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Timing of Suez Canal blockage was terrible, hitting already struggling Asia-Europe supply chain with a never-ending peak season

IHS Markit’s experts weighed in, regarding the impact from the latest setback in the global trade flows from the Suez Canal blockade.

Greg Knowler, senior European editor at JOC (Journal of Commerce) by IHS Markit:

“Even once the Ever Given is out of the way and the convoys resume, it will still take many days to clear the backlog of vessels at each end of the canal, then a week for the westbound container ships to reach ports in North Europe, such as Rotterdam, Antwerp, Le Havre, and Felixstowe. That could see the Suez ships arriving around the same time as the dozens of vessels re-routed around Africa.

This mass arrival of ships in Europe will be a huge handling challenge for container terminals and for the extensive network of short-sea shipping required for the onward ocean trans-shipment of cargo, while also stressing the inland logistics system of barges, road, and rail.

A key concern is the sheer size of the ships deployed on the Asia-Europe trade lane and the volume they carry. IHS Markit data show 16.5 percent of the ships in service are greater than 15,000 TEU (twenty-foot equivalent unit), and when calling at a European hub port, just one of these giant vessels can often unload and load more than 10,000 TEUs. With all ships operating full during the current period of high demand, the large container exchange per vessel will fall on terminals already stretched to the limit from months of heavy restocking to cope with consumer demand through the COVID-19 lockdowns. Staffing reductions through social distancing measures and quarantining will further add to the handling challenges.

Container shipping lines already warned European importers to expect a deterioration in supply chain reliability that could last for months, with lengthy delays for all inbound cargo, and knock-on effects of the Suez blockage leading to difficulties in booking space on ships leaving Europe and Asia.

Another consequence of the delays will be to effectively cut the available container shipping capacity on the trade lane at a time when it is urgently needed and push freight rates even higher. Spot rates from China to North Europe as at March 29 were up almost 400 percent year over year.”

Turloch Mooney, an Associate Director Maritime & Trade at IHS Markit added:

“It is very good news the Ever Given is close to being re-floated and the Suez reopened. The impact of the blocking of such a vital container trade artery for so many days in terms of port delays and schedule disruption will take some time to clear.

The timing of the incident is dreadful because container ports globally have been struggling so much with delays and congestion as a result of the pandemic. This includes major European gateways and supporting hinterland connections that will now potentially have to deal with large volumes of backlogged shipments arriving out of schedule and in a much more concentrated fashion that you would normally see.

This comes as Port Performance data from IHS Markit showed that congestion at major global seaports already spiked in the second half of 2020, with ships requiring the loading and unloading of over 6,000 containers per visit spending an average of over 83 hours in port, a rise of 20% year-on-year. Global port delays for ships doing smaller workloads were up between 7.8% and 9.5% depending on the call size.”

Source: IHS Markit

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