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The port congestion, delayed shipments and sky-high freight rates that have plagued importers and exporters show no sign of coming to an end, industry experts believe, as fresh data shows schedule reliability are hitting record lows. 

Maritime consultancy Sea-Intelligence revealed last week that schedule reliability fell to 32% in December last year, its lowest ever score since starting the measurement in 2011. 

The company, which analyses reliability across 34 trade lanes and more than 60 carriers, says the score is 12.5% lower than the equivalent figure for December 2020. The average delay for vessels arriving late stood at over seven days for the fifth month running. 

It says that of the top 14 carriers, Maersk was the most reliable with a score of 46.2%, while the lowest score was recorded by Evergreen, at 14.4%. 

“No carrier recorded a year-on-year improvement in schedule reliability, with all but four carriers recording double-digit year-on-year declines,” Sea-Intelligence says. 

A market update by freight forwarder Flexport, also published last week, says port congestion is causing worsening problems on shipments from Asia to North America and Europe. 

In North America, the number of vessels waiting outside ports is starting to “pile up… with Charleston becoming the newest port to see a severe spike in congestion”. 

“Shippers with urgent cargo, or those working to replenish depleted inventories, are willing to pay premium rates for scarce space,” Flexport says, though adds that some softening could occur following Chinese New Year. 

In Europe, market demand continues to exceed supply, meaning space and equipment availability at ports “remain very tight due to frequent blank sailings and port omissions”. The company expects there will still be a significant impact on schedule reliability after Chinese New Year as a result of delays to earlier shipments. 

For trade between Europe and North America, Flexport says it expects no short-term improvement due to continuous congestion on both sides. Shipments to Asia, meanwhile, are being affected by “erratic” vessel schedules and blank sailings. 

The findings will not come as a shock to the maritime trade industry. Experts have long warned that disruptions would likely continue into the second half of 2022 at least, and a late-2021 report from insurers Euler Hermes and Allianz suggested that without increases in port capacity, the trend could last well into 2023. 

“Technically, the global reliability in December was a new low point, but you are only talking marginal decimal points,” says Lars Jensen, chief executive and partner at consultancy firm Vespucci Maritime. 

“In reality, this has been the case all through 2021. It’s just a continuation of a dismal state of affairs, with no improvement and no degradation over the last 12 months.” 

 

Curveballs ahead 

Port congestion and shipping disruption is not likely to become a “permanent status quo”, Jensen says, but because it is caused by a confluence of several factors it will inevitably take time to resolve. 

“If you go back to 2020, nobody was really prepared for the huge boom in demand for goods coming into the US,” he tells GTR. “That meant the ports started filling up with cargo, and once a port gets completely full it tends to become very inefficient – you need space within which to move goods around.” 

If those importers then encounter further difficulties – including shortages in vehicles, parts and drivers, a lack of railway capacity, and issues with warehouse space and staff – they are unable to pick up containers quickly, leaving ports congested. 

“Looking forward, it will probably take all of 2022 to get back to operational normality,” Jensen says. “But that’s if there are no further curveballs. There very likely will be, and the highest risk remains China’s zero tolerance policy towards Covid.”  

That policy was flagged as a serious risk to trade by Danske Bank economists in November last year, as signs started to emerge that the Omicron variant of Covid-19 was more transmissible than earlier strains. 

It is considered highly likely that Chinese authorities will shut down a port if infections are found, leaving importers in Europe and North America – where demand for Chinese goods has long outstripped supply – highly vulnerable. 

“We’ve been lucky in the last month that the major shutdowns in China haven’t happened at the ports, and maybe we can be lucky going forward, but we could also have a major port close suddenly tomorrow and that would obviously make matters worse,” Jensen says. 

The squeeze on supply, congestion at ports and delays on shipping routes have contributed to soaring freight rates during 2021.  

The UN has warned global import prices could increase by 11% this year if rates do not return to pre-pandemic levels, and at the same time, exporters of lower-value goods are increasingly faced with insurmountable costs. 

“All of this means there is continuing upward pressure on freight rates, which continues to create problems for exporters,” Jensen says. “If you’re an exporter of low-value agricultural commodities, for example, there is no way you can pay the rates that are out there now, so as long as this persists, carriers have very little incentive to service the exporters.” 

Research by US supply chain monitoring company Resilinc, published in January, finds disruptions due to supply shortages increased more than 450% year-on-year in 2021.  The company sent out nearly 500 alerts related to supply shortages, covering semiconductor chips, paper, plastics, raw materials and other goods.