Sea Logistics

Shipping demand surges causing delays, congestions

Increased consumer spending on furniture and household appliances, work-from-home goods and exercise equipment, medical supplies (personal protective equipment and gloves) and high volume of e-commerce goods have contributed to the spike in demand for ocean shipping.

But this came at the expense of ports congestion and extended working hours.

Shipping Association Malaysia (SAM) chairman Ooi Lean Hin said the congestion and extended working hours had led to berthing delays, disruption in shipping schedules, vessel bunching and the overall expansion in ocean voyage sailing turnaround.

“This has reduced shipping capacity and further expanded container turnaround on the ocean leg,” Ooi told the New Straits Times recently.

He said the shift of air cargo to ocean shipping due to a spike in air freight charges resulting from about 90 per cent of grounded passenger aircraft globally, had created more demand in ocean shipping.

“Shipping lines have already mopped up all available container inventory, both old and new, in the market. The container leasing rates also increased by more than double while leasing companies are demanding longer lock-in periods of eight to 12 years for new leases.

“Likewise, shipping lines have chartered in additional vessels to cover for the shortfall in shipping capacity brought about by the disruption, which in turn pushing for higher charter hire rates,” he said.

Ooi said the landside disruption, major ports congestions globally and pent up demand for ocean shipping were among the global snowball effect in the logistics and shipping industry brought upon by the Covid-19 pandemic.

He said the landside turnaround (return of containers) in the United States and Europe had expanded by 25 days to 30 days due to the shortage of truck drivers and warehouse capacity.

“Globally, container yards in the port terminal are full of laden import and export containers, coupled with a disruption in port labour supply.

“This has affected shipside operation’s productivity, leading to extended working hours for vessel operations and snowballing into acute port congestions worldwide,” he said.

Ooi said shipping lines might be burdened with additional container fleet and costs as well as vessel capacity when the world reverted to normal.

He expects the container equipment to stabilise by the second half of 2021 as new factories produced units that would balance the supply with demand.

He said the recovery of ocean shipping capacity would be largely dependent on the world returning to normal in respect of logistics disruption and ports resolving their congestion situation.

Ooi said the ocean freight rates might stabilise and reduce gradually. Howver, the rates were unlikely to return to pre-pandemic levels given the carriers’ rising costs as most mainline operators (MLOs) had reset their business model.

He said the export and import business community can assist by reviewing their operating policies such as avoiding early pick up of export containers as well as doing away with requests for food grade and Grade A containers, which exporters have currently accommodated due to the acute shortage of equipment.

“The merchants’ cargo is protected by many layers of packaging material. There is simply no logic in the request for food grade and Grade A containers, and the standard for container equipment should be clean and sea-worthy as being practised globally.

“Such early pick-ups and requests of special grade containers are unique to only Malaysia and poses huge logistical challenges for container liner operators to accommodate as their container fleet are made up of both old and new containers,” he added.
Source: New Straits Times

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