Port Congestion to Continue Through End of Year

Shipping line Maersk has provided a market update on the challenging global logistics situation, saying that port congestion and supply chain bottlenecks persist through year-end. China’s October Golden Week, Christmas and Chinese New Year will bolster strong demand for container shipping for the last quarter of 2021. But port congestion, especially in the U.S. and Europe, and service delays are expected to create headwinds for service schedules. Maersk says extra loaders (additional ships) and ad hoc port omissions will be implemented to help improve schedule reliability. Meanwhile, inventory levels in Europe and the U.S. remain at their lowest levels on record, leading to stockouts on some products. This means even once retail demand declines, and we will see cargo volumes continue to remain strong as inventory levels need to be rebuilt, Maersk said. Global container demand growth is projected at 6%-8% in 2021, reflecting strong first-half and ongoing demand strength in the U.S. and partly in Europe. While container demand growth has run ahead of supply growth since the second half of 2020, the true drivers of high freight rates are congestions in ports and supply-chain bottlenecks, Maersk says. Vessel waiting time at ports has increased, requiring more ships per string to lift the same cargo volume. Waiting times rose at Los Angeles and Long Beach ports, with over 70 vessels anchored in mid-September. Covid-19 has also led to shutdowns that have delayed vessels from Asia. Warehousing capacity has also been reduced due to port and landside congestion, while returning empty containers to Asia remains challenging. “Maersk has taken many actions to redirect flows back to Asia to ensure we have equipment supply. Despite this, equipment turn-round times continue to increase driven by landside and seaborne delays,” says Maersk. To address capacity and equipment shortages, Maersk says it has taken measures to alleviate this by rationalizing its schedules and repositioning empty containers. The company has also tripled the number of dry freight containers in its fleet during the last few months to support customers’ export requirements. “However, In-fleeting of new containers alone is no longer sufficient to meet overall demand, so it remains critically important that import containers are turned around as quickly as possible,” Maersk said. In Vietnam, hundreds of factories have remained closed under COVID-19 lockdown rules, with many expected to reopen from early October as local restrictions are lifted.