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Market Situation - Container flows - update IX

Jun 2021
8 minutes
Update 9 – following earlier blog posts. In order to keep some overview, we try to break it down into several segments covering different areas worldwide. Although not all trades are in the report, similar tendencies apply.

 

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 affected the hardest due to a severe drop in workforces because of many ill longshoremen and logistical workers. Due to this decrease in available workforces, many shipping lines have diverted cargo to neighboring ports (Shekou and Chiwan). The problems are however also expanding to these ports in the meantime and even further outside of the Shenzhen area to the Guangdong province with Nansha as the main container port.

In all affected areas the corona contaminations are on the rise reducing the container movements in and out the ports. The lead time to move cargo over the terminals in or out 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 on 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 linked road congestion caused by queued trucks 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 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 only in Yantian has already exceeded this number.

The container movements in Yantian have been reduced by 70%. Based on historical figures, this causes +25.000 TEU not to move in or out of the terminal per day. At a delay of 14 days and more, this number will be close to 400.000 TEU of blocked containers. Keep in mind this is not even considering Shekou, Nansha, and other neighboring ports in the area.

 

North Africa

*Important Notification -- Egypt*

As from sailing date 01/07, 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 an ACID number (19 digits) within 48 hours upon his request. The ACID needs to be shared with the foreign exporter (the shipper) and needs to be mentioned on all documentation (B/L, invoice, packing list, Cert of origin, ….).

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.

The carrier will send 24hours before departure of the vessel 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 nr. is not included in the shipping documents, cargo will be refused and will be returned to origin without unloading in any Egyptian port!
  • Without the ACID number (from Nafeza) and registration by the exporter with reg. nr (from CargoX), the cargo will not be loaded onboard.
  • Please consider the same procedure for containerized cargo, breakbulk, 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, in combination with the lack of return cargo, have pushed many shipping lines to reduce their normal capacity to West Africa. The shipping lines simply rather 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 and this has resulted in increased pricing.

 

Oceania

On 1 June 2021, Australia will cease its measures for the brown marmorated stink bug (BMSB) risk season. Goods shipped or vessels departing from BMSB identified target risk countries on or after 1 May 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 is their responsibility to continue to ensure that any goods imported, are free of biosecurity risk material throughout the year.

For more info, you can always consult your normal contact with Manuport or check the webpage of the Australian Government.
(
https://www.agriculture.gov.au/import/before/brown-marmorated-stink-bugs)

 

Europe

In many other European countries, the corona measures are being relieved more and more, causing extra volumes to move to these countries. Mainly retail products and fast-moving consumer goods are on the rise. With the increase of volumes and the issues in South China due to Covid, the container rates from Asia to Europe are being pushed to a fresh 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 to relieve the backlog which was not getting under control.

 

North America

The trades going to the Northern part of the American continent continue to have high filling rates. From Asia volumes towards the USA 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 many importers to divert to other ports in Canada and to Northern ports in the US.

Several shipping lines have announced to implement a heavyweight surcharge (HWS or OWS) from 18 tons for cargo destined to the US. 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 triaxle most likely will result in an easier finding of suitable inland haulers in the USA. An additional effect is a maximization of the TEU utilization instead of being maxed on weight on the vessels.

Next to the weight limitations on the US, the Saint Lawrence River water level has decreased strongly resulting in draft restrictions invoked by the Canadian authorities as from June 15th. This additional capacity restriction will result in 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 USA.

 

Latin America

Following the civil unrest in Colombia and especially the area around Buenaventura, local consignees cannot pick up their cargo, which leads to congestion in the container yard. Nearly all vessels omit Buenaventura until further notice. This logically results in a booking stop for all Buenaventura shipments with immediate effect.

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

The port of Buenos Aires keeps facing 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 still are the increased volumes on the Asia-Pacific and Asia-Europe trade. Traditionally ex Asia the majority moves in 40’ or 45’ containers and return cargo is mainly moving in 20-foot containers. Also 40-foot non-operating reefer as an alternative for 40’ dry equipment is insufficient available. Most of this equipment type is moving from and to Latin America on trades with, relatively, shorter 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, 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.

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