Asia | US news digest. 24 June
With Yantian’s congestion gone, the industry will have to seek an antidote for recovery and the search might take weeks to say the least.
The storm of congestion above Yantian is about to pass after a month-long cut in productivity, however, it is too early to celebrate the release as the aftermath of it has caused such damage that shippers have been warned that it will take many weeks to clear up the immense container backlog. The schedule reliability remains compromised despite the diminishing queue as well. The most challenging part of recovery regards moving the boxes around inside the clogged-up port perimeter and getting ships to berth. On the global scale, the ports will still struggle, meanwhile there is a premise for the Chinese ports to recover sooner — despite the severe fluctuations in container volumes since the beginning of COVID-19, four of the seven ports in the recent reports saw double-digit growth, indicating that the country’s maritime sector is robust. Shenzhen was the best performing port with growth of 29.3%.
The negative effect of the port blockage has resulted in a sharp increase in double sailings. It is the situation when two or more vessels are sailing within the same week on the same service string. It would not have been such a problem under normal market conditions, as such shifts would be of limited impact on the industry, but now due to the mass spread of the congestion, ports do not have buffers that would mitigate the risk. Consequently, spot rates are also expected to rise further on Asia-Europe services. According to experts, there are more blank sailings coming up in June-July and no improvement in equipment status. This most definitely explains why the National Retail Federation actively calls for a meeting with Joe Biden. The House Coast Guard and Maritime Transportation subcommittee will examine the impact of shipping container shortages. However, regardless of plans by Democrats or Republicans, US ports and inland waterways are due for just $17bn in spending under proposals by each of the two parties. That $17bn is a fraction of what ports alone need, so even bigger investments are needed urgently.
The forecasts do not predict any normality till the second quarter of 2022 at the earliest. The reason for it is that apart from inventories being pulled down by strong consumer spending combined, there are problems on both transportation and production sides. The retailers simply have neither the inventory they want, nor the possibility to place orders. The USA, for example, will need to add a lot of warehouse space dedicated to online fulfillment by 2025 in order to keep pace with the expected uptick in e-commerce sales.
One more obstacle has appeared on the way. In Shanghai, authorities have suspended the land transport of containerised non-essential dangerous goods after two recent fires in the port. They started when a reefer spontaneously combusted as it was being loaded onto a vessel.
The final accord of Ever Given deal has been struck. The agreement in principle has been reached over a compensation claim between the SCA and the owners of the ship. The deal follows a recently increased offer from Shoei Kisen to free the ship after an initial offer of $150m.
Meanwhile, Port Houston’s volumes have demonstrated a significant increase by 30% year-over-year in May. It has been driven by the new direct trans-Pacific Asian service and resulted in 288,127 TEUs. In turn, Port of Oakland awaits delivery of a new STS crane. It will improve cargo operations at the Everport marine terminal, run by Everport Terminal Services.
The Busan Port Authority aims at strengthening the logistics competitiveness of the domestic companies by signing a memorandum of understanding with KIFFA. It intends to help local companies enter overseas markets.
