Queues outside the world’s container ports are tying up vessel capacity and helping to underpin both freight and charter rates
The container shipping industry has seen congestion at major ports reach levels that exceed those recorded during the Covid-19 supply chain crisis.
More than 4.3m teu of container ship capacity is currently waiting outside ports around the world, according to analysis from Linerlytica.
This surpasses the previous pandemic high of 4m teu recorded in 2022.
The figure represents 12.6% of the global container fleet, a striking reminder that despite years of investment and operational improvements, supply chains remain vulnerable to disruption.
This time the causes are different.
Rather than a pandemic-induced collapse in logistics networks, the latest bottlenecks are being fuelled by a combination of severe weather,
infrastructure constraints and increasingly complex trade patterns.
East Asia has emerged as the epicentre of the crisis after a series of powerful typhoons disrupted vessel schedules and left ships queuing for berths across China and neighbouring markets.
The impact has been significant.
In North Asia alone, more than 2.4m teu of capacity has been stranded, accounting for over half of the global vessel queue, according to logistics
specialist Zencargo.
Schedule reliability remains stubbornly weak at between 60% and 65%, while late arrivals are averaging between five and five-and-a-half days.
The disruption has effectively removed about 1.7m teu of deepsea capacity from active circulation, Zencargo said, equivalent to the entire fleet of the
world’s eighth-largest container carrier.
Congestion is not confined to Asia.
Delays are beginning to build at the Panama Canal, where transit slots are expected to be reduced further in September, adding another layer of
uncertainty to global liner schedules.
The result is a growing shortage of available ships that is helping to support freight and charter rates despite continued fleet growth and a historically low level of idle tonnage.
That is proving important with the easing of peak season for liner operators.
Strong market
Congestion is helping to underpin both charter and freight markets.
Charter rates, for example, have risen to levels not seen in nearly four years.
The New ConTex index, a composite of charter market vessel sizes, gained 0.4% this week, hitting 1629 points, its highest level since October 2022.
Container ships are now being fixed about six months ahead of expiry, which is a record that surpasses the 2021 and 2022 peak, MPC Container Ships chief executive Constantin Baack told an earnings call this week.
Freight rates show a more mixed picture with declines from Asia to Europe and spot rates peaking on the transpacific.
Yet, congestion is also proving to be an important factor in slowing the rate of decrease in freight rates from Asia to Europe.
The Shanghai Containerised Freight Index rose for the seventh straight week to 3,509 points on 28 August.
Moreover, congestion and firm trade volumes lift the outlook for the sector and have added to the “real market balance”, Clarksons Research said.
Structural weaknesses
Industry analysts argue that what is happening today reflects deeper structural weaknesses that have been building for years.
Drewry cites a sharp deterioration in port productivity since before the pandemic.
The consultancy said global ship waiting times so far this year have almost doubled compared with the first seven months of 2019.
Container ships are spending longer in port overall, but the increase is not primarily due to slower cargo handling.
Instead, a growing share of time is being spent waiting outside terminals before a berth becomes available.
“Container ships are demonstrably less productive in ports and spend more time waiting for a berth than they were before the Covid pandemic,” Drewry said in a note.
Shipping giant AP Moller-Maersk believes part of the answer lies in years of underinvestment in terminals.
Presenting the group’s financial results earlier this month, chief executive Vincent Clerc said that strong growth in Asian exports and widening trade
imbalances have collided with inadequate investment in port capacity.
But Drewry’s view is that the higher risk of port congestion is more complex, linking the change to several industry trends.
Higher levels of automation and a focus on maximising terminal utilisation have reduced spare capacity, leaving operators with less flexibility to absorb disruptions.
Carriers themselves also play a role, Drewry said.
Blank sailings, extra-loader services and ad hoc schedule adjustments are designed to maximise returns, but can generate vessel bunching at major
gateways, contributing to yard congestion and longer waiting times, Drewry added.
Source:TradeWinds
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