Container cargo accumulations at ports increase

The situation could continue for months to come.

shipping containers stacked

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The COVID-19 pandemic has led to an accumulation of cargo at warehouses, port terminals and inland depots, either in containers or removed from the transport units, as consumer demand and manufacturing production slow in many parts of the world.

The current pandemic has disrupted global supply chains particularly because of the lag in its effects between the large-scale sourcing regions of China and other parts of Asia and the consuming markets of Europe and North America. This has caused goods produced in the former regions but not now required in the later to build up, says TT Club, an international freight and logistics insurer that is based in Sydney, with regional head offices in London, Hong Kong and Jersey City, New Jersey.

These accumulations include cargo in containers at transhipment and destination port terminals, as well as import consignments that have been delivered to warehouses and distribution centers (DC). These are primarily nonessential products or supplies for production lines that are either static or at reduced capacity, TT Club says.

In the U.K., for instance, the latest estimates are that 90 percent of the country’s warehouse capacity is full, with the UK Warehousing Association (UKWA) forecasting no available space by two weeks’ time.

TT Club says such bottlenecks in the supply chain through the lack of demand for goods may be temporary as diminishing orders start to affect the flow through. However, some port terminal operators, along with their ocean carrier customers, are attempting to help importers by delaying delivery and/or providing temporary storage for containers.

A recent survey by the International Association of Ports & Harbors (IAPH), Tokyo, shows a mixed picture at ports around the world. “Thirty-five percent of ports reported an increase in utilization of warehousing and distribution facilities for foodstuffs and medical supplies, with some ports reporting capacity shortages,” the analysis shows.

FIATA, the International Federation of Freight Forwarders Associations, Zurich, says the issue of container imbalances in the maritime supply chain is not a new one, but it has reached a tipping point with the COVID-19 pandemic, leading to port and terminal congestion, abandoned cargo and container shortages.

According to a recent report from FIATA on the current imbalance, “Container imbalances have been a perennial issue in the supply chain. In addition to inherent imbalances for special equipment and reefer containers, increase in vessel capacity over the past decade and shipping lines cooperating in only three major alliances, have generally led to higher peaks in container terminals and landside infrastructure. Inherent in the global nature of the world’s supply chains are the impacts of major regional holidays, the Chinese New Year period being particularly significant in its ability to severely impact the global manufacturing base and logistic supply chain. In the current environment, these imbalances are exacerbated by shipping lines employing substantial numbers of blank sailings to adjust supply, which impacts on the availability of containers for backhaul (exports) shipments in the importing countries.”

FIATA says this year’s Chinese New Year holiday took place in the context of a general increase in blank sailings and capacity oversupply. The lack of container export shipments during the extended Chinese New Year holiday and the COVID-19 outbreak further exacerbated this problem. “This had severe implications on destination backhaul (export) space and equipment due to the significant shortage of sailings and containers shipped,” the association adds.

As China began to restart its economy, many of the world’s other economies remained shut down to contain the spread of COVID-19, which continued to affect global supply chains. “Though containers from China will continue to arrive in ports, factory closures will continue to prevent the ease of delivery of containers,” FIATA says.

Orders for new shipments are being canceled, again leading to an increase in blank sailings. Terminal congestion is increasing as the import /export imbalance of containers continues and economies slowly emerge from lockdowns, the association adds.

FIATA concludes, “The impacts of such container imbalances will continue to be felt, even as economies strengthen and reinvigorate the supply chain. As backhaul (export) demand increases, for example, the current high levels of blank sailings may mean there is not sufficient vessel space or container equipment for backhaul (export) containers, and, as such, imbalances in containers and available vessels will continue to be present.

“Based on the current economic positions, it seems the global maritime supply chain is in for stormy weather in the months to come.”

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