European container port congestion predicted for Spring 2022 17/02/22

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The market for shipping general cargo in containers is uphill again



Author: Piotr Stefaniak 2022/02/17

Freight forwarders should prepare in the second quarter for further obstacles to the transport of goods in containers by sea. These are the conclusions of several assessments by analysts from container shipping around the world.

photo: Pixabay

The Danish research firm Sea-Intelligence predicts that the number of container ships scheduled to deliver cargo from Asia to North America and Europe will increase in March and April, which will increase port congestion on both sides of these routes. According to SI estimates, it is expected to drop 40 percent in March and April. more ships carrying loads to US western ports only, compared to "the average number in the pre-pandemic period".

Equally important, the larger fleet bound for the US has far more small vessels than before. Until a few months earlier, they were used for coastal shipping, but when the freight rates rose last year. - and remain at a high level - it has become profitable to exploit them also on trans-ocean routes. They are used not only by the largest shipping lines, but also by small ones or those specializing in, for example, the trans-Asian market.

This will be an additional reason (in addition to the greater number of ships dispatched) that will lead to a possible increase in congestion at loading and unloading ports. As Alan Murphy, CEO of Sea-Intelligence comments, handling two 5000 TEU ships in the port is less effective than handling one 10,000 TEU ship (neopanamax class), not to mention mega ships (ULCV) with a capacity of 18- 24 thousand TEU.

Ship delays are increasing

Meanwhile, the congestion trend is still negative. As Alphaliner reports, despite an overall decline in the number of ships waiting to dock in Los Angeles / Long Beach - from a peak of 109 on January 9 to "just" 76 earlier this week - transit times from Asia to these twin ports have increased on average to 38 days, compared with the 28 days recorded in mid-November (and less than 20 before the pandemic). The punctuality rates of container ships on the Asia - Northern Europe route have not improved since the beginning of November. Ships taking between 14,000 and 24,000 TEU still require an average of 17 days more than their pro forma schedules, Alphaliner estimates.

Delays in Asia

These problems are also confirmed by the American project44 platform. Its data also indicate that the problem of port congestion is increasingly shifting to Asia, i.e. the place of shipment. This is attributed not so much to the accumulation of goods not shipped during the Lunar New Year period, but to the new Covid-19 outbreaks in Asia, and especially in China, causing absenteeism of port and land transport workers. From December to January, Asian ports saw an increase in the average waiting of ships to moor from 13 days to 16.7 days. The largest increase was recorded by the port of Hong Kong, from an average of 17.5 days in December to 22.5 days in January.

“While the ocean freight market is likely to see a slight lull in February, we expect demand to pick up again as production facilities reopen. The potential for further port congestion is likely in the coming month as US retailers and other shippers replenish and increase safety stocks, ”suggests project44.

Other dangers

If the above scenarios of increased congestion in ports and delayed container ships are fulfilled, a further increase in sea freight rates can also be expected. In the SCFI quotations, they decreased after their peak, which they reached on January 7 this year. (average ratio of 5,109.6 USD / TEU, on the route from Shanghai - Northern European ports 7,777 USD / TEU) inclusive until February 11 (respectively: 4,980.9 and 7,676 USD / TEU). The Drewry's index for the Shanghai - Rotterdam route decreased from the level of + USD 14,053 / FEU reached on January 22 this year. up to 13,622 USD / FEU 17 bm. A return to the upward trend in transport costs may therefore take place as early as next week