Continuing port congestion stretches supply chains to the limit

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Well over a hundred containerships were stuck off major container ports last week as port delays continue to disrupt supply chains and hamper industrial customers.

Worst affected were the US west coast ports of Long Beach and Los Angeles and Chinese terminals at Shanghai and Ningbo, according to industry analysis.

The chaos is costing millions of dollars in delays to ships and cargo. Experts say that the rapid recovery in world trade after the worst of the pandemic caused significant disruption to supply chains, with large volumes of equipment at the wrong end of trade lanes and port productivity plummeting. The extent of the congestion crisis, which is expected to have an impact on inflation, has also demonstrated how some ports have not kept pace with digital technologies to minimise dwell times and maximise throughput.

Yet shipping analysts at Drewry have revised upwards their projected five-year growth forecasts on port handling in the latest issue of the firm’s Global Container Terminal Operators – Annual Review and Forecast. Cargo handled is expected to grow by an average of 5% a year over the first half of the decade, reaching global capacity of 1.34bn teu by 2025, the company’s sector experts revealed in a webinar last week.

Digitalisation will provide the key to increased port productivity, Drewry declared. Improved data flow can materially reduce the time taken for containers to transit ports and blockchain technology now provides a basis for significant efficiency gains. The analysts noted how global terminal operators, regional container lines and arterial trade lane carriers are now using neutral platforms including TradeLens and Global Shipping Business Network, and others such as Ant Blockchain (Alibaba) in China.

Meanwhile, the impact of port delays is underpinning a surge in container ship chartering, with companies taking extra tonnage on longer period contracts. However, port congestion is putting a brake on some deals, as charterers hold off committing to expensive tonnage that could be held up, waiting outside congested ports for long spells.  

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