Market Situation – Container flows - Update V

In order to keep some overview, we tried to break it down in several segments covering different areas worldwide. Although not all trades are in the report, similar tendencies apply.

Asia

We are nearing the Chinese New Year Holidays which will be from February 11th till February 17th. During this period almost all factories and offices will be closed. Traditionally, this causes many truckers to depart from the port areas to go homewards greatly reducing the availability of truckers’ capacity. We notice this already and this has an impact both on operations and pricing.

For the period following the public holiday, it is not entirely sure if the Chinese government will apply any quarantine rules for returning workers. Hence no reports were received most likely we will not see a similar situation as in the Pearl River Delta as reported a few weeks ago following Golden Week.

Due to the Chinese New Year, and the expected drop in volume flows, the shipping lines traditionally invoke void sailings. Although the volume demand remains very strong in China, during the holiday period this will temporarily freeze. That is why the shipping lines will apply these void sailings, be it less aggressive than what we have seen in previous years. Due to the high demand that remains ex Asia, volume shortage also remains. The weeks following the Chinese New Year will be critical to assess if the reduced export volumes during the Chinese New Year Holidays will have a stabilizing effect on the equipment flows.

Oceania

The Australian Coastal Trade is facing major issues. This is mainly caused by a disruption of the normal network creating reduced access to space and equipment to move from Asia and South East Asia to Australia and N.Zealand. Due to heavy congestion in the South East Asian ports (Singapore, Port Kelang, Tanjung Pelepas,…) vessels are arriving in the first AU Port (Brisbane) with a delay of around 7 days. The delays worsen as the vessel transits the coast due to congestion in Sydney, Melbourne and Fremantle. Discussions are ongoing to relaunch some coastal services to again give Oceania a better connection to Asia and South East Asia.

In the Australian ports the congestion in remains. According to local reports, there are more than 75.000 empty boxes crowding the facilities in Sydney alone. On top of the structural trade imbalance where Australia needs different container types for incoming and outgoing cargoes (such as food or special equipment), China has imposed a ban on timber and wood, wine and other cargoes that can move in 40’ containers. This is even worsening the situation in the AU ports further.

USA

Compared to the most European countries, the US is far ahead on vaccinating their population. However, amongst the port workers we are seeing a growing number of COVID-19 cases and this is adding to the bottlenecks to get cargo moving. In combination with the increased trucker shortage because of the surging Asia volumes going to USA, the delays are only increasing to get cargo discharged to the customers.

On top of the issues for the inland transportation, please note that severe snowstorms on the East Coast of the USA are adding to delays. Storms are expected to continue until end of this week. The states of PA, NJ, & NY have declared a State of Emergency. Ports across the USA are struggling with the increased pressure on the running of normal operations which is again resulting in congestion at all major terminals.

Europe

Chain disruptions for road transport from the UK to the European Mainland are pushing more and more volumes to container transport in stead of on trucks. Very strict COVID-19 restrictions both in the UK, and from European countries affecting the UK, cause trucking companies to no longer send their employees to the UK. They are tired of all these uncertainties. Truckers are being blocked by customs, extra delays in the ports and at (un)loading sites, truck-stops and parking spaces are closed,… Truckers simply do not want to get ‘stuck’ in the UK. Yesterday in France a national strike was initiated but not extensively executed but again only adding to the chaos at hand. Many EU countries have banned flights from the UK so even when a trucker is stuck in the UK they have almost no possibility to get back home.

This rush from cargo to container logistics is adding to the congestion in the UK ports. Although this might eventually proof to be interesting for the shipping lines considering this is a mean for them to get empty containers out of the UK ports. So hopefully this can relief the congested ports and can increase the equipment availability in the EU mainland.

General

Due to all the uncertainties in global shipping today, the shipping lines have reported dramatic schedule reliability data. In December less than half of the vessels worldwide arrived on time. This has been going on for five consecutive months and is at the lowest point since ‘Sea-intelligence’ introduced this benchmark in 2011.

The global equipment imbalance is pushing shipping lines to invoke all kinds of surcharges to facilitate them to re-position containers from overflow areas to areas with container deficits. These increases are being applied in unstructured and unclear manners, only affecting certain areas. This situation of a global container shortage is unprecedented, and it seems that the shipping lines do not know how to behave or how to resolve this. These increases are being pushed not only onto the market rates but also on long term agreements. As it is a normal market effect to move rates up and down because of supply and demand, it is another thing to break open contract agreements.

It is difficult to predict when the market will come back to acceptable levels both on pricing and on service.

We will keep close track of further developments.