It could be déjà vu all over again for agricultural exporters who rely on containers, according to several officials.
Huge COVID-related delays in unloading ships at the Port of Shanghai are causing ripple effects around the world, reminding people of the last container crisis.
Windward, a maritime artificial intelligence company, reports that 1,826 container ships were waiting outside of ports around the world as of mid-April.
“That’s 20 percent of all container vessels globally,” the company said in a recent update on the situation.
A lot of those vessels are anchored outside the Port of Shanghai, the world’s largest container port.
That is because Chinese authorities put the entire city of Shanghai in a COVID lockdown on April 5.
The result is that 506 container vessels are now moored outside of Chinese ports, which is nearly double the amount of two months ago.
That is expected to have a delayed ripple effect around the world for shippers who rely on containers, said Greg Northey, vice-president of corporate affairs with Pulse Canada.
Eventually all those ships in Shanghai will be unloaded and re-loaded with consumer goods destined for North America and other markets.
“The expectation now, right in time for the new crop year, is that we’re going to see basically a bullwhip of all that stuff coming,” he said.
That will be followed by a tremendous pull to get empty containers back to China to be reloaded with a backlog of more consumer goods.
“For sure it’s going to be harder to find containers,” said Northey.
Others are also bracing for another looming container crunch.
“We expect a bigger mess than last year,” Jacques Vandermeiran, chief executive officer of the Port of Antwerp, Europe’s second-busiest container port, told Bloomberg.
“It will have a negative impact, and a big negative impact, for the whole of 2022.”
JB Hunt, a major U.S. trucking firm, told the online publication Quartz that it anticipates today’s delays in Shanghai will work their way back to North America’s west coast by July.
“It just takes a little bit of disruption to change the environment all over again,” said JB Hunt’s chief commercial officer, Shelley Simpson.
This new shipping bottleneck is happening just as the industry was seeing the first improvement in schedule reliability in two years, according to The Maritime Executive.
Northey agreed there was a slight improvement in rates and service but exporters are still only getting half of the containers they require.
“Something like this in Shanghai is just going to exacerbate that,” he said.
China’s People’s Daily newspaper is reporting that the country’s transport network has “resumed smooth operation” with truck flow in and out of the Port of Shanghai up by 37 percent week over week.
But some are skeptical about suggestions of a rapid recovery in port activity.
American Shipper is reporting that port productivity has decreased 20 to 30 percent in Shanghai. It quoted one analyst who said it will be three months before trade flows are restored to normal levels.
Northey said there are also broader issues in the container industry that need to be addressed.
Pulse Canada is a member of the Coalition to Fix the Container Crunch, a collection of agricultural groups that have been raising awareness about the container issue in Ottawa.
The coalition believes it has succeeded in getting the government’s attention on the issue and is now shifting gears.
“We’re going to be really focusing on competition law and asking for investigations into the container lines,” said Northey.
The coalition wants Canada to follow the lead of the United States, which has introduced legislation to provide more competition and improved service in the container industry.
Northey said the Competition Bureau has already initiated an investigation into the container industry in conjunction with the U.S., the United Kingdom, Australia and New Zealand.
It is asking shippers for input and the coalition intends to provide significant feedback on the situation. It has already completed an impact assessment that it will be submitting to the bureau.
Par : Sean Pratt (05/05/2022)
Source : producer.com (The Western Producer)
Photo : rawpixel.com