Søren Skou warns of new logistics chaos: “If it ends in strike, then it all shuts down”
A.P. Møller-Maersk watches a looming US labor conflict closely, which may worsen bottlenecks at the country’s key ports and stir up problems in the entire supply chain.
BY NIKLAS KRIGSLUND
(Excerpted from ShippingWatch.com)
Just as the world catches a glimpse of an end to the coronavirus pandemic’s logistical chaos, A.P. Møller-Maersk warns that a new challenge threatens to disrupt supply chains and keep freight rates high.
This summer, dock workers on the US west coast are up for a new labor agreement. If negotiations break down, it may result in new, serious bottlenecks that may exceed the problems which culminated towards the end of 2021.
“There is no doubt that it’s not going to be easy negotiations, and a lot is at stake,” says A.P. Møller-Maersk CEO Søren Skou, furthermore pointing out that the agreement covers all ports on the west coast.
“If it ends in strike, then it all shuts down,” predicts the top exec of the Danish group, which operates the largest terminal in Los Angeles through its port company, APM Terminals.
Bottlenecks at the two key ports Long Beach and Los Angeles are the paramount reason why it’s still very expensive and difficult to buy freight space onboard container vessels.
Therefore, the consequences of a labor conflict and new traffic congestions will quickly spread to the entire supply chain and ultimately affect Danish companies and their customers.
“When ships can’t unload in the US, then they can’t go back to China to be refilled. That will extend the delivery time and increase prices. That goes for Danish companies and customers as well,” says Nordea Group Chief Economist Helge J. Pedersen.
“A continuation of high transportation prices will also increase the pressure from inflation and limit the world economy upswing,” he adds.
Interest group the Confederation of Danish Industry (DI) also keeps an eye on the situation on the US west coast. General manager of DI’s US office Louis Funder assesses that a conflict will first and foremost affect the many Danish companies dependent on bringing goods in and out of the country.
“It will typically be production companies, which gather their goods in the US before sending them out to their US customers. I’ve also spoken to a large Danish wine importer, who has had difficulties bringing wine out of the country. So actually, it goes both ways when there are problems,” says Funder. Right now, 56 ships able to accommodate 450,000 containers are waiting outside Long Beach and Los Angeles.
When congestion was at its worst shortly before Christmas, 85 vessels were queued up, according to figures by analyst firm VesselsValue.
A strike will put even further pressure on the ports, which are already short on dock workers, truck drivers and storage space to handle the significant increase in US purchasing of Chinese goods during the pandemic.
“Therefore, any protracted strike action could conceivably cause queue numbers to spike even higher than the previous peak,” states Vivek Srivastava, senior trade analyst at VesselsValue.
It is dock workers’ union the International Longshore and Warehouse Union (ILWU) and major carriers and port companies’ organization the Pacific Maritime Association (PMA) that are negotiating a deal.
The current labor agreement was extended last year and expires in July. It applies to 29 ports and covers wages and work conditions, among other things. The biggest issue, however, is expected to be the automation of ports, which the workers are fundamentally skeptical towards.
In November 2021, PMA tried to renew the current deal for another year in order to avoid a conflict at a time when supply chains are highly vulnerable, but the attempt was rejected by the workers.
They feel that they ought to be rewarded for their effort during the pandemic during which they have struggled as never before and fought Covid contamination, while carriers such as Maersk have reeled in historic amounts of money.
In an editorial in the latest issue of ILWU’s member magazine, The Dispatcher, fronts are drawn up sharply.
“It’s time to decide which side we’re on: That of the foreign shipping companies that are profiteering from the pandemic, or that of US farmers, manufacturers, dockworkers and truckers who deserve to earn a family wage,” writes ILWU Coast Committeeman Frank Ponce De Leon.
A.P. Møller-Maersk operates the largest container terminal in Los Angeles and has been hit by protests before. In 2012, the administrative staff were unhappy because they felt that their work was being increasingly outsourced.
Previous negotiations also show that it usually has been extremely difficult to reach an agreement, and that political interference is often needed in order to land a deal and avoid ports halting operations.
In 2002, employers started a lockout lasting for ten days. And in 2014-2015, work progressed at a very slow pace for four months, while negotiations took place. Both times, the governments at the time under, respectively, George W. Bush and Barack Obama had to step in for the situation to be solved.
The current negotiations will begin properly in April and will be followed closely this time again by the US president, in this case Joe Biden, who has a major focus on putting the rogue inflation to a halt, which, according to major bank UBS, can be traced back to freight prices to a certain extent.
Correcting poor reliability will take container lines at least eight months
Once carrier reliability starts recovering, it will take up to nine months to return to a normal level, writes Sea-Intelligence. But there are no indications that the situation is about to improve.
BY DANIEL LOGAN (excerpted from shippingwatch.com)
It will take container lines eight to nine months to get their schedule reliability back on track after more than two years with the Covid pandemic and chaotic supply chains.
That’s the assessment of Sea-Intelligence, which posits the situation with major bottlenecks on the US west coast in 2015 as a comparable scenario for examining the industry’s current outlook.
”As the 2015 problem was resolved in 6-7 months, this means an average reduction in excess delay of 1.25-1.46 days per month,” writes Sea-Intelligence.
”If the current port and hinterland system manages the same speed of recovery this time, it means that the current delays will take 8-9 months to resolve.”
In December 2021, 10.1 percent of the ships on the stretch from Asia to the US west coast arrived on time, while the figure for February 2015 came to 12.6 percent. At the same time, the analyst firm estimates that ships in December 2021 on average arrived 11.5 days late compared to a pre-pandemic baseline, while the number for February 2015 is 8.7 days.
If the recovery had begun in December 2021, from where the latest data are gathered, the container sector would in this scenario return to normal in August or September this year, Sea-Intelligence assesses.
Realistically, however, it will take a while longer as there are no signs that carrier reliability has improved going into February. Meanwhile, there’s also the catch that the problems in 2015 exclusively affected the US west coast.
”Now it is a global challenge, and the problem also include inland logistics issues,” writes Sea-Intelligence.
Covid-hit Lufthansa Cargo cancels all transit freight via Frankfurt hub
By Alex Lennane, (excerpted from loadstar.com) 26/01/2022
Lufthansa Cargo is the latest carrier to suffer operationally from an outbreak of Covid and has been forced to cancel all transit traffic through Frankfurt.
It has advised customers to cancel all transit bookings, saying in a note to customers this morning: “We unfortunately see no other option at the moment than to take some measures at the Frankfurt hub. As of now … there will be a transit embargo for Frankfurt.”
It added that customers should cancel shipments which have not been delivered, while freight which has already been accepted will be dispatched “as soon as possible”.
LC added: “We firmly believe these measures will contribute to stabilisation and that we can gradually return to normal operations.”
One European forwarder told The Loadstar: “This is pretty staggering and will be painful.
“Either the cargo is trapped and not moving if in the network, or you have to book elsewhere with alternative carriers, which will then increase demand and undoubtedly mean rate increases on air cargo if Lufty is out of the game for any time.
Lufthansa Bans Freight Through Frankfurt Hub Due to Omicron
Carrier says transit embargo hits North America, Europe routes Frankfurt is a major transport hub for Covid-19 vaccines
By William Wilkes (excerpted from Bloomberg.com) January 26, 2022
11:04 AM EST Updated on January 26, 2022, 11:57 AM EST
Deutsche Lufthansa AG banned cargo from moving through its Frankfurt hub due to surging Covid-19 infections and related staff shortages in the German city.
The move will impact goods arriving from other parts of Germany, the rest of Europe and North America, according to an emailed statement Wednesday. Direct deliveries to Frankfurt — a major transport hub for coronavirus vaccines — are still possible, Lufthansa said.
Did you know:
- Many carriers will not take responsibility for loss or damage if a warehouse signs off clean on a POD, so it is important, before signing off, to note the condition of the cargo. Claims are usually time-barred, unless filed within a few days (standards vary by carrier). So alert your carrier to possible damage immediately. The best way to do this is by signing the delivery receipt notating damage! And be specific, for example, 8 glasses broken, 10 boxes crushed (Make ensure that you have the correct boxes or pallet count).
Shippers who rely on suppliers to furnish cargo insurance or who rely on their carriers to take responsibility for losses may be in for a big surprise. Protecting your investments by insuring your goods provides peace of mind.
According to internationally accepted trade terms, referred to as Incoterms, suppliers selling CIF are responsible for arranging cargo insurance. But just because your supplier has the obligation to arrange insurance under CIF terms, it doesn’t mean that they are ultimately responsible if your product is lost or damaged during transit. The ultimate burden of loss falls upon you, the buyer. This is why many experts recommend importers change their buying terms to control the selection, and thereby the quality, of insurance coverage.
Foreign suppliers and their forwarding agents often tack on placement fees to the insurance costs. Those added fees often inflate the cost of insurance well beyond market pricing for the same coverage purchased in the United States. Find out how much you’re really paying and then compare quotes received from BOC International.
Importers relying on their suppliers to arrange insurance run the risk of having inadequate insurance coverage. Cargo insurance policies can vary widely in levels of coverage, deductibles and special restrictions. Ask your supplier for a complete copy of the insurance policy or for a certificate of insurance detailing all the policy terms and conditions
Importers are encouraged to make certain their suppliers use insurers with a favorable financial rating supplied by a respected financial rating service. BOC’s insurance company, underwriters at Lloyd’s of London, has an A.M. Best financial rating of A (Excellent).
Ask your supplier for a list of insurance claims adjusters contracted by the insurance company. Adjuster and surveyor networks approved by Lloyd’s of London and AIMA are among the most credible. BOC has a vested interest in your insurance needs and will directly handle cargo claim documentation requirements to ensure prompt processing and timely settlement.
Every Shipper Needs Cargo Insurance
Global trading involves risk; however, broad insurance coverage minimizes your financial risk. Don’t leave your livelihood up to chance! Statistics show that one ship sinks each day and you will experience a General Average loss every eight years. If you are depending on the carrier to cover losses, their responsibility is limited by law as follows:
Ocean Carriers……………………………$500 per shipping unit (a shipping unit may be defined as one ocean container).
Air Carriers…………………………………$9.07 per pound
Truckers……………………………………$.50 per pound
The insurance we offer is competitively priced and insures approved merchandise against physical loss or damage from external causes. By purchasing cargo insurance, you can avoid inconvenience and frustration. Contact your BOC Representative at 617-345-0050 for your free quote.
Are you familiar with GENERAL AVERAGE?
| Ever Given, year built 2015, 199,692 dwt Date of Blockage: 3/23/21 Part loaded with 18,000 teu (capacity 20,000 teu.) Egypt alone believes it is owed at least $1 billion in compensation for the six-day shutdown and the cost of the refloat effort. | Yantian Express, year built 2002, 100,003 dwt Date of loss: 1/3/19 Part loaded with 4,000 teu (capacity 7,551 teu.) 198 total loss, 462 damaged required survey LOF salvage – security 32.5% GA – security estimate 28% | APL Vancouver, year built 2013, 115,060 dwt Date of loss: 1/31/19 Part loaded with (capacity 9,200 teu.) 947 containers affected LOF salvage – security 15-20% GA – security | ER KOBE, year built 2001, 68,196 dwt Date of loss: 2/24/19 GA declaration on March 12, 2019 NO SEPARATE SALVAGE CLAIM GA – security estimate 10% |
There are a number of notable fire cases, with many resulting in General Average!
- Ever Given – April 2021
- Sincerity Ace – January 2019
- Maersk Honam – March 2018
- Maersk Kensington – March 2018
- Hyundai Auto Banner – May 2018
- MOL Prestige – February 2018
- Caribbean Fantasy – June 2018
General Average
- Basic principle – that which has been sacrificed for the benefit of all shall be made good by the contribution of all.
- Applies to maritime claims only.
- Is declared by the captain when there is imminent danger to the vessel, voyage or crew.
- You are contractually obligated, via the Bill of Lading, for unknown and undetermined costs.
How does it work?
- Value of the voyage is determined (vessel value plus value of all cargo on the vessel.)
- Participation is determined by the percentage that the value of your cargo bears to the overall value of the voyage.
- The loss amount is determined, and participation percentage is applied to the loss amount to determine security deposit.
- Shipper or their cargo insurer pay twice – first for the initial contribution, then for a bond covering future adjustments to that estimate.
Hidden Costs
- LCL Freight – Freight is not released until all payments received.
Difficulties of preventing and extinguishing fires on the open sea, include:
- Ships are larger with more varied cargo.
- Crew are ill equipped to deal with these fires.
- Fire-fighting tugs are often days or weeks away.
- Prevention is difficult, with rising problems with mis-declared cargo.
- IMDG Code is evolving to impose stricter rules on dangerous goods (DG.)
Problems Facing the Industry
- Stricter rules on DG will lead to higher costs and more incentive on the part of shippers to avoid proper declarations
- Ship owners and shipbuilders need to improve fire-fighting capabilities with CO² systems being shown to be inadequate – cost benefit analysis
- National Cargo Bureau in NY found in 2017 that of 1,721 stowage plans inspected, 20% showed errors with DG
General Average will never go away
- Awareness across all business units that losses & delays are part of any supply chain. Mission-critical shipments need more risk analysis to determine transport mode.
- Understanding of what to do when General Average occurs. This is best led by your cargo insurance provider meeting with your ‘team,’ not just the risk manager or CFO.
- Have a contingency plan or at least an understanding of how the event will unfold.
U.S. to Ban Goods Made In Xinjiang, China
Under a new law, the U.S. will ban imports of all goods made in whole or in part from any good from the Xinjiang Uyghur Autonomous Region in China, effective June 21, 2022. Companies need to use the next 180 days to ensure their supply chains do not include such goods.
Sandler, Travis & Rosenberg, P.A., has developed a program to help companies review their supply chain visibility in response to this new law.
For more information on this program, please contact Elise Shibles (at (415) 490-1403 or via email eshibles@strtrade.com), Amanda Levitt (at (212) 549-0148) or via email alevitt@strtrade.com), or David Olave (at (202) 730-4960 or via email dolave@strtrade.com).
BOC NOTE: Xinjiang should not be confused with the common coastal port named Xingang (Tianjin). Xinjiang is 2,000 miles inland from Xingang/Tianjin/Yellow Sea.
LA/LB Port Update- New Fee
The details are being finalized but the current plan is for the terminal to bill the ocean carrier. In the end, the ocean carrier will likely bill the cost to the importer directly or increase the ocean freight to cover the fees. Similar to demurrage, detention, excess chassis fees and now these new charges, everything is getting dumped on the importer. It is unfair but it is what is currently happening in the marketplace.
Until the world governments can step up or until the advantage goes back to the importer when the demand is not so strong, the carrier and terminal will continue to be king and put everything back on the importer. We are suggesting for all importers to contact your congressional representatives and voice your concern.
Chart: American Shipper
BOC will continue to monitor this situation and will advise if there are any changes or updates. If you have any questions please feel free to reach out to your BOC representative.
Finally Some Good News for Importers
(Tariff Exclusions)
USTR will start a targeted tariff exclusion process focused on restating previously extended exclusions, most of which expired on December 31, 2020. Per a Federal Register notice inviting public comment attached, USTR will evaluate the reinstatement of each of these exclusions on a case-by-case basis. The 549 exclusions covered by the notice can be found in the link below:
For additional information on 301 tariffs, please visit the below link of Sandler, Travis and Rosenberg, PA, or contact their attorney who specializes in this area, Paula Connelly.
https://www.strtrade.com/trade-news-resources/tariff-actions-resources/section-301-tariffs-on-china
Paula Connelly, Esquire
mobile phone: (781) 897-1771
pconnelly@strtrade.com
NOTICE OF CHB DELAYS DUE TO UNCERTAIN BERTHING TIMES/LOCATIONS
All steamship lines are experiencing port and berth congestion. Please see notice below received from Wanhai. This explains the late notice brokers are receiving regarding arrival notices, berthing times and locations. Without an accurate arrival notice, Customs Brokers cannot file Customs entry. Please be patient as we all continue to work through these trying times. Rest assured, our CHB teams want to clear your freight as quickly as possible.
Asia Holidays
Key Asian locations with upcoming holidays, listed below.
China Schedule for Upcoming holidays.
| Sep 18 | Saturday | Special Working Day | Working day on weekend |
| Sep 19 | Sunday | Mid-Autumn Festival holiday | National holiday |
| Sep 20 | Monday | Mid-Autumn Festival holiday | National holiday |
| Sep 21 | Tuesday | Mid-Autumn Festival | National holiday |
| Sep 26 | Sunday | Special Working Day | Working day on weekend |
| Oct 1 | Friday | National Day | National holiday |
| Oct 2 | Saturday | National Day Golden Week holiday | National holiday |
| Oct 3 | Sunday | National Day Golden Week holiday | National holiday |
| Oct 4 | Monday | National Day Golden Week holiday | National holiday |
| Oct 5 | Tuesday | National Day Golden Week holiday | National holiday |
| Oct 6 | Wednesday | National Day Golden Week holiday | National holiday |
| Oct 7 | Thursday | National Day Golden Week holiday | National holiday |
| Oct 9 | Saturday | Special Working Day | Working day on weekend |
Taiwan Schedule for Upcoming holidays
| Sep 20 | Monday | Mid-Autumn Festival | National holiday |
| Sep 21 | Tuesday | Mid-Autumn Festival | National holiday |
| Oct 10 | Sunday | National Day | National holiday |
| Oct 11 | Monday | National Day observed | National holiday |
Thailand Schedule for Upcoming holidays
| Sep 24 | Friday | Mahidol Day | National holiday |
| Oct 13 | Wednesday | Anniversary of the Death of King Bhumibol | National holiday |
Malaysia Schedule for Upcoming holidays
| Oct 2 | Saturday | Birthday of the Governor of Sabah | State Holiday | Sabah |
| Oct 9 | Saturday | Birthday of the Governor of Sarawak | State Holiday | Sarawak |
Indonesia Schedule for Upcoming holidays
| Oct 7 | Thursday | Navaratri | Hindu Holiday |
| Oct 15 | Friday | Dussehra | Hindu Holiday |
| Oct 20 | Wednesday | Maulid Nabi Muhammad (The Prophet Muhammad’s Birthday) | Public Holiday |
Japan Schedule for Upcoming holidays
| Sep 20 | Monday | Respect for the Aged Day | National holiday |
| Sep 23 | Thursday | Autumn Equinox | National holiday |
India Schedule for Upcoming holidays
| Oct 2 | Saturday | Mahatma Gandhi Jayanti | Gazetted Holiday |
| Oct 7 | Thursday | First Day of Sharad Navratri | Observance, Hinduism |
| Oct 11 | Monday | First Day of Durga Puja Festivities | Observance, Hinduism |
| Oct 12 | Tuesday | Maha Saptami | Restricted Holiday |
| Oct 13 | Wednesday | Maha Ashtami | Restricted Holiday |
| Oct 14 | Thursday | Maha Navami | Restricted Holiday |
| Oct 15 | Friday | Dussehra | Gazetted Holiday |
| Oct 19 | Tuesday | Milad un-Nabi/Id-e-Milad (Tentative Date) | Gazetted Holiday |
| Oct 20 | Wednesday | Maharishi Valmiki Jayanti | Restricted Holiday |
Ships resume docking at Ningbo port after two-week shutdown
Berthing operations have resumed at the Port of Ningbo-Zhoushan after having been suspended for two weeks. CMA CGM reports that two of its vessels were in the process of completing cargo operations.
Ships have resumed berthing operations at a halted container terminal in Ningbo, China, adding to optimism that full activity at one of the world’s busiest ports will be restored shortly after a two-week shutdown to quarantine dockworkers.
| Photo: Stringer/Reuters/Ritzau Scanpix BY ANN KOH, BLOOMBERG excerpted from Yahoo.com |
At least five container ships have left the Meishan terminal at Ningbo in the past few days after berthing there, according to shipping data compiled by Bloomberg. While container collection services were still halted on Tuesday, some ships have been allowed to berth at the terminal, an official from the Ningbo-Zhoushan port said.
The movement of ships is sparking optimism among shippers that operations will resume soon after no new cases of Covid-19 were discovered, according to local media reports.
The Meishan terminal has resumed partial vessel operations since Aug. 18 and is expected to have a gradual return to full operations in the coming weeks, shipping line CMA CGM SA said in an advisory to customers.
Two of the company’s ships – the Rivoli and the Samson – were completing cargo operations and would depart the terminal “very soon,” the French company said on Aug. 20. The ships have since left Ningbo, while a separate vessel named the Taurus traveled to Meishan on Sunday and is currently docked there, Bloomberg data showed.
CMA’s Elbe arrived at the terminal on Monday after waiting at anchorage for a week.
The Meishan terminal, which accounts for about a quarter of the Ningbo port’s container throughput, was shut on August 11 after a worker became infected with the delta variant of Covid-19. The partial closure of the world’s third-busiest container port worsened congestion at other major Chinese gateways such as Shanghai, Xiamen and Hong Hong, as ships diverted away amid uncertainty over how long virus control measures in the city will last
2.7 million containers queued off the world’s
ports – Ningbo shutdown worsens bottlenecks
Traffic pressure in the world’s largest container ports is now so intense that 2.7 million twenty-foot containers are waiting off ports to unload their goods. Some ships have been waiting for 18 days, shows an analysis from VesselsValue, and the Ningbo shutdown has only exacerbated the problem.
| BY DAG HOLMSTAD, excerpted from ShippingWatch.com |
It may prove difficult for the US and many other countries to stock up enough retail goods for the shopping spree that awaits on Black Friday and during the Christmas season.
As a consequence of the traffic pressure in the world’s largest container ports, 2.7 million twenty-foot containers are currently anchored off some of the world’s largest container ports.
More specifically, 409 container vessels loaded with a total of 2,732,133 twenty-foot containers (teu) filled with goods for retail and industry are currently waiting in line to unload their cargo, according to a new analysis prepared by VesselsValue for ShippingWatch.
Over the past nine days, the shut down container terminal Meishan in major Chinese port Ningbo has only exacerbated the chaos in global supply chains.
Thousands of containers waiting
As of August 18, a total of 80 container vessels comprising 393,650 teu are waiting to unload and reload goods at Ningbo’s remaining terminals, according to VesselsValue.
Marking the longest waiting period, one container vessel has been in line for more than nine days.
In another major Chinese port, Zhoushan, 100 container vessels totaling 457,869 teu are awaiting permission and entry at the terminals to unload their goods, with the longest waiting period being more than five days.
On the US west coast at Long Beach, California, one of the largest container ports in the US, issues with queues and bottlenecks are major as well, shows the analysis from VesselsValue.
33 container vessels are queued outside the port, totaling 255,333 teu, with one container vessel waiting for more than 18 days.
Good and bad news
According to shipping analyst Lars Jensen at Vespucci Maritime, there are both good and bad news about the precarious situation in global supply chains.
The good news, according to Jensen, is that the Meishan terminal at Ningbo, which was shut down on August 11, has now reopened.
The news about a reopening have yet to be confirmed, however, both by Chinese authorities as well as the carriers.
The bad news, on the other hand, is that even though the remaining terminals have been able to somewhat manage the daily container traffic of around 77,000 teu, corresponding to 90 percent of the flow, the delays and rerouting that ensued from the shutdown will continue to reverberate throughout other ports and continually cause congestion in the global supply chains, Jensen explains.
The current situation resulting from the Ningbo shutdown will continually generate challenges in coming weeks. The overall situation, however, is not as bad as expected compared to the partial shutdown of Yantian, China, earlier in the year, Jensen concludes.
China bulker pileup dwarfs California container-ship gridlock
COVID restrictions in China push dry bulk congestion to all-time high
excerpted from Freightwaves.com – Greg Miller, Senior Editor
Container ships stuck off Los Angeles/Long Beach are grabbing the headlines — with a record-tying 40 at anchor on Friday. But there’s another massive shipping traffic jam out there, one that’s holding up even more cargo.
This other, less-publicized tale of seaborne gridlock is set in China and it’s not about container ships, it’s about dry bulk carriers.
| Idle bulk carriers off the coast of China and in the Yangtze River on Friday (Map: MarineTraffic) |
Bulker congestion has now risen to historic highs as China enforces stricter COVID rules for arriving vessels. And what happens in China will be felt in America. Every bulker
stuck at anchor in China is one less ship that’s available to load U.S. soybeans, corn, wheat and coal — pushing spot freight rates for U.S. bulk exports higher.
“It is staggering how much congestion there is [in China],” said Martyn Wade, CEO of Grindrod Shipping (NASDAQ: GRIN), on a conference call with analysts on Thursday.
Highest congestion on record
According to Nick Ristic, lead dry cargo analyst at Braemar ACM Shipbroking, there were 1,692 bulkers worldwide . . . waiting in queues in mid-August, equating to 15.9% of global capacity. That was “the highest level we have on record and about 15% higher year on year,” he said. In comparison, U.K.-based data provider VesselsValue reported that there are 409 container ships stuck in congestion worldwide with an aggregate capacity of 2.7 million twenty-foot equivalent units. Not only are there far more bulkers tied up than box ships, but a typical bulk vessel carries much more cargo (measured by weight) than the average container ship.
China is driving the rise in global dry bulk congestion, comprising more than a third of the total, said Ristic. Bulker congestion in China hit 52.7 million DWT in mid-August, representing 6% of global capacity, up 28% from mid-July and 23% year on year. Bulker congestion was also high outside of China, but in line with seasonal norms.
(Charts: Braemar ACM Shipbroking)
U.K.-based forecasting and advisory company Maritime Strategies International (MSI) highlighted the same trend. In its latest sector outlook, it cited data from Oceanbolt showing 405 bulkers waiting outside Chinese ports on Aug. 12 for more than five days, compared to 261 on the same day last year and 113 on that day in 2019, pre-pandemic.
The flashpoint in China is the Yangtze River region. Ristic said it accounts for “about 18% of total bulker congestion in China and it has become a particularly bad bottleneck for geared vessels [bunkers with onboard cranes].”
COVID rules keep bulkers at bay
Congestion in container shipping is primarily caused by COVID-era changes in consumer spending, whereas congestion in dry bulk shipping is primarily caused by COVID precautions at ports.
COVID rules have caused bulker delays throughout the year, but this month’s delta variant outbreak in China brought restrictions to a whole new level.
“We’ve heard reports that on the Yangtze, they’re talking about all river pilots having to do compulsory quarantine,” said Wade.
According to Ristic, “Regardless of how long vessels have been at sea since their last port call, their risk level is reportedly being assessed by authorities based on factors such as crew nationality and boarding time, navigation route, and cargo on board. On top of this, quarantine measures have greatly reduced the number of pilots operating on the river, which has been slashed up to 50% versus normal levels.
“At other ports, we are hearing reports of mandatory quarantine periods, cargo operations not being allowed to proceed until negative PCR test results are obtained and other protocols,” added Ristic.
According to Argus Media, “Many Chinese coastal ports require a 14-day quarantine for imported cargoes after they depart from ports in other countries — including Indonesia, India and Laos — before they can berth. Some other Chinese ports, including Nanjing and Changshu along the Yangtze River, require a 21-day quarantine. The Liuheng terminal at east China’s Zhoushan port requires a quarantine as long as 28 days. All crew members must take COVID-19 test before vessels are allowed to discharge their cargoes.”
