked so well and became so slick, that they encouraged the widespread adoption of supply chain dependent strategies, like just-in-time (JIT) manufacturing which, at its purest, meant no inventory and assembly lines dependent on the next part arriving (just) in time.

But, there’s a limited supply of containers, to meet what became unpredictable demand two years ago. 

The COVID pandemic triggered unusual swings in the demand for goods as well as on-again, off-again lockdowns and the disruption left handlers of containers struggling to manage traffic, creating shortages of equipment, where and when they were needed most. 

JIT is being replaced by Just-in-case inventory management, as firms build buffer stocks, as the world continues to deal with many of the previous risks, along with a new set of geopolitical worries.

The other consideration is the fact that we are in the traditional ‘slack’ season where demand for logistics softens and the peak is yet to come – there could be even more trouble ahead...

With continuing supply chain challenges in many regions, we work closely with our network partners, carriers and own offices globally, to monitor the situation and find solutions for our customers, including the most time-sensitive and urgent shipments. 

Despite the negative tone of the above market update Metro are constantly introducing initiatives, innovation and market leading services, that deliver reliability within your logistics platforms and supply chains. Creative, tailored in design and consistent solutions based on an end outcome and your expectations.

With the continued rate and capacity pessimism, there are often new and emerging opportunities thrown up by the market, which is why we share regular intelligence and breaking news.

For the latest insights and to review your situation please contact Elliot Carlile, who will share market conditions and intelligence and explain how we will protect your supply chain in avolatile situation.

Nhava Sheva

Sea freight challenges in India and Sri Lanka

Apr 7, 2022 | ,

Leading container shipping line MSC is reducing Indian ports of call, in order to sustain a weekly sailing frequency on major commercial routes.

As the shipping line struggles to sustain a weekly sailing frequency on major commercial routes, Mediterranean Shipping Co (MSC) is reducing Indian ports of call, with services between India the United States and Europe frequently sailing directly into Mundra Port and skipping the first JNPT/Nhava Sheva port call. 

Nhava Sheva is roughly 300 nautical miles from Mundra, where the carrier has ‘own terminal advantages’, which allow it to turn its vessels around faster.  (The largest container handler in Mundra, the Adani International Container Terminal, is a strategic investment collaboration between port owner Adani Group and MSC.)

After the MSC Altair skipped Nhava Sheva in Week 11, MSC has issued a new advisory announcing another Nhava Sheva omission on the same service.

In view of severe delays faced at previous ports of call and to maintain schedule integrity, MSC Rosa M, voyage IV211A, will skip the Nhava Sheva call and proceed to Mundra, the carrier said in its notice.

With heightened service reliability challenges, the concentration of Indian calls in Mundra, instead of multiple port calls, is becoming an industry strategy to maximise cargo volumes.

That consolidation has seen many sailings on MSC’s premier routings under its US East Coast and Europe networks skipping Nhava Sheva/Jawaharlal Nehru Port Trust (JNPT) in recent weeks.

MSC’s ‘own-terminal advantage’ in Mundra enables quicker vessel turnarounds and tariff benefits, which are critical factors in the current flawed scenario.

On a normal schedule, the INDUSA rotates Mundra, Nhava Sheva, Colombo, Valencia, New York, Savannah, Norfolk and Mundra.

MSC’s India-Europe connections have also missed or are due to miss Nhava Sheva calls, while IPAK’s third Indian port call at Hazira has also been disrupted.

With schedule disruptions set to persist, Indian exporters have a harder time shipping goods out of the country, even though empty container availability has expanded substantially, with empty imports via Nhava Sheva up 20% (Dec to Feb) and 78,000 teu of empties landing in Chennai between April 2021 and February 2022.

Growing transhipment delays at Colombo Port in Sri Lanka, as a consequence of the economic and political crisis and capacity strains from new COVID lockdowns in China, add even more pressure to market conditions for Indian shippers.

Increasingly, shipments that would typically take a two to four-week window from booking to sailing are now taking up to six to eight weeks, across all lanes into Europe and The USA – and then there is the potential dwell time on arrival at congested destination ports to also contend with and consider within the logistics equation.

We have also been cautioned by our local partners about truck shortages increasing in Colombo for inter-terminal transfer operations, with the potential to cause delays to loading vessels, and with inventory levels increasing, if the delay in the supply of fuel for trailers to the port increases, delays will creep in for the vessels too.

Our network and expertise extend across the Indian subcontinent, with customers across a variety of verticals sourcing from and exporting to the region. We have established operations throughout Pakistan, India, Sri Lanka and Bangladesh and will always offer the most reliable options available within each market.

We are monitoring the evolving situation closely with our local network partners, so if you are currently shipping, or are thinking of developing the ISC, please speak to Elliot Carlile, who will be delighted to offer guidance and recommendations on the best solutions for your needs.

Category: Sea

China | Coronavirus | Sea | Supply Chain

Latest News in this category