South Africa does not live in a bubble, and globalisation has greatly affected supply chain management where materials, factories and customers all over the world are at the mercy of global events.
Covid-19
Covid-19 is the perfect example; the cost of shipping containers has reached historical highs following the outbreak of Covid-19 around the world last year. As capacity plummeted, rates skyrocketed, reaching unprecedented levels.
At the same time, local quarantining policies, social distancing and the new working conditions have impacted port operations, which means that container turnaround times have decreased. As a result, port congestion and container shortages have become serious challenges.
Compounding this issue is the fact that there is a swift return of trade in various markets, with growth in the eCommerce industry. Cargo volumes have quickly returned to pre-pandemic levels – and this has resulted in tight capacity on vessels.
Asia
The situation from Asia remains challenging, with available space/booking capacity with the carriers and soaring freight rates continuing to deteriorate from the region to all areas globally.
Vessels are over-committed, and carriers are only releasing limited bookings and equipment, with contracted space allocation being disregarded at this time, in favour of ‘spot’ bookings with priority freight rates being applied. Freight rates continue to increase as capacity constraints become tighter into August. Carrier rate structures and contract rates are not guaranteeing availability, with additional shipping priority rates being introduced.
Two of the busiest ports in China (Shenzhen and Ningbo) have stalled operations due to Covid-19 cases and extreme weather conditions.
For instance, the Meishan Container Terminal in Zhoushan Port Ningbo has been closed for the past week due to a Covid-19 case. It is only due to open on the 1st September fully. Agents anticipate it will take 10 days to two weeks to clear the boxship backlog, with the whole port back to normal operations by next month. Currently, project44 reports that 41 ships at anchor awaiting a berth and cargo handling at the Meishan terminal.
Main ports from Asia are advising that there is very limited, to no capacity into South Africa for the rest of August, with carriers not releasing bookings on already over-committed vessels for the balance of the month
Major transhipment hubs (Singapore and Tanjung Pelepas) are experiencing 5 week delays.
USA
These delays in Asia have significantly impacted the USA, with the biggest U.S. trade gateway with Asia clogged with the most inbound container vessels in more than six months. For example, last week 37 ships were anchored awaiting berth space outside the twin ports of Los Angeles and Long Beach, California.
Port and rail congestion, chassis shortages, and extended wait times with the terminals and piers continue to negatively impact the movement of cargo and containers within the US.
In addition to the already challenging situation, limited driver availability further impacts delays in cargo movement – FTL, LTL and container movement is being affected.
Juggling cargo readiness dates with carrier space availability, equipment release, and truck and driver availability is essential before confirming cargo moves. In addition, congested CFS facilities, container yards, rail movement, and erratic schedules impact cargo and containers’ efficient and timely movement.
There is a decreasing volume of empty containers from the USA ports, which could mean that proportionately fewer containers are now going empty or that there are overall fewer containers available.
Constantly changing vessel stack dates in the USA and South Africa are seeing container loading delays and container rollovers at the discretion of the carriers and port authorities.
Australia
The average berthing waiting period in Melbourne is 4 days and 9 days in Sydney.
Furthermore, Australia moves into its traditional’ peak season’, with continued strong import and seasonal export demand. One consequence of the current shipping capacity squeeze is the potential for rising container detention costs imposed by shipping lines on import and export container equipment.
Europe
Turkey, Spain, and Italy are affected by the global equipment imbalances, the congestion at Italian terminals, and the shortage of feeder vessels. This could affect transhipments.
The summer holiday season has started in Europe from the end of July up to the beginning of September. Businesses, including some transporters, close for summer vacations. During this time, there are restrictions on the movement of heavy vehicles throughout Europe – impacting cargo deliveries and pickups.
There are driver shortages, impacting collections and deliveries throughout the UK.
Local ports
With poor weather conditions being experienced in SA ports and recent IT and other service disruptions, we see an increase in the number of port omissions and scheduling changes.
Ziegler sees unscheduled container transhipments, as well as extended delays in transhipment hubs around the globe.
Export capacity out of South Africa is constrained, as carriers work to move backlogged cargo, and global equipment shortages impact SA exports.
- Durban
High traffic volumes continue in the Durban terminals, resulting in delays in container movement. Transnet issued an advisory on Saturday 21st August, requesting customers to please hold back the delivery of export containers to Durban MPT (Point Terminal) until further notice. This is due to stack occupancy. Transporters are requested to make necessary appointments to uplift available import containers from Durban MPT (Point Terminal) as soon as possible. Congestion is high in Durban, with the vessel berthing times indicated as follows: Pier 1 at 5-6 days; Pier 2 at 5-6 days; Durban Point at 3 days. High winds have been forecast from 22nd through to 29th August and may impact operations.
- Cape Town
High traffic volumes are still experienced; however, containers are moving. Cape Town terminal berthing times indicated: CTC at 1-2 days; MPT at 1 day. Seasonal high winds are expected on 26th & 27th August.
- Port Elizabeth
Port Elizabeth terminals have been affected by poor weather conditions and winds during the week. As a result, there have been some system constraints. Containers are moving, but high traffic volumes are being experienced. Therefore, berthing times in Port Elizabeth are indicated: Coega at 3 days; Port Elizabeth at 0 days. Seasonal high winds are forecast on 24th August and 27th to 29th August.
In conclusion
The combination of these types of delays effectively reduces the amount of transport available at any given time and exacerbates high stack occupancy and resulting congestion.
We will continue to experience volatile freight rates, carrier capacity constraints, extended transit times, transhipment hub delays, and carrier scheduling amendments on all trades.
Carrier schedules are very erratic at this time, with blanked sailings being announced by shipping lines. Additionally, carriers are amending schedules mid-voyage, vessels are being phased into and out of services, and we see cases of unscheduled container transhipments due to vessel schedule amendments.
Ziegler will continue to remain in close communication with our customers. Our operations team continuously checks with all carriers and endeavours to source the best freight rate at the earliest sailing.