Congestion in Chinese Ports – Major Causes and Effects
For the broader economy, the shipping line and port performances usually determine how quickly in-demand products reach various markets all over the world. However, ever since the pandemic began, there have been massive delays / cancellations of services in the shipping industry. Even now, as the world recovers from the pandemic, the shipping sector is struggling to keep up with the increased demands for various products, both essential and non-essential. And China, being one of the biggest manufacturing and exporting hubs in the world, is maybe facing the worst problems out of all countries.
Following are some of the reasons on why China is so severely affected:
- Vessel Delays:
Vessel delay is defined as number of days between the originally scheduled arrival date and actual arrival date for a particular vessel. Speaking in terms of Chinese ports, vessels on general shipping routes to/from China are seeing delays of 5 to 7 days at the least, with the delay expected to rise over one week in certain ports, if the current trend continues. There are many factors causing these delays; It’s clear, however, that overcapacity and port inefficiencies are a large part of the problem. Liner companies have engaged in overselling cargo space to increase shipping load efficiency. Conversely, this has greatly decreased the efficiency of wharf operations. Moreover, the ports original design was not meant to handle the current amount containers handled onsite. And, a shipping alliance formed between more than ten liner companies has contributed to further increase in cargo volume in turn leading to deterioration of wharf operations.
For example, currently, more than 50 container vessels are waiting to dock in the Outer Pearl River Delta in the southern part of China, as compared to 20 vessels in the same period last year
- Rising COVID cases:
Congestion at container shipping ports, especially in southern China is worsening amid a sudden rise in COVID-19 cases, causing the biggest backlog since at least 2019. For example, more than 150 coronavirus cases have been reported in Guangdong province, a key manufacturing and exporting hub in southern China, since the latest wave of cases struck in late May, triggering local governments to step up prevention and control efforts that have curbed port processing capacity. Ports in Guangdong, including Yantian, Shekou, Chiwan and Nansha, have issued notices this week suspending vessels from entering ports without advance reservations. This has also led to severe drop in efficiency of ports, with many ports operating at 30% of normal productivity levels while congestion at container terminals in these ports have surged to over 90% of capacity.
- Equipment Unavailability:
In the early days of the pandemic, global trade had effectively come to a standstill. In the first half of 2020, many shipping companies cancelled a lot of their services and docked their ships, leading to a huge backlog in trade. Another adverse effect of this was stranding of empty containers at various countries, meaning there was a huge shortage of containers in China to meet the current demands. Another important factor is that processing containers in these ports has been taking longer because of all the disruptions and inefficiencies brought about by the pandemic. Containers have been piling up at dockyards, and trains and trucks have struggled to get them out fast enough. This has led to a global container shortage, creating massive delays on both ends of the shipping supply chain, tying up large numbers of containers and ships and leading to growing backlogs and shortages. Then, in March 2021, the Ever Given, one of the largest container ships in the world, got stuck in the Suez Canal in Egypt. This added to the global shortage of ships and containers by stranding even more of them out at sea.
As a result of these congestion problems, many mainline carriers are skipping or curtailing direct calls to Chinese ports like Tianjin and Qingdao improve schedule reliability and equipment availability and to catch up with the planned sailing schedule and increase vessel turnaround times.