Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Global supply lines struggle to clear container backlog after Suez chaos

EconomyApr 08, 2021 10:20AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: Ship Ever Given, one of the world's largest container ships, is seen after it was fully floated in Suez Canal 2/2

By Jonathan Saul and Timothy Aeppel

LONDON/LOS ANGELES (Reuters) - A backlog of container ships carrying consumer goods has grown in some key strategic ports after a near week-long blockage in the Suez Canal, adding to ongoing disruptions to global trade, industry sources say.

Dozens of container ships were stuck when the 400-metre-long (430-yard) Ever Given ran aground in the canal on March 23, with specialist rescue teams taking almost a week to free the vessel.

The suspension of sailings through the waterway left shipping companies - including container lines - with millions of dollars in extra costs, which were not covered by insurance.

"The blockage of the Suez Canal will increase the negative impact on global supply chains in the coming weeks, as the availability of empty equipment, particularly in Asia and Europe, will be affected," Reiner Heiken, chief executive of U.S. headquartered Hellmann Worldwide Logistics, told Reuters.

Container shipping companies, carrying products ranging from mobile phones to designer goods, have been contending for months with disruptions caused by the coronavirus pandemic and a surge in demand for retail goods that led to wider logistical bottlenecks including in top consumer market the United States.

While some transporters of goods have turned to rail, that option has barely made a dent as about 90% of world trade is transported by sea.

European and U.S. retailers have warned about potential supply snags due to the impact from Suez.

Port officials in Europe's leading gateways say the impact will be felt in coming days, adding to already stretched supply lines.

Barbara Janssens, with the Port of Antwerp, said the port and terminal operators were "already preparing for what's ahead".

"The impact on global supply chains is expected to last for several months. There is simply not enough spare capacity across the worldwide container ship fleet to help counter the worst effects of the Suez incident," Janssens said.

Leon Willems, with the port of Rotterdam, said it expected its container traffic to be around 10% higher than normal every day in the coming weeks.

"Both the port and container terminals are doing everything they can to minimise disruptions," Willems said.

Maersk, the world's number 1 container line, said in a customer note that vessels held up in Suez would be delayed for a number of days before they reached U.S. East Coast ports.

In an unusual step, the company urged the ports "to take this opportunity to clear cargo from terminals which will allow them to operate more efficiently".

  The East Coast Port of Newark did not immediately respond to a request for comment.

A source at the southern U.S. port of Savannah said they expected to clear a backlog of ships in the coming days.

LONG WAITING TIMES

While ports on the U.S. East Coast are more exposed to any disruptions in the Suez Canal, the surge in demand for retail goods has overwhelmed West Coast terminals in recent months.

Container ships face longer waiting and discharging times at West Coast ports than in many other ports around the world, analysis from logistics platform project44 showed.

Eugene Seroka, executive director of the Port of Los Angeles, said they were making progress whittling down the backlog, which could be cleared by the end of May or early June.

Mario Cordero, executive director of neighbouring Long Beach port, also expected their backlog to be reduced by summer.

"But for at least the next couple of months, we expect a continuing surge on the volume that we're seeing." Cordero said.

Analysts Sea-Intelligence expected a ripple effect in the coming weeks between Asia and Europe and disruption of container trade.

Hong Kong's Transport and Housing Bureau said the government was monitoring the situation although the disruption had not had a significant impact on shipping operations between Europe and Hong Kong.

Transporters elsewhere have been turning to a rail links between China and Europe to get critical supplies through, although users stressed volumes were still small.

Journey times via the rail routes, which run from China through Kazakhstan or Mongolia to Russia and then on to freight centres across Europe, typically take between 16-18 days compared with four weeks by sea and just under a week by air.

Danish freight forwarder DSV, Dutch freight management company GVT and Maersk all said they were seeing a surge in interest for rail freight between Europe and Asia.

"Land transport between Asia and Europe will always be able to cover only a small share of the total transport volume," Hellmann's Heiken said.

Global supply lines struggle to clear container backlog after Suez chaos
 

Related Articles

Economic Calendar - Top 5 Things to Watch This Week
Economic Calendar - Top 5 Things to Watch This Week By Investing.com - Apr 18, 2021 18

By Jesse Cohen Investing.com - Dozens of companies from a wide range of industries will report quarterly results in the week ahead as the first quarter earnings season on Wall...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email