Maritime supply chains stuck in a catch-22
More and more often, it seems, resolving one problem along the container shipping supply chain creates even bigger problems and disruptions elsewhere in the supply chain.
Just recently, operations returned to normal at Yantian International Container Terminal (YICT), after Covid-19 staff restrictions there, but the congestion shifted largely to nearby port of Hong Kong and also affected other ports in Asia, as ships and cargo volumes were diverted. Because ports are already struggling to cope with high volumes, they are vulnerable to sudden, incremental stresses.
Drewry’s tracking of vessel waiting events in the ports of Yantian and Hong Kong shows the congestion easing in Yantian, while simultaneously increasing in Hong Kong.
As can be seen in our Cancelled Sailings Weekly Insight report, the situation of vessel delays at ports in North America and Europe is also serious and the delays of 4 days or more are chronic and sustained.
It will certainly take an awful length of time before schedules are back to normal and reliable again, because the current model of operations of carriers – sliding schedules, blanking sailings and skipping congested ports in their rotations – is expected to continue.
Particularly for shippers and BCOs, this will mean a long period of extended and less predictable transit times, combined with rollovers, lack of space and empty equipment, and extreme spot freight rates (see related Logistics Executive Briefing opinion piece).
The imminent peak season will exacerbate the situation further and there are further risks on the horizon, such as potential US West Coast port lockdowns in 2022.
Shippers and importers find themselves stuck in the middle of this vicious circle where one problem amplifies another, with no industry-wide solution in sight.
Drewry is having many discussions with shippers about alternatives (alternative ports, alternative transport modes, alternatives transloading nodes for a specific shipper) and even about the feasibility of major BCOs chartering containerships, as HomeDepot did recently. The new Chinese carrier CU Line, for example, is considering new investors in its venture. Logistics planners are also rethinking safety margins and increasing inventory at destination.
In Drewry’s view, these industry-wide container supply chain problems are not going away. As a shipper/BCO, you should be thinking about tactics and strategies to diversify and mitigate potentially long-lasting ‘Catch-22’ disruptions to your maritime supply chains.