Asia | US news digest. 11 June
It is not a pretty sight at Yantian Port: backed up vessels, box shortages and continuous delays – companies brace up for another week of congestion.
The recent outbreak at Yantian Port has caused a jam of the principal goods highway – numerous vessels are now backed up in the South China Sea, while others have sought alternatives in western Shenzhen, Hong Kong, and Nansha. The ports have been hit with a devastating box shortage. The increased congestion and vessel delays upwards of 16 days will follow in Yantian port. Road congestion is also expected, meaning that the situation continues to deteriorate. Meanwhile, the Singaporean carrier has decided to apply a congestion surcharge of $1,000 per container to cover additional costs related to the unexpected but necessary arrangement of shipments and associated plug-in charges and monitoring fees. If a change of destination (COD) is requested to discharge inbound reefers from Yantian to other alternative ports, CGD and COD administration fees can be waived. This measure is effective immediately for all reefer cargo arriving into Yantian from 10 June 2021 onwards, and for regulated trades. According to the data, there are now more than 300 containerships waiting for berth spaces to open up around the world. The new COVID-19 outbreak has forced the government to impose new sanitary measures that complicate transportation processes: the port of Nansha now requires a negative test within 48 hours of gaining entry, and at the same time, Yantian will not allow a driver who has been to Nansha to come into their terminal.
The high rates have brought up the new players seeking opportunities for expansion. BAL Container Line has become the latest entrant into the Transpacific and Asia-Europe lanes. Facing the high costs and equipment shortages, the company has decided to use its ships to increase the capacity of China-Europe routes to satisfy the growing demand.
Meanwhile, the PTC Holding Group of Companies aims to develop a multifunctional zone that will also include an industrial area and a dry port. So far, the first stage of the initiative has been completed – a new transshipment terminal on the Kazakh-Chinese border started operating last week. It will undergo several expansion – the target goal is to enable its capacity of 700 thousand TEUs. It is the busiest point along the New Silk Road, so the new terminal, will have an ancillary role for better traffic management.
The lack of capacity affects air cargo as well. It continues to result in elevated rates with prices from Hong Kong to the U.S. reaching $8.07/kg as of Monday, June 7. However, as air cargo volume was up 41% YoY in May, it showed slight signs of recovery. The experts warn that it was still down 4% compared to May 2019, suggesting the market has room to grow to retain its pre-pandemic operating levels. A relatively positive dynamic finds its reflection in air companies expanding their stuff’s capacity – Aero Africa has welcomed two specialists to its management team in China and southern Africa.
The U.S. supply chains are no exception when it comes to failing to meet the soaring demand. Recent data has demonstrated that the country’s ports saw record traffic in April 2021 – the biggest gateways in the US handled was approximately 2.15 million TEU. The update for May is not available yet, but some forecasts predict that US ports will carry 2.32 million TEU, which would be a 51.1% YoY increase and beath April’s monthly record. South Carolina Ports (SC Ports) has had yet another record month for containers handled at the Port of Charleston, marking the third consecutive month of record volumes – the increase of 36%. The Port of Long Beach moves half of all of its cargo by rail in the long-term future, following the announcement of $1 billion in on-dock rail investment for the next 10 years.
The Global Shippers’ Forum has used the current disruption in supply chains to renew its call for the removal of the consortia block exemption regulation. There is a predominant opinion that if rates and costs were the product of fair competition, the overall transparency of the industry would significantly increase as well as confidence in the market. It is possible to achieve this through the development of specific agreements between the lines, which are regulated and reviewed. In turn, South Korea’s anti-trust authority has slapped penalties on 23 liner operators for colluding to fix freight ratesas a part of their anti-monopoly agenda, proving that the industry is indeed concerned with the aforementioned problem. HMM, SM Merchant Marine (SM Line), Sinokor Merchant Marine, and Pan Ocean are among the 23 errant companies.
DP World UAE Region has announced it will build on its support and partnership with Chinese companies to boost trade between the region and China and strengthen its presence. The project takes place under the Belt & Road Initiative (BRI). The market will give traders and businesses access to discounts with minimized supply chain costs and turnaround times.
The International Maritime Organization (IMO) environmental meeting took place on June 11, with a row between Japan and its neighbors over the dumping of contaminated water into the ocean. It comes from the Fukushima Nuclear Power Station, damaged in the 2011 tsunami.
