Perfect Storm: Congestion Plagues South China And US West Coast Ports 

Perfect Storm: Congestion Plagues South China And US West Coast Ports 

Peak shipping season is ahead — and the parking lot of container ships moored off the US West Coast continues to worsen, with the epicenter of congestion based around Los Angeles/Long Beach ports. On the other side of the Pacific, in southern China, a surge in COVID-19 has caused some of the biggest port congestion in more than one year. 

So now port congestion is seen on both sides of the Pacific as it’s hardly a secret that the recent collapse of trans-pacific supply chains will remain strained through the summer and one reason why prices for goods are soaring (as recently discussed in “It’s About To Get Much Worse”: Supply Chains Implode As “Price Doesn’t Even Matter Anymore” and “Port Of LA Volumes Are “Off The Charts.””) 

But now, focusing at South China ports, exploding cases of coronavirus infections in Guangdong province, a top manufacturing and exporting hub, recently triggered local governments to increase prevention and control efforts that “curbed port processing capacity,” said Reuters

Major shipping companies have warned clients of vessel delays, changes to port call schedules, and the possibility of avoiding some ports altogether.

Ocean Network Express (ONE), a container shipping company, warned customers in an advisory Wednesday: “The container logistics situation continues to deteriorate around all the ports in the area [South China port].” 

Most of the congestion has been building at the Yantian International Container Terminal (YICT), a deepwater port in Shenzhen, Guangdong, China handing some of the largest container ships in the world, has reduced capacity at the port due to a recent outbreak of the virus, according to Seatrade Maritime News, citing ONE. 

The world’s leading container line Maersk told customers to expect delays up to two weeks because of the reduced capacity of staffing at the port. 

Refinitiv data shows 50 container vessels are moored in the Outer Pearl River Delta, waiting to dock at YICT. For comparison, this compares with 20 vessels for the same time last year. 

Reuters quoted one exporter who said loading delays and slow deliveries continue to tangle global supply chains. 

“Basically we had a similar experience last year so we have experience in responding, only the increase in transport costs are getting really astonishing. The freight fees are reflected in the increase in material costs which are up by around 15%-30% already,” said a sales manager at an electronics cable manufacturer in Shenzhen, a large manufacturing city in Guangdong. 

The congestion and delays in South China came when container shipping supply chains were already at full stretch due to US West Coast port congestion. As a result, container freight rates have hit a record high and are expected to continue to rise further. 

“The recent rise in Covid-19 cases in China has resulted in a shutdown that may add to the already record cost of shipping goods out of China. The delays have already resulted in pressurizing soaring shipping prices within China due to a lack of containers and increased export demand,” said Josh Brazil, the Vice President of Marketing at project44. 

Port congestion on either side of the Pacific continues to deteriorate. It suggests that the normalization of trans-pacific supply chains will not happen anytime soon and will continue to add cost pressures for exporters in China and importers in the US – adding to the cost of products and ultimately pushed along to US consumers. Delays will also continue to create additional shortages…  

Tyler Durden
Fri, 06/11/2021 – 21:20

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