Market situation – container flows – JAN/FEB

Update February 2022 These past weeks have been very intense, not only in the maritime industry but also geopolitically. Therefore, we opted to postpone our market update of January to combine with the update of February. In order to provide a clear overview, we have broken down the market into several segments covering different areas worldwide. Although not all trades are in the report, similar trends apply. If you require more detailed info on specific trade you can always reach out to your Manuport contact.

Black Sea & Ukraine situation update

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Asia

Although the rates are still a lot higher compared to ‘pre-pandemic’, we are noticing that the market is cooling down somewhat ex Asia. This is seen by a slight decrease in different trades.

However, this Omicron variant is raising more concerns for ships that are calling at Chinese ports, as it has proven to be very contagious. For crews, the very strict quarantine requirements are delaying the supply chain and are only adding instability to the already unstable shipping industry. Ship managers say the problem has been manageable so far, though a sustained jump in cases will add pressure to supply chains as many ports still have long lines of cargo ships waiting, while a shortage of workers and drivers are adding to the snarls.

Vessels calling at Chinese ports must be free of COVID-19 for at least three weeks. On top of that, crew changes in China are still nearly impossible for foreign seafarers. The Chinese government seems to be keen on eradicating COVID-19 while the rest of the world resolves to live with it. According to data from project44 (a supply chain visibility platform), average shipment delays from China to the U.S. West Coast were 114% longer in 2021 than 2020. The route to Europe recorded a 172% surge.

Europe

The issues in the U.K. remain. The reduced labor force due to COVID-19 is delaying and limiting port operations in the terminals, as in any other ports, but additionally congestion at U.K. ports remains extremely high, making it difficult for carriers to fully carry out their operations. This results in a lower number of units making intended sailings or arrivals. The recent storms and bad weather across Europe have of course only worsened the situation. With the passing of the 3 storms (Eunice, Franklin and Dudley) over a major part of Europe, the overall situation at terminals and on inland connections has not improved for obvious reasons. The heavy winds made port operations close to impossible as several vessels got knocked adrift and port cranes needed to shut down for safety reasons. In Eastern Europe, the rail connections faced some delays due to debris on the tracks, and cut power lines due to trees and branches that fell on the cables. The most recent reports, however, state that the majority of operators are back operating their normal schedule.

North America

Throughout the pandemic, the U.S. market has proven to be a challenge, with the problems on the islands that have only gotten more intense. Seeing as the port congestion in the major U.S. port gateways has triggered a rare intervention by the White House, the problems are still not resolved. The Federal Office has agreed on a $1.2 trillion bipartisan bill to upgrade the overall port infrastructures and inland connections.

At its core, the current crisis, with ships waiting offshore for berths at multiple U.S. ports, is the result of those containers remaining at the terminal. The ports of Los Angeles and Long Beach have threatened to charge a fee for containers sitting on the docks for longer than nine days. On the East Coast, federally supported “pop-up” yards in Georgia have enabled containers to be relocated from the Port of Savannah to near-dock locations. These additional yards could be a promising longer-term solution, especially if these locations can be kept as ‘reserve’ so they can be activated only during surge periods.

On February 16, we got the following ‘snapshot’ of the vessel count at the top 6 U.S. Ocean ports

As the contract negotiations for the longshoremen the U.S are nearing, delegates from the International Longshore and Warehouse Union (ILWU) gathered at the beginning of February to discuss the strategy, ahead of what is expected to be contentious contract negotiations. The major issue is the automation at West Coast ports. For the unions, the automation of cargo-handling equipment would translate directly to job losses on the docks. On the other hand, automation will also create new types of jobs at container terminals, such as in computer programming. The ILWU has insisted that any new jobs fall under the union’s jurisdiction and that employers train their members for those positions. The ILWU will likely leverage today’s strong cargo volumes and supply chain bottlenecks as the July 1 expiration of the current contract draws closer. Last year, the West Coast ports handled record cargo volumes despite unprecedented supply chain disruptions. Both parties acknowledge that work slowdowns this summer, if a contract is not concluded by July 1, would cripple the already congested West Coast ports and would be devastating for retailers and the U.S. economy.