South China container dwell times and availability worsen
Vessel delays and container dwell times at South China’s key Yantian Port have been worsening over the last week and the port is expected to remain congested throughout the month, based on container dwell time data from logistics visibility specialist Project44 – with container equipment availability indicators also appearing to worsen.
The congestion at southern China’s biggest export container port – due to tightened controls over a detected Covid-19 outbreak on 25 May amongst port workers, has resulted in container lines blank sailings or bypassing Yantian and escalating congestion and restrictions at neighbouring Shekou Port in Shenzhen and Nansha Port in Guangzhou.
By June 7, Project44 found that minimum dwell times for containers at YICT as a port of loading was one day, while median dwell times were up to 18 days – with similar figures for container dwell times at YICT as the port of discharge.
The Covid-19 outbreak has also spread Guangzhou, the industrial city northwest of Shenzhen, which has also imposed restrictions on business activity – including at Nansha Port, further increasing congestion issues in Yantian.
Port congestion in the South China Sea surrounding Yantian has been severe, Project44 highlighted, noting that “as of 7 June, 47 vessels are approaching the port with upcoming ETAs – of which 22 vessels with ETAs already in the past. With roughly 32% of all vessels approaching Yantian delayed already, the congestion is expected to exacerbate over the next few weeks. Several container lines have announced rerouting their vessels away from the Shenzhen port cluster to preserve their schedule reliability.”
Josh Brazil, vice president of marketing at Project44, said the disruptions “may add to the already record cost of shipping goods out of China”, adding: “The delays have already resulted in pressurising soaring shipping prices within China due to a lack of containers and increased export demand. These high shipping costs are just one factor that may contribute to an additional looming threat to global inflation.”
Further reduced container supply
Interruptions caused by the Covid-19 outbreak have reduced container supply further, even as demand for Chinese goods remains at record highs. In the last year, freight costs between China and the US West Coast have gone up by 156%, while China to the US East Coast trade lane saw an increase of 162%, Project44 calculates. Meanwhile, freight prices between China and North Europe have gained the most, witnessing a 535% increase, by Project44’s calculations – reflecting high demand, reduced capacity, and increased dwell time across the Chinese coast.
Project44 said the current obstruction will mean additional blank sailings in June from Yantian to Hong Kong to the US West Coast, noting that container capacity “may reduce by roughly 50% from the port, and there could be restrictions on the carriers allowed to release premium shipping containers. For Asia-Europe trade lanes, carriers have announced blank sails from northern ports like Tianjin and Quindao, citing congestion issues.”
The company added that importers from the US and Europe “must remain wary of the overall deterioration of maritime trade lanes originating from China and plan their freight operations accordingly”.
Slump in container availability
Meanwhile, data from equipment positioning specialist Containers xChange shows a “significant slump” in container availability at southern China’s ports over the past two weeks. Yantian saw a 19% drop in incoming containers between Week 17 and last week, while Nansha’s drop in incoming containers over the same period was 16.4%, and at Shekou the decline was 29.6%.
Chief executive Johannes Schlingmeiner noted: “Far fewer empty boxes are arriving back to southern China as container lines skip calls and many shippers will likely face long delays or higher prices for equipment if they can’t avoid using the affected ports. Our forecasts suggest container availability at these ports in southern China will not increase in the coming weeks as more container lines cancel calls.
“We expect container prices in those areas to increase and many shippers will likely turn to shipper-owned containers.”
In an update today on the latest Covid-19 related impacts to the Yantian, Shekou, and Nansha ports in China’s southern Pearl River Delta area, Maersk said the situation “continues to deteriorate as more positive Covid cases have been confirmed in Shenzhen – where Yantian port and Shekou port are located – and in Guangzhou, where Nansha port is located.”
Ships bypass Yantian and Shekou
On the vessel said, Maersk said that due to the disruptions, “64 vessels, including our partners’ vessels, have omitted the Port of Yantian and Shekou in order to protect schedule reliability. Our people are working relentlessly with the contingency plan – which covers 49 vessels for origin export shipments. Import laden containers on the omitted vessels are expected to delay for over three weeks.”
Maersk said that “due to further measures being implemented, increased congestion and vessel delays upwards of 16 days are expected in Yantian port”. It said Yantian International Container Terminal (YICT) yard density “remains elevated with disinfection and quarantine measures being continuously implemented by local authorities to prevent the spread of Covid-19”.
However, some operations in the western area of Yantian International Container Terminal (YICT) that had been suspended have resumed: From 08:00 yesterday, Maersk said import laden containers resume operation in the western area of YICT.
But other operations in the western area remain suspended until further notice, and “origin export containers and transhipment containers have been detained there”. As of today, export laden container gate-in continues to be accepted only 7 days prior to vessel ETA, and only after the terminal confirms the advance reservation made by trucking companies for laden containers gate-in.
Pick-up of laden import containers – which is mainly concentrated in the eastern area of the port – maintains normal operations, Maersk said. But operation in the eastern area of the terminal – where mother vessels mainly berth – continues to experience low productivity, which is about 30% of its normal level.
Global impact
As reported yesterday in Lloyd’s Loading List, these disruptions in southern China threaten to ripple around the world. Drewry ports and terminals analyst Eleanor Hadland commented: “We’re seeing this contagion spread around the world and there is just a lack of resilience. There is no spare capacity in North America or China at the moment to handle this level of disruption.”