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Congestion has caused blank flights to rise by 300%, and delays in surrounding ports have increased; freight charges continue to soar
2022-11-12   168

Congestion at Yantian Port has extended to surrounding ports, with a large number of ships canceling calls at the heavily congested Yantian Port, which has placed a heavy burden on surrounding ports – delays at Nansha Port and Shekou Port continue to increase.

Affected by congestion at Yantian Port, the number of blank flights rose by 300% in the first half of June, and container freight continued to soar to an unprecedented level.

Project44 analysts said that from June 1st to 15th, 298 voyages of global container liners were suspended, with a total capacity of more than 3 million TEU, which means that the number of suspended voyages increased by 300% within one month. Although not all air traffic is caused by the Yantian International Container Terminals, the impact is clear.
Josh Brazil, vice president of marketing at project44, said: “Although Yantian Port is the epicenter of the crash, these figures spell trouble for the entire industry, especially those companies that rely on these routes. Even freight not directly affected by the Yantian situation will be implicated as operators adjust their networks to avoid congestion.”
Josh Brazil said that, as of June 24th, the number of blank voyages was still rising, and then it would decline, depending on the continued control of the epidemic in the port and South China.
Maersk said that as of June 21st, the density of the car park in Nansha has reached 100%, and it is expected that ships at Nansha Port will continue to be delayed for 4-5 days in the coming week. Nansha only accepts export containers loaded seven days before the estimated arrival time of the ship, and only accepts the advance reservation of the truck transport company confirmed at the wharf. The supply of 40-foot containers in Yantian and Shekou is still tight, and Maersk recommends that customers use 20-foot containers instead.

Shekou Port including Chiwan Container Terminal, Mawan Container Terminal and Shekou Container Terminal have tightened regulations to accept only locks loaded with export cargo within 4 days before the estimated arrival time of vessels.

Shekou Port (including Chiwan Container Terminal, Mawan Container Terminal and Shekou Container Terminal) have tightened the rules and only accept reservations for export within 4 days prior to vessel arrival. As far as Yantian itself is concerned, Maersk reported that the operating capacity of the east area of the terminal is about 54% of normal capacity, and it is gradually recovering, and the density of storage yard is reduced to 60%. Maersk expects that flights to Yantian will be “delayed by more than 4 days” in the coming week.
On June 21st, Maersk reported that the number of vessels operated by Maersk and its partners that canceled calls to the Yantian increased to 90, up from 84 last week. The container to load imported cargo on these vessels is expected to be delayed by more than three weeks.
Project44 has warned that even if operations return to normal, it could take weeks to process the backlog of container. “If Chinese authorities extend their stringent controls, daily high double-digit blank sailing rates could extend into July, throwing supply chain at this globally important port into turmoil until summer,” the analyst said.
At present, the container transportation market is facing various problems caused by overstock of cargo, delay of ships, port jumping, shortage of container and freight space. Some analysts said that once the port resumes normal operations, it is expected that there will be a surge in demand for cargo exports in the next 2-5 weeks, as well as the chain reaction caused by the interruption of the deployment of empty containers returning to South China. The follow-up impact of this incident will last for more than half a year.
Flexport CEO Ryan Petersen said there is no single solution to the shipping delays that have roiled the global economy. Resolving this global shipping delay “may take a while,” especially with the holiday season and Christmas looming.

At the same time, the continuous congestion, transportation capacity and equipment shortage are driving the container freight rate to rise. On June 17, Drewry’s World Container Index rose 3.4%, or USD231, to USD6957.44/FEU. The price of Shanghai-Rotterdam increased by 6% from the previous week to USD11,196 per box, an increase of 534% year-on-year. Drewry expects rates to rise in the coming week due to GRI implementation, high production and equipment shortages.

The congestion in South China has already led to congestion surcharges imposed by shipping companies, and both FAK and insurance premiums continue to rise. During the week ending June 18, S&P Global Platts said that the premium service fee for cargo sailing from north Asia to the U-S-Pacific-Coast was USD9,000-10,000/FEU. The freight rate to the United States Atlantic Coast (transatlantic to US East) is significantly higher than that of the transpacific, and the price of all premium bookings is more than USD15,000 / FEU, but the person with inside information said that the freight rate is close to USD18,000 to USD20,000/FEU. A North American shipper said: “The premium is approaching the FAK rate in March and April.” The inland container flow at the port of destination is slow, empty shifts increase, and freight rate rise further. Asia-America (trans-Pacific route): tight freight space on the west coast/east coast of North America; Due to multiple factors such as port congestion, shipping schedule delays, capacity imbalances, inland transportation delays, and the continued strong demand for imports in the Americas, many shipping companies have announced that they will increase and levy GRI and PSS in July; It is inevitable that freight rate will rise further in July. It should be noted that due to port congestion, the transportation capacity is in short supply, and the pressure of empty box return increases; The shipping company is limited to receiving cargo from inland points.
Asia-Europe routes: European and Mediterranean markets have strong demand, freight space is very tight, SCFI index on European routes are rising steadily, and freight rates have reached the highest record; Due to the epidemic prevention and control measures in South China, the terminal has tightened the operation process and the operation is slow; Vessels are canceling their calls to Yantian Terminal one after another, and some cargos are choosing to go north from East China, so the shortage of containers in the East China market will further intensify in the coming weeks. Freight rates will continue to rise.

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