Market situation – container flows – update IX

Asia

The second corona wave which is hitting the Shenzhen area is severely impacting the equipment levels and congestion in surrounding ports. Yantian is being hardest hit due to a severe drop in the workforce because of many ill longshoremen and logistical workers. Due to this decrease in the available workforce, many shipping lines have diverted cargo to neighboring ports (Shekou and Chiwan). However, in the meantime the problems are also expanding to these ports, and even further outside of the Shenzhen area to the Guangdong province, with Nansha as the main container port.

In all affected areas, coronavirus infections are on the rise, reducing the container movements in and out of the ports. The lead time to move cargo in and out through the terminals has drastically increased. The delay is currently estimated at above 14 days. In Yantian, some of the yards face a density of above 90%, reducing the efficiency of the throughput even further.

To prevent extra congestion at the terminals, like what we have seen in Europe, the Chinese ports are reducing pick up and drop off times to prevent idle equipment on the quay, and associated road congestion caused by trucks queuing in and around the port areas.

Because of the various delays, Chinese exporters are struggling to ship goods from 'second-tier' ports, as shipping lines tend to skip certain calls and curtail direct calls to improve schedule reliability. When reading 'second-tier', you might automatically think this will only affect smaller ports. In practice, however, carriers are dropping calls at Qingdao, Xingang/Tianjin, and Ningbo as congestion at the terminals builds, and container services suffer delays.

The congestion in these key areas in China is generating an extra bottleneck and shipping experts are stating that this will have a bigger effect than the recently blocked Suez Canal. Lars Jensen, from Vespucci Maritime, has calculated the blockage by the ‘Ever Given’ at 55,000 TEU per day for 6 days, meaning 330,000 TEU delayed. The number of idle containers has already exceeded this number in Yantian alone.

The container movements in Yantian have been reduced by 70%. Based on historical figures, this means over 25,000 TEU not moving in or out of the terminal per day. At a delay of 14 days or more, this number will be close to 400,000 TEU of blocked containers. And bear in mind this is not even considering Shekou, Nansha, and other neighboring ports in the area.

North Africa

Important Notification – Egypt

From sailing date July 1, the Egyptian Customs Authorities will implement a new system for “Advanced Cargo Information (ACI)”. This system aims to prevent potential risks related to the release of import goods.

Importers are obliged to register all related data through an online portal (Nafeza) prior to sailing. This system will create a 19-digit ACID (ACI Declaration) number within 48 hours of request. The ACID number needs to be shared with the foreign exporter (the shipper) and must be mentioned on all documentation (B/L, invoice, packing list, cert of origin, etc.).

The exporter needs to register at Cargo X (https://cargox.io). This platform is used by the exporter to upload all data and documents for each individual shipment at the time of departure. Once submitted, the Egyptian importer will review and approve the data and documents. If approval is given, the importer can apply for pre-clearance processing.

24 hours before departure of the vessel, the carrier will send the electronic cargo manifest for all cargo destined for Egypt. No later than 48 hours before arrival in Egypt, the local shipping agent submits the final cargo manifest via the Nafeza platform.

Keynotes:

• If the ACID and export registration no. are not included in the shipping documents, the cargo will be refused and will be returned to origin without unloading in any Egyptian port!

• Without the ACID number (from Nafeza) and exporter registration number (from CargoX), the cargo will not be loaded on board.

• The same applies for containerized cargo, break-bulk, and LCL.

• The ACID number has a validity of 3 months to execute the shipment.

West Africa

As most shipping lines are optimizing the turnaround of the containers, the cargo destined for the African continent and especially to the West Coast has become less attractive for the shipping lines. The traditional high idle times due to congestion in ports and linked free times, combined with the lack of return cargo, have pushed many shipping lines to reduce their normal capacity to West Africa. The shipping lines simply want to position their containers to Asia to benefit from the high pricing on these markets. Niche carriers not active on the Asian markets are being overrun with cargo because the global carriers are temporarily stepping away from West Africa. This has resulted in increased pricing.

Oceania

On June 1, 2021, Australia will cease its measures for the Brown Marmorated Stink Bug (BMSB) risk season. Goods shipped or vessels departing from identified BMSB-risk countries on or after May 1, 2021, will no longer be subject to the BMSB seasonal measures including the Seasonal Pest Inspection (SPI) on arrival. Importers are however reminded that it remains their responsibility to ensure that any goods imported are free of biosecurity risk material throughout the year. For more information, you can always consult with your normal Manuport contact, or check the webpage of the Australian Government

(

https://www.agriculture.gov.au/import/before/brown-marmorated-stink-bugs)

Europe

In many European countries, the coronavirus measures are being relaxed more and more, causing extra volumes to move to these countries. It is mainly retail products and fast-moving consumer goods on the rise. With the increase of volumes and the issues in South China due to COVID-19, the container rates from Asia to Europe are being pushed to a new all-time high. As the market and demand remain firm through to July, further rate increases are expected. The congestion in the Port of Hamburg has resulted in shipping lines diverting cargo via Bremerhaven. This is to relieve the backlog, which was not being brought under control.

North America

The trades going to the northern part of the American continent continue to have high filling rates. From Asia, volumes toward the U.S. remain very strong and there are no signals that this market will cool down any time soon. The main driver is a similar effect as on the Asia–Europe trade, with fast-moving consumer goods being massively imported.

As an additional factor, the strike in Montreal has created a severe backlog and has caused a lot of equipment to divert to other ports in Canada and to northern ports in the U.S.

Several shipping lines have announced the introduction of a heavyweight surcharge (HWS or OWS) from 18 tons for cargo destined for the U.S. By doing this, the shipping lines hope to reduce the need for tri-axle chassis, possibly resulting in a faster transport solution and thus less idle time of the containers on and off the quay. Not requiring a tri-axle should make it easier to find suitable inland haulers in the U.S. An additional effect is a maximization of the TEU utilization, instead of being maxed on weight on the vessels.

Next to the weight limitations in the U.S., the Saint Lawrence River water level has dropped dramatic, resulting in draft restrictions invoked by the Canadian authorities from June 15. This additional capacity restriction will lead to higher costs per slot on the vessels. To compensate for this, the shipping lines will implement a low water surcharge (LWS). This surcharge will apply to all cargo moving via the Saint Lawrence River – also cargo destined for the United States.

Latin America

Following the civil unrest in Colombia, especially in the area around Buenaventura, local consignees cannot pick up their cargo, which has led to congestion in the container yard. Nearly all vessels are omitting Buenaventura until further notice. This has logically resulted in a stop on bookings for all Buenaventura shipments with immediate effect.

Depending on the shipping lines, the actions taken will be different. Some will re-route cargo, while others will drop the cargo at other ports, be it neighboring or transshipment ports.

The Port of Buenos Aires continues to face tremendous delays because of an earlier strike. The backlog of both import and export containers is putting high pressure on inland connections and container availability.

It seems the effect of equipment shortages is worsening for the entire region as we are getting signals from Brazil that the equipment availability has hit its worst point so far. Shipping lines are very reluctant to release containers as they prefer to ship them empty to Asia.

General

Equipment shortages remain an industry-wide challenge. The main drivers remain the increased volumes on the Asia–Pacific and Asia–Europe trades. Traditionally, ex Asia, the majority moves in 40’ or 45’ containers and return cargo is mainly moved in 20’ containers. Additionally, there is insufficient availability of 40’ non-operating reefers as an alternative to 40’ dry equipment. Most of this equipment type is moving from and to Latin America on trades with relatively short transit times.

This is causing the wrong equipment types to be present in the ‘wrong’ areas. Accurate forecasting and advance booking remain a necessity in the current market. This is not only limited to volumes ex Asia, although this region is suffering the hardest. Ex Asia, several rate increases are expected over the weeks to come.