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Global freighter congestion, the shipping industry is facing its biggest dilemma in 65 years

Under the impact of the new crown pneumonia epidemic, the disadvantages of backward port infrastructure have been highlighted, and the global shipping industry is facing its biggest dilemma in 65 years. There are currently more than 350 freighters in the world that are jammed at ports, causing delays in delivery and rising prices of goods.

According to the latest data from the signal platform of the Port of Los Angeles on the 16th, there are currently 22 container ships waiting at the Southern California anchorage, 9 ships waiting outside the port, and the total number of waiting ships reaching 31. The ships have to wait at least 12 days to stop. Anchor and unload the cargo on the ship, and then transport them to factories, warehouses and shops across the United States.

According to Vessels Value’s AIS data, there are about 50 container ships berthed near Ningbo-Zhoushan Port.
According to the latest data on the 16th of the German Seaexplorer ship monitoring platform, as many ports on all continents are facing operational interruptions, there are currently 346 freighters trapped outside the ports in the world, more than twice the number earlier this year. Shipping problems caused stock shortages and delayed deliveries. When ships were jammed at sea, there was a gradual shortage of various types of inventory on shore, causing prices to rise. This situation was prominently reflected in the “e-commerce logistics” during the epidemic.

At the same time, port congestion in Asia, Europe, and the United States has severely affected the carrier’s services. As ships are parked at anchorages waiting to load and unload cargo, the available capacity is reduced.

One of the biggest causes of global freight congestion is the border control of various countries during the epidemic and the forced shutdown of many factories, which jeopardizes the smoothness of the entire supply chain and causes the freight rates of major maritime transport routes to soar. Due to the shortage of containers in sea port congestion, the freight rate of container ships continues to rise. The freight rate from China to the United States is about US$20,000 per FEU (40-foot container), and the freight rate from China to Europe is between US$12,000 and US$16,000.

Experts in the industry believe that European routes have reached the limit of shippers’ tolerance, and the space is limited. North American routes are expected to continue to rise due to the continued high demand and the lack of containers and spaces. As the port plug problem may be difficult to alleviate in the fourth quarter, the high freight rate is expected to continue until next year before the Chinese New Year.

In addition, the long-standing problem of insufficient supporting facilities for port infrastructure has also been exposed. Before the epidemic broke out, ports were under pressure to upgrade their infrastructure, such as automated operations, decarbonized logistics, and construction of facilities that can cope with larger and larger ships.

Relevant agencies said that the port urgently needs investment. In the past year, the port infrastructure has been overwhelmed.
Soren Toft, CEO of MSC, the world’s second-largest container shipping company, said that the industry’s current problems did not emerge overnight.

In the past few decades, in order to reduce transportation costs with economies of scale, freighters have become larger and larger, and deeper docks and larger cranes have also been required. Taking a new crane as an example, it takes 18 months from order to installation. Therefore, it is difficult for the port to respond quickly to changes in demand.

Mooney, deputy director of IHS Markit’s maritime and trade department, believes that some ports may have long been “below the standard” and cannot accommodate new giant ships. Emerging markets such as Bangladesh and the Philippines always had port congestion before the epidemic. Mooney said that improving infrastructure can only solve some of the problems, and the epidemic also highlights the need to strengthen coordination, exchange of information, and digitization of the overall supply chain.


Post time: Aug-20-2021

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