'Dark clouds' cover the shipping industry again, the global supply chain is difficult to overlap

Shipping costs skyrocketed
Yantian International Container Terminal in Guangdong was closed for nearly a week at the end of May. Currently, the port has reopened but is still operating below capacity, leaving a large backlog of containers waiting to be exported. berth and many ships waiting to dock.

Congestion at Yantian port has created a "domino effect" on other container ports in Guangdong, including Shekou, Chiwan and Nansha. These are important ports, all in the top 5 of the largest ports in the world. This situation creates a big problem for the world shipping industry.

Shipping analyst Peter Sand said: "The backlog of containers at Yantian port is adding to the disruption to already strained global supply chains. Goods during the year-end shopping season. may be affected and it may be difficult for consumers to find the right gift this Christmas."

Operations at the port of Yantian are also struggling. According to a recent estimate by Lars Jensen, CEO of consulting firm Vespucci Maritime, the port has been unable to handle around 357,000 containers since the end of May. This is larger than the total volume of cargo affected by the incident. congestion in the Suez Canal in March 2021.

Yantian port operations have recovered to about 70% of normal levels but are unlikely to return to full capacity until the end of June.

The backlog of containers at the port of Yantian is adding to the disruption to already strained global supply chains. Merchandise during the year-end shopping season may be affected and it may be difficult for consumers to find the right Christmas gift this year," said Peter Sand, shipping analyst.

Congestion at a port in southern China has prompted major shipping companies to warn customers of delays, changes in routes, vessel destinations, and spikes in costs.

Maersk, the world's largest container shipping company, told customers last week that ships could be backlogged at Yantian port for at least 16 days.

While the company will redirect some carriers to alternative ports, that won't necessarily solve the problem. Maersk warned that the waiting time to change routes to other ports in Shenzhen, Guangzhou and Hong Kong (China) could cause transportation costs to increase "vertically".

Meanwhile, shipping giants such as Hapag-Lloyd, MSC and Cosco Shipping also increased freight rates between Asia and North America or Europe.

According to consulting firm Drewry Shipping based in London, UK, freight rates for eight main East-West routes have increased over the same period last year. The biggest price increase was along the route from Shanghai to Rotterdam in the Netherlands, up 534% from a year ago, to more than $11,000 per 40-foot container (1 foot = 30.48 cm).

Meanwhile, average container freight rates from China to Europe recently hit $11,352 per 40-foot container, the highest level since 2017.

The global supply chain is more fragile
The crisis in Guangdong is aggravating the pressure on the already strained global shipping industry.

In the US, for example, major ports along the California coast have been congested with container ships, exacerbating a "bottleneck" at the country's largest trade gateway to Asia.

Earlier last week, the National Retail Federation (NRF) called on President Joe Biden to solve the problem at the ports of this country.

In a letter to Mr. Biden, the NRF warned that these issues not only put pressure on the supply chain, but also lead to shortages of goods, affecting the ability to serve customers.

"Recently, we've seen prolonged fatigue in the transport industry and a run of global supply chains. Tensions are likely to continue for the next year or so." - Peter Sand, Head of Transportation Analytics at Bimco

The shipping industry is still seeing the effects of disruptions in the Suez Canal, when the Ever Given vessel became stranded and blocked one of its routes, said Parash Jain, head of shipping at HSBC. the world's most important trade for almost a week.

"Resolving the backlog due to congestion in China's Yantian port could take months," said Mr. Jain.

According to Pawan Joshi, Executive Vice President at E2open, a supply chain software provider based in Texas, USA, the crisis in Guangdong shows how fragile global supply chains are.

In 2020, the Covid-19 pandemic wreaked havoc on supply chains, as factories halted operations and disrupted trade flows. Currently, the economies are developing again, the strong increase in consumer demand is making it difficult for the shipping industry, when the ability to transport containers by sea is almost unchanged, even is decreasing.