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Claims that Severe Congestion is Easing Proving to be Premature

Recent media reports claiming severe port backlogs are easing and the industry is slowly getting back to normal are, at best, premature. Up to date information from multiple sources throughout the industry shows that ports are as congested as ever, if not worsening, and space is at a premium.

Major port disruptions continue to emerge even as we move farther away from the apex of pandemic complications. JOC recently reported that severe backlogs at the Port of Yantian, an important shipping hub in South China, are due to a recent COVID-19 outbreak amongst workers. As a result, productivity went down by 80%. To date, production is still not back to normal, as some working teams continue to have issues with the virus. Many carriers are consistently skipping Yantian to avoid costly delays.

On the other side of the pacific, most US ports are still struggling with severe congestion. To demonstrate just how severe port congestion is, the top three global carrier alliances have opted to drop Oakland on some Pacific Southwest services to help reduce severe delays and maintain service integrity. The high TEU volumes have proven to be too much to handle for the northern California port. Now, premium services from those alliances will skip Oakland and only berth in Los Angeles, which is also suffering from a substantial backlog.

“One good indicator that this strong market trend is here to stay is the number of new ships on order,” said Anthony Fullbrook, President of OEC Group’s Northeast Region. “Carriers have commissioned the construction of new vessels that would increase total global seaborne capacity by 4.17 million TEU, and they are expected to be delivered by 2025. Carriers are betting this new trend will continue and become the norm.”

One area of hope for improved operations in logistics had been air cargo. That optimism is due to an increase in commercial airline flights from the overall increase in vaccinated people and the opening of the tourist industry. While air travel has gone up, it has not risen enough to make a meaningful dent in the cargo backlog. Additionally, recent cases of COVID-19 have emerged in some airports in the Far East, causing new closures. At the same time demand levels for commodities like clothing, footwear, electronic goods, and children’s toys are expected to remain high and the e-commerce boom shows no sign of slowing down.

“Despite what is being claimed in media reports, the reality is demand for consumers goods remains high and global supply chains are as congested as ever,” said Peter Hsieh, regional vice president of sales and marketing for OEC Group. “Right now, the only thing importers can do is plan early, not delay their shipments, and prepare for delays.”
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