Welcome to the latest Global Logistics Update. As of July 2024, the global port situation continues to face challenges and fluctuations due to various factors including congestion, demand surges, and geopolitical issues.
South African Ports
Every importer / exporter wants to know what is happening at our ports as this impacts pending customer orders, stock levels, ability to manufacture and mostly business profitability, so we keep our focus on this. South African ports certainly still experience significant congestion issues, leading to severe delays and economic impacts.
Local Delays Recorded:
Port congestion and delays have been reported with Durban at 10-15 days, Cape Town 13 days and Coega 8 days on average. Week 30 brought about challenges with wind causing ports to be on standby until safe to operate as well as equipment challenges with low availability of straddle carriers at Durban Pier 2. Durban had many cancelled appointment slots with truckers queuing all day to collect containers and breakdowns causing major congestion and slow operations. Cape Town and Coega port is still recovering from the harsh weather conditions 2 weeks prior, but reports confirm that these ports will soon be back to normal as well as landside improvements in equipment to come.
We highlight in the images below, vessels currently at anchorage pending berth at our major ports as well as delays recorded for the last week.
Carrier schedules are still erratic, and we continue to see changes last minute especially with vessel split discharges and delayed ETA’s.
Global Port Statistics
Container ship capacity records fastest growth in 15 years
The global container ship fleet has expanded by 11% in the first half of the year, reaching a total capacity of 29.5 million TEU, according to the latest update from the Baltic and International Maritime Council (Bimco). This represents the fastest growth in 15 years, with 264 ships totalling 1.6m TEU delivered from shipyards during this period, two-thirds more than the same period last year.
https://www.freightnews.co.za/article/container-ship-capacity-records-fastest-growth-15–years
Is the container shipping system running out of capacity?
‘The return of vessel queues outside Singapore, and many other ports for the first time since Covid point to trouble in the system that transports 45% of global trade by value. The fact the port congestion is recurring illustrates a truism many in the industry believe is beyond dispute: that the system remains vulnerable especially when volumes grow quickly, and that weaknesses exposed during Covid remain unfixed.
The backups are contributing to a surge in shipping costs – spot freight rates have tripled on major routes like the trans-Pacific over the past eight weeks and are occurring despite 2024 being a record year for new container ship deliveries; 461 new vessels, many of them capable of operating on zero-carbon fuel, are forecast to hit the waves this year, the result of a surge in vessel ordering during the pandemic, according to S&P Global Market Intelligence.
Yet despite the new tonnage, virtually no ships currently are sitting idle or are being scrapped and the price to hire a ship on charter has spiked in recent months.
The conclusion is inescapable: just like occurred during Covid, a surge in demand is overwhelming the ability of the end-to-end system to cope. Volume growth in containers has roared back to life this year, with volumes up 9% in the first quarter on the strength of inventory restocking, an earlier peak holiday season, and global growth momentum. S&P Global Market Intelligence has twice raised its forecast for global GDP growth this year.
The surge in growth is colliding head-on with two factors conspiring to reduce system wide capacity: Diversions of ships around Africa to avoid attacks in the Red Sea, and vessels falling off schedule, reducing port efficiency.
At least 6-7% vessel capacity was effectively taken off the market early this year due to the longer voyages ships must take around the Cape of Good Hope to avoid attacks in the Red Sea. The longer sailing times absorbed container equipment as well, an issue that strikes at the heart of the system because without containers, cargo can’t move. Sharply higher new and used container prices and leasing rates in China as reported by Container xChange point to the shortage.
Robust cargo growth leads to the other big issue: too much cargo moving on and off ships results in ships more easily falling off schedule because they are forced to remain in port longer. A result is they frequently miss their scheduled berthing slot at the next port, forcing them to wait offshore until the next slot opens.
“The increase in container vessels arriving off-schedule and the increased container volumes handled in Singapore have resulted in longer vessels’ wait time for a container berth,” PSA Corp. the operator of the Singapore port, said on May 30. The port was recently forced to reactivate dormant port facilities to handle the increase in volume.
This is a stark reminder of the central role of ports in the supply chain and how easily things can go off track. During Covid, when containerized supply chains experienced their worst disruption since the first container ships sailed in the late 1950s, the core problem was congestion at ports.
Too many containers not moving quickly enough through ports – often due to issues outside ports such as lack of trucking or warehouse space -led containers to pile up at the port and prevented ships from being worked at their normal pace. As a result, they occupied limited berth space for longer and ships that were waiting backed up offshore; at the height of the crisis in Jan. 2022 109 container ships were backed off of Los Angeles-Long Beach, the largest port in the Western Hemisphere, when typically the anchorage areas are empty.
Today a similar phenomenon is playing out, still on a milder scale but pointing to the same issues that have gone unsolved since Covid: inadequate advanced visibility to cargo volumes and thus the inability of ports, container lines, truckers, and other players in the ecosystem to effectively prepare. Add to that an unwillingness of transport providers to invest in surge capacity under the theory that “you don’t build a church for Easter Sunday.”
The lesson for companies dependant on container shipping for their supply chains isn’t that the system is running out of capacity. Though it may function with little disruption for months or even years as it did prior to Covid, it remains fragile and vulnerable to external shocks, whether it’s Covid, attacks on shipping or a volume surge. That vulnerability is unlikely to go away. Lean inventory, or “just in time” strategies which depend on reliable and consistent logistics connections will always be vulnerable. That is as much the case today as it was in 2020 or any other year.’
Freight News
We understand the importance of staying up to date with the latest trends, challenges, and advancements in our industry and we wish to highlight just a few articles which you might find of interest.
City approves second road to deal with Durban harbour traffic
https://www.iol.co.za/mercury/news/city-approves-second-road-to-deal-with-durban-harbour-traffic-7b3f540b-728a-4812-ac45-a3fa4bfd5dae
Stormy seas rock supply chain
https://www.investec.com/en_za/focus/logistics-update/adverse-weather-halts-port-operations.html
Strong increase in daily container movement at SA ports
https://www.freightnews.co.za/article/strong-increase-daily-container-movement-sa-ports
Vessels wait 189 hours at anchorage at Port of Durban
https://www.freightnews.co.za/article/vessels-wait-189-hours-anchorage-port-durban?page=2
Last chance’ for US importers to stock up before possible east coast port strike
https://theloadstar.com/last-chance-for-us-importers-to-stock-up-before-possible-east-coast-port-strike/
AfCFTA conference spotlights trade growth
https://www.freightnews.co.za/article/afcfta-conference-spotlights-trade-growth?utm_source=newsletter&utm_medium=email&utm_campaign=daily-news-2024-07-28&utm_content=afcfta-conference-spotlights-trade-growth
Sources & References
Seatrade Maritime / Loadstar / Freight News / GoComet / Maersk / MSC / Transnet / WeFreight / Beacon / Joc / MSC / Maersk / Container Statistics / DHL Market Update / CS News