Ports congestion holds back nascent global growth revival

Just as strained supply chains have weighed on global economy amid the enduring devastation brought about by the Covid-19 pandemic, congestion at many of the world’s major ports offer a snapshot of the clogged arteries of global commerce.

And the chaos that has bedevilled global supply chains in recent months will extend into next year, with a lack of truck drivers preventing hundreds of container vessels from offloading goods around the world, shipping group Maersk has said.

The number of container ships off China’s largest trade hub, the combined anchorage area of Shanghai-Ningbo, stood at 248 on November 5, 31 less than the April-to-October median.

The smaller neighbour to the north, the regional port of Tianjin, was saddled with 14 waiting container carriers, 11 more than usual, according to a Bloomberg report.

Southern California remained a logistical mess early this month, with at least 79 vessels waiting to offload in Los Angeles and Long Beach, the largest container complex in the Americas.

In Asia’s second-largest combined anchorage spot, Hong Kong-Shenzhen, the ship count stood at 221, 30 more than the median. Its smaller southern neighbour, Qinzhou, saw a more modest high of 10 container ships over the same study period.

Singapore had 17 more waylaid vessels than usual in the first week of November, creating a congestion rate of 48.2%, or 10.5 percentage points higher than the median, according to a Bloomberg report.

The United Arab Emirates’ combined hub of Jebel Ali and Dubai tied its highest counts from April to November at 55 container ships, with congestion at 22.2% compared with the global average of 32.8%.

There are about 25mn standardised shipping containers plying the seas on about 6,000 ships in a fragile network designed to stay in sync with port capacity, railroad lines and trucking networks. It’s a system that has lifted millions of people out of poverty and created a generation of discount-minded shoppers.

In normal times, it works so well that it has led to the widespread adoption of more efficient just-in-time inventory management.
However, the Covid-19 crisis led to unpredictable demand for goods and on-again-off-again lockdowns that idled port terminals.
By October, ocean cargo rates had spiked ten-fold from a year earlier, sparking worries about the year-end holiday shopping season and disruption stretching into 2022.

As the Big Crunch of 2021 has repeatedly demonstrated, a bottleneck in one corner of the globe eventually exacerbates a logjam or compounds shortages in another.

The rapid surge in demand for goods as the American economy reopened in the wake of the Covid-19 shutdowns has created severe challenges for suppliers who struggle to get key materials and goods.

Ports are overwhelmed because they sit at the junctions of global trade where ocean freight gets transferred to some mode of land-based transportation.

The supply snags are colliding with a demand surge: peak season for retailers to stock up before holiday shopping kicks off.
In a wider sense, concentration in the shipping industry is being blamed for dulling some of the competitive spirit that could have provided adjustments to swiftly changing demand.

In 2017, about a dozen container lines that control 80% of the global market formed three main alliances to share ships, co-operate on routes and limit excess capacity, an arrangement that has been likened to an oligopoly.
Source: Gulf Times