Following a nearly week-long blockage in the Suez Canal, a backlog of container ships carrying consumer products has built up in some key strategic ports, contributing to ongoing global trade disruptions, industry sources claim.
When the 400-meter-long (430-yard) yard was given ran aground in the canal on March 23, dozens of container ships were stranded, and it took nearly a week for specialist rescue teams to free the ship. Shippers, including container lines, faced millions of dollars in additional expenses, as a result of the suspension of sailings through the waterway, which were not covered by insurance.
“In the coming weeks, the Suez Canal blockade will have a greater negative effect on global supply chains, as the availability of empty equipment, especially in Asia and Europe, will be affected,” says Reiner Heiken, chief executive of the US headquartered Hellmann Worldwide Logistics. Container shipping firms have been dealing with delays caused by the coronavirus pandemic and an increase in demand for retail goods for months, resulting in broader logistical bottlenecks, even in the top consumer market of the United States. Although some goods transporters have shifted to rail, sea transport accounts for nearly 90% of global trade.
Suez has caused supply disruptions in Europe and the United States, according to retailers. The effect will be felt in the coming days, according to port officials in Europe’s major gateways, contributing to already overburdened supply lines. The port and terminal owners, according to Barbara Janssens of the Port of Antwerp, are “already planning for what lies ahead.”
“The effect on global supply chains would likely last many months. The world’s container ship fleet clearly does not have enough spare capacity to help mitigate the worst effects of the Suez incident “According to Janssens, the port of Rotterdam’s Leon Willems predicted that in the coming weeks, container traffic will be about 10% higher than normal. Willems said, “Both the port and the container terminals are doing whatever they can to minimise disturbances.” In a customer note, Maersk, the world’s largest container line, said that vessels stranded in Suez will be delayed for several days before reaching ports on the US East Coast.
In an unprecedented move, the company urged ports to “take advantage of this opportunity to clear cargo from terminals, allowing them to function more efficiently.” A request for comment from the East Coast Port of Newark went unanswered right away. According to a source at Savannah, Georgia’s southern port, a backlog of ships is scheduled to be cleared in the coming days. Although ports on the US East Coast are more vulnerable to Suez Canal disturbances, West Coast terminals have been overburdened in recent months due to an increase in retail demand. According to a study by logistics platform project44, container ships on the West Coast face longer waiting and discharging times than in many other ports around the world.
“The backlog may be cleared by the end of May or early June, according to Eugene Seroka, executive director of the Port of Los Angeles. The backlog at the neighbouring Long Beach terminal, according to Mario Cordero, should be reduced by summer. However, we expect a continued increase in the amount we’re seeing for at least the next few months.” Cordero explained. The Suez Canal’s obstruction has had a major impact on a variety of Hapag-facilities, Lloyd’s according to the German container line. “We’re still trying to recover from that crisis,” Hapag CEO Rolf Habben Jansen said during a virtual news conference on Thursday.
“Towards the beginning of the third quarter, we’re working hard to try to get back to normal.” Sea-Intelligence analysts predicted a ripple impact between Asia and Europe in the coming weeks, as well as container trade disruption. Although the disruption had not had a major effect on shipping operations between Europe and Hong Kong, the Transport and Housing Bureau of Hong Kong said the government was monitoring the situation. Other transporters have turned to rail links between China and Europe to get vital supplies through, despite the fact that volumes are still limited, according to users.
The rail routes, which run from China via Kazakhstan or Mongolia to Russia, and then on to freight hubs across Europe, take 16-18 days on average, compared to four weeks by sea and just under a week by air. DSV, a Danish freight forwarder, GVT, a Dutch freight management firm, and Maersk have all stated that rail freight between Europe and Asia is gaining popularity. “Land transport between Asia and Europe will still be able to cover just a small share of total transport volume,” said Hellmann’s Heiken.
