Business

Ports face biggest crisis since start of container shipping

Ports have always faced delays due to waves, fog and storms, but the pandemic has caused the greatest disruption since the start of container shipping 65 years ago.

“The Covid-19 pandemic has highlighted the urgent need for investment in the port,” said John Manners-Bell, CEO of consultancy Transport Intelligence. “Over the past year, the entire port infrastructure system has been overwhelmed.”

According to real-time data from logistics company Kuehne + Nagel, there are currently 353 container ships stacked outside ports around the world, more than doubling earlier this year.

In some cases, such as the Ports of Los Angeles and Long Beach in the United States, where 22 vessels are currently awaiting berth, it can take up to 12 days for vessels to anchor, unload containers and distribute them. For factories, warehouses, shops and homes throughout the United States.

When the pandemic-led boom in online shopping increased demand for overnight deliveries, logjam caused inventory shortages and delivery delays, raising prices and frustrating consumers.

Covid-19 border restrictions, distance requirements, and factory closures all disrupted traditional supply chains and boosted fares on major transportation routes between China, the United States, and Europe.

Even before the pandemic, ports were forced to upgrade their infrastructure, including automation of operations, decarbonization of logistics, and the construction of facilities to accommodate the new generation of large vessels.

“It’s not correct to say that there was no problem before the cargo flooded,” said Soren Toft, CEO of MSC, the world’s second largest containership group. “The port facilities are old and have limited capacity. [and] There was a limit to the ability to accommodate an ever-increasing size of ships. “

Shipping groups such as AP Moller-Maersk in Denmark, MSC in Switzerland-Italy, Hapag-Lloyd in Germany and CMA CGM in France, the world’s largest container shipping companies, have products on time because the containers are stuck at sea. I’m having a hard time delivering.

Ship stuck in the sea

Some ships are stuck at sea because they are waiting for access to the port © Bing Guan / Bloomberg

The turmoil is exacerbated by new, larger vessels that have grown enormous over decades, as owners are targeting economies of scale to reduce transportation costs.

The largest ships can carry up to 20,000 20-foot containers at a time, and when loaded onto a truck, they extend farther in the highway lane than the distance between Paris and Amsterdam. However, infrastructure changes such as deeper docks and larger cranes are also required.

Delivering new infrastructure takes time. Even with a crane, it takes 18 months from ordering to installation, so it is difficult to respond quickly to changes in demand.

Turloch Mooney, Associate Director of Maritime and Trade at IHS Markit, said some ports were “substandard” and may not have been able to adapt to new large vessels, especially in chronic emerging markets such as Bangladesh and the Philippines. Said. Crowded even before the pandemic.

For example, the terminal yard layout may not be configured to accommodate sudden increases in throughput, he said.

But infrastructure improvements were only part of the story, he added. He said the pandemic highlighted the need for greater coordination, information exchange and digitization throughout the supply chain.

Large container ship

Largest ships can carry up to 20,000 20-foot containers at a time, but require deeper docks and larger cranes © David Gray / Bloomberg

In some cases, productivity is hindered by social distance, but can be improved. In North America, the average time spent waiting for anchors for container ships to berth jumped to 33 hours in May, compared to just 8 hours in 2019, according to IHS Markit port performance data. rice field.

Larger vessels aim to save owners’ costs, but that also means that the port receives fewer calls, which weighs on their returns.

Pandemics have forced more pressure, higher costs and margins, forcing some ports to cut headcount and reduce spending by promoting automation.

Shyamali Rajivan, Director of Infrastructure and Project Finance at Fitch Ratings, said: “But it would be interesting to see if it is sustainable.”

Others argue that it is unfair to blame the port for problems that arose during the crisis. The problem was exacerbated by the stranded one of the world’s largest ships. Suez Canal At the beginning of the year.

“Currently, every part of the supply chain is at its limit,” says Manners-Bell. “You can’t blame a freight carrier, carrier, or shipping company. Even small changes in demand can have a significant impact further down the supply chain.”

Some shipping companies handle the problem on their own and invest in ports to give priority to their vessels.

In the latest example, HHLA, a terminal operator in Hamburg, said it is in talks with Cosco Shipping Ports, a subsidiary of the broader Chinese shipping conglomerate, over a minority stake.

Gabrielle Dale of Macquarie Asset Management, a port investor, said the shipping group has become a “partner in planning and investing in terminal infrastructure to meet demand.”

In the UK, where most ports are wholly owned by the private sector, operators say the government needs to help the industry to achieve its ambitious Net Zero goals. This includes wharf uplift and improved flood protection, dock charging, and allows cruise ships moored by thousands of passengers to convert from diesel power.

“There is no business case for ports to make this investment, and the government needs to fund it to make it feasible,” said Mark Simmons, policy director for the British Port Association’s trade association. increase.

But perhaps the biggest question is how ports adapt to changes in consumer demand after a pandemic.

“The demand for next-day delivery has changed the way shippers choose ports. If it becomes a disadvantage after a pandemic, it can change again,” said a container shipping expert. Mark Levinson said.

Ports face biggest crisis since start of container shipping Source link Ports face biggest crisis since start of container shipping

Related Articles

Back to top button