Rotterdam and Singapore Face the Highest Risk of Port Congestion Following Suez Canal ClosureEverstream Team
Major container gateways in Europe and Southeast Asia have started to experience congestion issues following the six-day closure of the Suez Canal in late March 2021, although most terminals have so far managed rising inbound vessel volumes without significant delays.
From March 23 to March 30, the 400m-long container vessel Ever Given ran aground in the Suez Canal on its way from China to Rotterdam, Netherlands, disrupting maritime traffic in one of the world’s busiest waterways that led to more than 360 vessels waiting to pass through the canal for almost one week. On April 3, the last of these ships cleared the canal as authorities spent five days to clear up the backlog.
|Ports||Port congestion risk in the next 3-4 weeks|
|Port of Rotterdam||High|
|Port of Felixstowe||Medium|
|Port of Southampton||Medium|
|Port of Antwerp||Medium|
|Port of Le Havre||Medium|
|Port of Singapore||High|
|Port of Tanjung Pelepas||High|
Despite the normalization of canal operations, shippers have been bracing for knock-on effects of the Suez Canal closure that include higher shipping rates and limited ocean capacity as well as growing congestion at container gateways in Europe and Asia as vessels were expected to arrive in short succession. Longer waiting times have so far primarily been reported at Port Said in Egypt and the Port of Haifa in Israel in the first two weeks of April, likely due to their geographic proximity to the Suez Canal.
Since last week, the first vessels stuck in the Suez Canal have been arriving in European and Southeast-Asian container ports which have been quieter than usual in the first half of April due to the canal blockage. In Europe, the Port of Rotterdam was expected to have the greater number of vessel calls from ships arriving from the Suez Canal. Although contingency measures, such as emptying yards to make space for new containers, have helped terminal operators to keep operations running, berth line-ups of vessels have started to become congested and are expected to remain so until the end of April as more vessels continue to call at the port.
Terminals in Rotterdam are likely to remain under the greatest pressure with the highest risk of congestion as ocean carriers are considering a strategy that involves offloading cargo at major hub ports, skipping subsequent port calls, and turning ships around early to return to Asian ports. This allows the container lines to move faster to reposition empty containers which have been held at European ports for longer than usual due to the Ever Given’s grounding and are therefore unavailable in Asia, thus benefitting from spot rates which are almost four times higher on the fronthaul from China to Europe than on the backhaul.
Should congestion issues in Rotterdam worsen, carriers could opt to unload cargo at nearby ports such as Antwerp, Felixstowe, or Le Havre. This may cause knock-on congestion effects at these gateways due to ad-hoc vessel arrivals and leave shippers with cargo at the wrong ports until ships arrive a week later to carry the cargo to destination ports. Container terminals in Antwerp have already faced congestion issues prior to the Ever Given’s grounding, prompting container lines to push more volumes to terminals in Le Havre.
In Asia, the Port of Singapore, which is expected to receive the largest number of vessels calls on eastbound services, has also faced an uptick in vessel berthing times over the past 10 days – with vessels now spending 51 hours on average outside the port, compared to 42 hours two weeks ago. Should congestion issues worsen in Singapore, carriers could opt to discharge cargo at alternative hubs nearby, increasing the risk of congestion at Port Klang or Tanjung Pelepas. The latter has already been facing average berthing delays of more than 2 days in the past weeks.
Besides the increased risk of delays for import cargo into Europe and Asia, the Suez Canal closure will also have an impact on the availability of container equipment, notably 40-foot containers, at export hubs in China and Korea, which will likely decline from mid-April into the month of May. Among the ports most affected by the shortage are likely to be Shanghai, Ningbo, Qingdao, and Busan, which could lead to another spot rate increase on trans-Pacific and Asia-North Europe lanes. Maersk Line, the largest container line in the world, has already warned that it expects a temporary loss of up to 30 percent of its cargo capacity between Asia and Europe in the second quarter of the year due to the Suez Canal blockage.
However, as most container lines have opted to turn ships around faster than anticipated from Europe to Asia instead of waiting at potentially congested terminals, an earlier recovery of schedules appears increasingly likely, and capacity and equipment issues on the Asia-North Europe trade route caused by the Suez Canal blockage should decrease by the end of May.
The Everstream Analytics Intelligence Solutions team continues to monitor and analyze the latest developments concerning port congestion, reduced cargo capacity, and container equipment shortages. This intelligence is available to clients through the Everstream Analytics platform along with real time visibility on goods in transit, predictive ETAs, and the near-real time monitoring of other categories of supply chain risk. More information is at www.everstream.ai