Congestion Collaboration | Hellenic Shipping News Worldwide


After months of falling throughput volumes, a number of ports across the world are now seeing congestion. AJ Keyes asks if this is due to the rebound from COVID-19 or if other factors are in play?

There is no doubt that 2020 will be a year that most container ports will want to forget. The COVID-19 pandemic continues to impact volumes on a global basis with the fall-out from weak trade demand, spikes in demand and country lockdowns causing ongoing uncertainty.

Yet while the impact of COVID-19 is causing weaker port handling throughput, there are also now a growing number of ports experiencing congestion. So, what is causing the congestion, is it uniform across the world and what other factors are in play?

UNIFORM CONGESTION OR OTHER FACTORS?

At the time of writing, in mid-October 2020, various ports in Australia, Canada, the US and UK are all currently reporting or suffering terminal congestion. This is geographically widespread but is across different container trade lanes, taking in both the major deep-sea routes like Asia-Europe and the Transpacific, but also secondary options such as to/ from Australia.

Table 1 offers a summary of various factors known to have caused or contributed to port congestion recently – and not all due solely to the COVID-19 pandemic.

WATERFRONT DISPUTE HITS AUSTRALIA

Industrial action has been rumbling on for some time in Australia. The Fair Work Commission recently held a ballot in which the unionised-work force agreed to implement protected industrial action across the container terminals in the key ports of Brisbane, Freemantle, Sydney and Melbourne, affecting the majority of operators, DP World, Patrick Terminals and Hutchison Ports.

The work stoppages progressively impacted operations at the terminals, resulting in vessel delays and terminal congestion. Maersk Line stopped accepting new bookings for Sydney, “to remove uncertainty for customers,” in the latter part of September and declared that the “heavy congestion at Sydney terminals and container depots” was resulting in “vessel delays as a result of waiting times up to 19 days”.

The shipping line also switched terminals in Sydney during the second half of September, moving from Patrick Terminals to DPW Australia to try to maintain schedule integrity and introduced a Port Congestion Surcharge of US$350 per TEU for all containers arriving/departing Sydney. Hapag-Lloyd also omitted calls at Sydney to avoid congestion, instead discharging in Melbourne.

What seemed to be a positive step forward came in the second half of September when DP World confirmed that the MUA had withdrawn all industrial action at DP World Sydney, effective immediately. In addition, the union also agreed it would cease any industrial action at the operator’s Port Botany terminal before November 1st, 2020.

However, this was not a full resolution, with Patrick Terminals still trying to terminate maritime union strikes after the MUA notified stevedores of a planned 24-hour work stoppage in Brisbane and Port Botany. The response from the operator was an application to the Fair Work Commission to terminate its industrial action.

The issue is firmly in the political spotlight. Australian Prime Minister, Scott Morrison, accused maritime workers of “extortionate” pay claims and said that the industrial action must stop or face the threat of “federal intervention.”

The claims over pay are vehemently denied by the MUA, accusing Patrick Terminals and the government of a “hysterical” response, stating that the original six per cent pay increase for three years has been adjusted to below 2.5 per cent.

Nevertheless, Morrison ramped-up pressure on the MUA by refusing to rule out sending in the military, if required, to settle the dispute at Patrick Terminals. Australia is fully in its Peak Season for container demand, so terminal congestion needs to be resolved – and quickly.

MONTREAL STRIKE, HALIFAX CONGESTION

In Montreal, a dispute between terminal operators and the Local 375 of the Canadian Union of Public Employees (CUPE) erupted in July 2020. Initial stoppages for four days occurred in late July, which impacted import and export container handling.

These were followed by further action between August 3rd and August 7th that closed the Termont Terminal. The situation worsened with an indefinite strike commencing from August 10th stopping all container cargo handling and mooring services being provided by longshoremen.

There has been no contract in force since the end of December 2018, when the previous collective bargaining agreement expired, and a deal could not be reached.

However, by the end of August, the striking workers agreed a seven-month truce with employers while a new collective bargaining agreement is negotiated, hopefully by March 2021. While negotiations are ongoing, there will be no lockouts or strikes.

Montreal Port Authority estimates indicate that at the time of workers agreeing to return to work, 15 container ships had been re-routed, meaning around 90,000TEU was either diverted or idling, including 18,000TEU still on the ground. An extensive backlog built-up during the strike, with estimates of up four weeks predicted before operations could be back to normal.

Hapag-Lloyd noted: “It will take some weeks to clear the backlog of vessels and cargo in the terminals which were impacted because of this interruption. Both Railroads will need to re-adjust their networks to reinstate normal operations in Montreal while at the same time clear the backlogs in both Saint John and Halifax.”

OOCL confirmed a similar position in late September 2020, citing that inbound cargo moving via rail was seeing “excessive delays” from Montreal, but there were also issues in Halifax too.

This shipping line confirmed that congestion had been caused by a “large influx of cargo arriving via a non-standard gateway,” which had an impact. In a statement released, it added: “Due to the volume of diverted vessels, excessive dwell times continue to be experienced. While efforts are ongoing to prioritise dwelling cargo, current estimated delays of departure of cargo that is currently sitting in Halifax are projected to extend into October 2020.”

EXTRA LOADERS AND FAILING INFRASTRUCTURE IN USA

While the Montreal and Halifax congestion was caused by industrial action, other ports in North America are experiencing similar issues, although caused by different reasons.

The San Pedro Bay complex – Los Angeles and Long Beach – is being impacted by a shortage of equipment, warehouse workers and truck capacity as the Peak Season kicks in and logistics networks seek to ramp-up capacity. This had earlier been reduced due to the COVID-19 pandemic and softening import demand requirements.

Maersk Line is offering the following recommendation for congestion in the USA, clearly showing that this operator does not expect an improvement in the current position in the immediate days ahead: “The Peak Season is being defined by a number of volume-related challenges and we encourage customers to add more buffer to supply chain schedules to allow for potential disruptions and delays.”

This 2M Alliance member also confirmed that the issues of congestion are not limited to San Pedro, with strong import activity seen at the Pacific Gateway ports of Prince Rupert and Vancouver (BC) impacting container yards, who are now “often exceeding infrastructure limits,” and slowing down access through the ports. The Peak Season in North America was already going to be challenging, but congestion is likely to continue, as confirmed by Maersk Line.

IMPORT SURGE SEES FELIXSTOWE STRUGGLE

A surge in imported containers from Asia during the latter part of Q3 2020 has caused numerous issues of congestion and operational challenges for the UK’s largest volume container port, Felixstowe.

The British International Freight Association (BIFA) said in late September 2020 that there was “ongoing and severe congestion” at the port but added that while there was a surge in imports from China, there were longstanding problems with the port’s Vehicle Booking System (VBS), which have been ongoing since 2018.

According to the Port of Felixstowe, the congestion is being caused by a surge of imports, with increases of up to 30 per cent higher than the normal average, but a combination of storms and the unusually high levels of empty containers at the port are also influential factors.

This is partly repudiated by some of the port’s liner customers, who have openly stated that there have been additional issues too, caused by staff shortages (with workers on furlough) and reduced productivity as working patterns in the COVID-19 environment require new hygiene regimes.

In particular, trucking companies are especially upset due to the lack of positive dialogue with the port over the lack of availability in its appointment system, something the hauliers say is better-handled at DP World’s London Gateway and Southampton facilities.

The Port of Felixstowe has apologised for the issues and is working to improve the situation through improvements to its VBS but at the time of writing – mid October – the congestion remains a daily concern.

With the UK now seeing a combination of a return to pre-COVID-19 traffic levels and the ramp-up of volumes serving the Christmas holiday period, the threat of continued congestion remains at Felixstowe. Trucking companies will be hopeful that the tightening of VBS processes delivers positive benefits.

LOSERS AND LOSERS

There are no winners from port congestion and transport logistics networks are being impacted by it. The biggest losers, while these issues continue, will be importers and exporters, beneficial cargo owners and, ultimately, end-users.

These companies and individuals are all powerless to resolve waterfront strike issues, the impact of the COVID-19 pandemic and other congestion creating issues.

Short-term, these challenges look set to continue, so it is imperative that any other factors, such as poor IT, unavailable equipment or strained relations, are minimised. Collaborative and not combative attitudes are needed now, more so than ever before.
Source: Platts



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