China congestion ‘likely to affect other Asian ports’

5/11/2017

Port congestion at key hub terminals in China will ripple down to ports across Asia and further disrupt feeder operations in the coming weeks, according to forwarders.

As reported in Lloyd’s Loading List last week, the ports of Shanghai, Qingdao and Ningbo – all ranked in the world’s top ten box ports – have been struggling with congestion caused by changes to liner alliance networks and compounded by poor weather, strong demand, and the deployment of larger vessels by carriers. Forwarders say the delays have continued into this week, with vessels at some Shanghai terminals now forced to wait to load for up to four days.

“Congestion has been building up at some Chinese main ports caused by large phase-out and phase-in exercises of carriers due to the new alliance formations, and compounded by some unstable weather conditions – for example, fog,” said Daryl Ridgway, global head of ocean freight at Panalpina. “In addition, volume growth continues to be stronger than expected.”

Drewry also noted this week that terminals were struggling under the weight of extra business. “China’s top 10 ports collectively experienced a 6% year-on-year jump in throughput in the first quarter of 2017,” said the analyst. “It’s unlikely to be a coincidence that the ports facing the worst of the congestion registered the biggest gains: Qingdao (12%); Shanghai (10%) and Ningbo (9%).”

Ridgway told Lloyd’s Loading List the ports most impacted by congestion at present were Shanghai and Ningbo. “Delays at the moment are in the range of 2-4 days,” he said. “We are keeping our customers well appraised and updated of any delays and continue to monitor the situation closely. However, the delays will ripple down to other Chinese ports, as well as to Southeast Asia, and impact feeder connections too.”

Catherine Tsao, head of ocean Freight at DHL Global Forwarding China, said congestion was mainly contained within the Yangshan Terminal at Shanghai and this was causing most disruption to services to Europe handled there. But she added that barge feeder connections from inland points along the Yangtze River that serve Shanghai were also impacted.

“Shanghai International Port Group has announced that they are already taking necessary actions to enable normal port operations as soon as possible,” she noted. “This is actually unfavourable timing as we have been dealing with capacity shortages on the east- and westbound trade between Europe and Asia in March and April. Due to an overall well-performing world economy, we see a strong demand. But we also see that ocean freight rates continue to be on a high level. Such regional incidents don’t make it easier for all involved parties.”

She said DHL was monitoring the situation closely and providing update advisories to customers. “Where needed, we will be able to offer additional contingency plans for specific requirements,” she said.

These include, but are not limited to, offering shippers alternative vessel services, rail services for certain EU countries, particularly for urgent shipments, and shipping directly from Tai Cang port at Shanghai for shipments to Japan, Korea, Taiwan, Vietnam and Thailand. DHL is also advancing shipping schedules “or changing to rail or road mode for the inland ports from Yangtze River, at an additional cost,” she added