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World

GLOBAL SUPPLY LINES STRUGGLE TO CLEAR CONTAINER BACKLOG AFTER SUEZ CHAOS

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World


GLOBAL SUPPLY LINES STRUGGLE TO CLEAR CONTAINER BACKLOG AFTER SUEZ CHAOS

A container ship passes through Suez Canal, Egypt on April 6, 2021. (AP
Photo/Mohamed Elshahed)

08 Apr 2021 10:56PM (Updated: 08 Apr 2021 11:00PM)
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LOS ANGELES: A backlog of container ships carrying consumer goods has grown in
some key strategic ports after a near week-long blockage in the Suez Canal,
adding to ongoing disruptions to global trade, industry sources say.

Dozens of container ships were stuck when the 400m long Ever Given ran aground
in the canal on Mar 23, with specialist rescue teams taking almost a week to
free the vessel.


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The suspension of sailings through the waterway left shipping companies -
including container lines - with millions of dollars in extra costs, which were
not covered by insurance.

"The blockage of the Suez Canal will increase the negative impact on global
supply chains in the coming weeks, as the availability of empty equipment,
particularly in Asia and Europe, will be affected," Reiner Heiken, chief
executive of US headquartered Hellmann Worldwide Logistics, told Reuters.

Container shipping companies, carrying products ranging from mobile phones to
designer goods, have been contending for months with disruptions caused by the
coronavirus pandemic and a surge in demand for retail goods that led to wider
logistical bottlenecks including in top consumer market the United States.

While some transporters of goods have turned to rail, that option has barely
made a dent as about 90 per cent of world trade is transported by sea.


READ: SHIP BACKLOGS FROM SUEZ CANAL CHAOS COULD TAKE MONTHS TO CLEAR, CONTAINER
LINES SAY

European and US retailers have warned about potential supply snags due to the
impact from Suez.


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Port officials in Europe's leading gateways say the impact will be felt in the
coming days, adding to already stretched supply lines.

Barbara Janssens, with the Port of Antwerp, said the port and terminal operators
were "already preparing for what's ahead".

"The impact on global supply chains is expected to last for several months.
There is simply not enough spare capacity across the worldwide container ship
fleet to help counter the worst effects of the Suez incident," Janssens said.

Leon Willems, with the port of Rotterdam, said it expected its container traffic
to be around 10 per cent higher than normal every day in the coming weeks.

"Both the port and container terminals are doing everything they can to minimise
disruptions," Willems said.


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READ: FIRST SHIPS FROM SUEZ CANAL BACKLOG TO ARRIVE IN SINGAPORE THIS WEEK

Maersk, the world's number 1 container line, said in a customer note that
vessels held up in Suez would be delayed for a number of days before they
reached US East Coast ports.

In an unusual step, the company urged the ports "to take this opportunity to
clear cargo from terminals which will allow them to operate more efficiently".

The East Coast Port of Newark did not immediately respond to a request for
comment.

A source at the southern US port of Savannah said they expected to clear a
backlog of ships in the coming days.

LONG WAITING TIMES


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While ports on the US East Coast are more exposed to any disruptions in the Suez
Canal, the surge in demand for retail goods has overwhelmed West Coast terminals
in recent months.

Container ships face longer waiting and discharging times at West Coast ports
than in many other ports around the world, analysis from logistics platform
project44 showed.


READ: SUEZ CANAL SHIPPING BACKLOG ENDS, DAYS AFTER GIANT VESSEL FREED

Eugene Seroka, executive director of the Port of Los Angeles, said they were
making progress whittling down the backlog, which could be cleared by the end of
May or early June.

Mario Cordero, executive director of neighbouring Long Beach port, also expected
their backlog to be reduced by summer.

"But for at least the next couple of months, we expect a continuing surge on the
volume that we're seeing," Cordero said.

Analysts Sea-Intelligence expected a ripple effect in the coming weeks between
Asia and Europe and disruption of container trade.

Hong Kong's Transport and Housing Bureau said the government was monitoring the
situation although the disruption had not had a significant impact on shipping
operations between Europe and Hong Kong.

Transporters elsewhere have been turning to rail links between China and Europe
to get critical supplies through, although users stressed volumes were still
small.

Journey times via the rail routes, which run from China through Kazakhstan or
Mongolia to Russia and then on to freight centres across Europe, typically take
between 16 to 18 days compared with four weeks by sea and just under a week by
air.

Danish freight forwarder DSV, Dutch freight management company GVT and Maersk
all said they were seeing a surge in interest for rail freight between Europe
and Asia.

"Land transport between Asia and Europe will always be able to cover only a
small share of the total transport volume," Hellmann's Heiken said.

Source: Reuters/lk


RELATED TOPICS

Suez Canal


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