Port congestion, COVID-19 accelerated port investment

Port congestion, COVID-19 accelerated port investment

The Financial Times website recently published an article titled "Ports facing the biggest crisis since the start of container transport", saying that the COVID-19 pandemic has caused ports to face the biggest crisis in 65 years, highlighting the urgent need for investment in ports and the urgent need for upgrading ports around the world.This article has been widely reprinted and spread by Reference News and many network media, and the viewpoints are summarized as follows:

In addition to delays caused by extreme weather, the coronavirus pandemic that began last year has left the global shipping system facing its biggest crisis in 65 years.Surging end demand and aging port infrastructure are straining shipping supply chains, and shortages and congestion continue to worsen around the world.

Authorities say the pandemic highlights the port's urgent need for investment.Over the past year, the entire port infrastructure system has been overwhelmed.There are 353 container ships stranded outside ports around the world, more than double the number earlier this year, according to kuehne & Kuehne, a logistics provider.

The COVID-19 online shopping boom has driven up demand for next-day delivery services, while shipping congestion has led to stock shortages and delivery delays, driving up prices.Border controls, social distancing rules and factory closures caused by the pandemic have disrupted traditional supply chains, leading to soaring freight rates on some routes.

Before the outbreak, ports were already under pressure to upgrade their infrastructure by automating operations, decarbonising logistics and building facilities to handle a new generation of larger vessels.And new infrastructure takes time.

Some ports may not be able to accommodate the new large ships, says the British company Aceon Warmark.The pandemic has also highlighted the need for greater coordination, information exchange and digitization across the supply chain.

As of Sunday evening, 37 ships were waiting for berthing outside the California ports of Los Angeles and Long Beach, Bloomberg reported Monday, citing officials monitoring maritime traffic in the San Pedro Bay.That is nearly double the number in mid-July and the most since the record 40 was set in early February.

The average time ships are waiting for a berth is 6.2 days now, up from 5.7 days at the end of June, according to port of Los Angeles data.Still, that is below the average wait time of eight days set in April.

SAN Pedro Bay, located in California, has the busiest port in the United States.One of them, the Port of Los Angeles, is an important gateway to international trade in the United States and the busiest seaport in the Western Hemisphere.According to the port of Los Angeles website, it handled 9.2 million twenty-foot equivalent units (TEUs) in 2020, ranking first among U.S. ports.

It is not just the US. According to instant data from Kuehne+Nagel, a logistics company, 353 cargo ships are now stuck in ports around the world, more than double the number at the start of the year.

In addition to container congestion at ports, shipping costs are soaring.

The FT notes that the cost of shipping a 40-foot container from China to the WEST Coast of the US has soared to $15,800, 10 times pre-pandemic levels and up by half from last month, according to data provider Freightos.Lars Mikael Jensen, head of global Marine networks for Maersk, the world's largest container shipping group, said the situation showed no signs of improving since the Delta mutant strain became widespread and the maritime network remained very strained.

It comes on the heels of data showing record global shipping prices.

On the one hand, according to CCTV Finance, on August 10, the global Container Freight index showed that the sea freight price from China, Southeast Asia to the east coast of North America exceeded $20,000 per teU for the first time.Meanwhile, the Baltic Dry Index, a benchmark for global bulk freight prices, rose 93 points, or about 3%, to 3,503 on Aug. 12, its highest level since mid-2010.

The surge in shipping prices is expected to exacerbate a litany of problems in the supply chain, including semiconductor shortages and rising raw material prices.

In Europe these effects have already been felt in weak industrial production over the summer.George Buckley, chief UK and eurozone economist at Nomura, said supply chain endpoints were likely to weigh on eurozone production for some time, according to the Financial Times.Supply disruptions will prompt larger manufacturers and retailers to consider ways to strengthen supply chains, such as stocking more inventory and dual sourcing.

Despite increased investment in container ports, congestion is proving to be a growing problem for the industry in coming years, according to the Drewry report.

Congestion is well known at the major west Coast container ports, led by Long Beach and Los Angeles, and criticism is not hidden.Maersk, ONE and Hapag-Lloyd have been heavily critical of the lack of port capacity.But more is needed to speed up port expansion to eliminate delays.

In any case, the lack of investment and availability of ports will only worsen in the coming years and will become increasingly central to the industry, Drewry's report says.Drewry expects global port handling capacity to grow by 2.5% a year until 2025, or about 1.3 billion TEU in the next four years.At the same time, shipowners' demand will grow by about 5 per cent a year, increasing their use of ports to 75 per cent from 67 per cent now.

Congestion is bound to loom large

Economically, the signs are positive.But given recent port congestion, that 75 per cent may be too close to the Max.

Drewry said the issue would be a concern if port capacity were not increased.This is because there will be uneven utilization at each port, and the history of COVID-19 shows that a blockage at one port can quickly affect others.Most of the port expansion currently under way is expected to be the expansion of existing port facilities.However, construction of new ports is still at a very low level.

On the other hand, according to the 2020 survey, Asian ports, especially Chinese ports, occupy the top three positions in the global terminal operator ranking.Singapore's PSA International ranked first with 59.5m TEU.China Merchants Ports jumped to second place in 2020, with throughput up 13.4 percent to 47.1 million TEU.Cosco Shipping Port ranked third with 46.2 million TEU.Maersk's APM Terminals was fourth with 45.5 million TEU.Among them, the rise of China Merchants port ranks, due to the French CMA group reached a sale agreement, the acquisition of a number of ports previously negotiated.

(This article is from port loading and unloading machinery)