Severe Congestion at UK Ports Disrupts Supply Chains as Brexit Deadline Approaches

Severe Congestion at UK Ports Disrupts Supply Chains as Brexit Deadline Approaches

Since late September, congestion levels at the UK’s busiest container ports have worsened due to high incoming volumes caused by peak season deliveries and pandemic-related medical equipment shipments, as well as an order boom in the run-up to the Brexit deadline of January 2021.

The most severe congestion has been reported at the Port of Felixstowe, the UK’s largest container gateway, but also at London Gateway and the Port of Southampton. This has led to lower productivity, high stocks of empty containers, as well as disrupted vessel loading and unloading schedules. Additionally, a significant backlog of containers loaded with medical equipment at Felixstowe has resulted in a shortage of space for other containers. Among the most affected shipments have been those on the Asia-UK as well as U.S.-UK routes, with severe delays, omitted port calls, and considerably higher costs being reported. The situation is expected to last through December and possibly early 2021, likely affecting supply chains beyond the peak season.

COVID-19, peak season, and Brexit deadline among root causes

The situation at Felixstowe, London Gateway, and Southampton has worsened over the past ten weeks due to a number of reasons, including high import volumes, the approaching Brexit deadline, and peak season preparations, as well as a lack of storage space and yard congestion.

The volume of imports arriving at UK ports has increased following the lifting of some COVID-19 restrictions imposed in response to the initial wave of infection in the first half of the year. Weekly import volumes were up by more than 30 percent above average levels at Felixstowe from early September, as importers sought to replenish stock levels that dropped during the initial lockdown phase. In addition, with peak season and the Brexit deadline looming, companies have been preparing to increase buffer stocks in anticipation of potential disruption at UK borders from January 1.

Another significant factor contributing to the current congestion levels is the backlog of containers loaded with government-procured medical equipment that have been dwelling at UK ports for months. At the Port of Felixstowe, about 11,000 containers filled with masks and gloves have blocked about 30 percent of the port’s inbound container space since September. As of end of November, about 4,000 of these containers remained in the port yards.

Last but not least, a significant imbalance between import and export activities in the UK, as well as numerous ‘cut and run’ operations by carriers amid increased waiting times at the ports, have resulted in an increase in empty containers at the ports that considerably slowed down productivity. Some carriers, including Evergreen, were forced to temporarily halt the returns of empty containers to the Port of Felixstowe.

As a result, several ocean carriers have started to divert ships from UK ports and unload cargo at other countries including Germany (Bremerhaven); Belgium (Antwerp, Zeebrugge); and the Netherlands (Rotterdam). This has in turn led to lower productivity levels at some of these ports, and a lack of open feeder capacity could cause further delays in relaying the cargo back to the UK in the coming weeks.

Congestion leads to additional costs amid increasing container rates

On top of the rapidly increasing ocean cargo spot rates to Northern Europe in recent weeks, some carriers have imposed a series of congestion surcharges from mid-November 2020 to cover additional operating costs for shipments into the UK. At the same time, export shipments out of the UK have been suspended by several carriers and are increasingly only available upon payment of a premium fee from other North European ports, likely underlining a strategy to reposition empty containers as quickly as possible to Asia, which has been affected by a severe shortage of such containers. The table below summarizes the different surcharges implemented by major ocean carriers due to the port congestions in the UK:

FromToCarrierAmount per TEUDate
(From/To) London Getaway Port, Southampton & Felixstowe(From/To) Australia & New ZealandHapag-Lloyd, CMA CGMUSD 100November 30
(From/To) All UK ports(From/To) Australia & New Zealand, India, Middle East, South Africa, Pakistan, SAWC, SAEC, CAMMSCUSD 100November 16
(From/To) All UK ports(From/To) Far EastMSCUSD 175November 16
USALondon Gateway, Southampton and Liverpool.Hapag-LloydUSD 175January 1, 2021
North East Asia, South East Asia, China, Hong Kong & Macau SARSouthampton, Felixstowe & London Gateway PortCMA CMGUSD 150November 15 (Southampton); December 1 (Felixstowe & London Getaway)
All UK PortsTo North East Asia, South East Asia, China, Hong Kong & Macau SARCMA CMG USD 100November 23 (Reefer), December 5 (Dry)
(From/To) London Getaway Port, Southampton(From/To) India Subcontinent, Middle East Gulf & Red SeaCMA CMGUSD 100November 15
(From/To) London Getaway Port, Southampton & Felixstowe(From/To) Central America East Coast & the Caribbean, South America East & West Coasts, Central America West Coast & Mexico West CoastCMA CMGUSD 150November 15 (Latin America to UK); December 1 (UK to Latin America)

The high volume of imports and the resulting congestion at UK container gateways is expected to last through December and possibly into 2021. Some carriers have been discussing omitting the Port of Felixstowe until February due to fears of saturation after the holiday period, underlining that the congestion issues are unlikely to be resolved in the short term.

Customers shipping to the UK should consider exploring multimodal alternatives for import cargo, i.e., using road freight from the intermediate ports of discharge such as Rotterdam and Zeebrugge via the Eurotunnel or Dover-Calais ferry connection.

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