Maersk update: Port congestion to persist, Q4 air freight demand to be 'one of strongest peaks ever'
Shipping line Maersk has provided a market update on the challenging global logistics situation, saying that port congestion and supply chain bottlenecks are to persist through year-end.
China’s October Golden Week, Christmas and Chinese New Year will bolster strong demand for container shipping for the last quarter of 2021. But port congestion, especially in the U.S. and Europe, and service delays are expected to create headwinds for service schedules, the company said.
Maersk says extra loaders (additional ships) and ad hoc port omissions will be implemented to help improve schedule reliability. Meanwhile, inventory levels in Europe and the US remain at their lowest levels on record, leading to stock outs on some products.
This means even once retail demand declines, we will see cargo volumes continue to remain strong as inventory levels need to be rebuilt, Maersk said.
Global container demand growth is projected at 6%-8% in 2021, reflecting strong first-half as well as ongoing demand strength in the U.S. and partly in Europe. While container demand growth has ran ahead of supply growth since the second half 2020, the true drivers of high freight rates are congestions in ports and supply-chain bottlenecks, Maersk says.
Vessel waiting time at ports has increased requiring more ships per string to lift same cargo volume. At the ports of Los Angeles and Long Beach, waiting times rose with over 70 vessels anchored in mid-September.
Covid-19 has also led shutdowns that have delayed vessels from Asia. Warehousing capacity has also been reduced due to port and landside congestion, while returning empty containers back to Asia remains challenging.
“Maersk has taken many actions to redirect flows back to Asia to ensure we have equipment supply. Despite this, equipment turn-round times continue to increase driven by landside and seaborne delays,” says Maersk.
To address capacity and equipment shortages, Maersk says it has taken measures to alleviate this by rationalizing its schedules and repositioning empty containers. The company has also tripled the number of dry freight containers in its fleet during the last few months to support customers’ export requirements.
“However, In-fleeting of new containers alone is no longer sufficient to meet overall demand, so it remains critically important that import containers are turned around as quickly as possible,” Maersk said.
In Vietnam, hundreds of factories have remained closed under COVID-19 lockdown rules, with many expected to reopen from early October as local restrictions are lifted.
Major port update
- Ports in Asia Pacific continue to be severely congested. With continued high yard density issue and weather disruption since July (i.e. 3 typhoons and 6 tropical storms), operational challenges remain in port operations and the situation is not expected to improve in the immediate future.
- Ports of Los Angeles and Long Beach congestion levels continue to deteriorate as we move further into peak season with 70+ vessels waiting at anchorage recently. Labour restrictions coupled with high throughput volumes remain the primary constraint.
- Port of Savannah has become increasingly challenging recently as congestion across the East Coast picks up. There were around 30+ vessels at anchorage with wait times upwards of 7 days in mid-September.
- Port of Seattle continues to struggle with available yard capacity. Waiting times have increased to 11/12 days and the typical port stay lengthening from 3 days to about a week.
- UK Ports are operating smoothly but with very severe trucking shortages across the country, leading to high yard density in ports. Port of Rotterdam is also seeing trucking shortages although not as severe as UK.
- Ports in Latin America: Port of San Antonio continues to be congested causing further delays. Port of Lazaro Cardenas - railways continue to be blocked by protestors. We suggest customers to move cargo to Manzanillo where possible.
Regarding air freight, Maersk says 2021 Q4 is expected to be "one of the strongest peaks the industry has seen with demand surpassing 2019 levels".
New technical product launches and winter fashion products together with continued ocean freight disruption are expected to push demand higher even as capacity has yet to return to pre-COVID levels.
"Rate levels, already at all-time highs, are set to increase further in Q4. Most of the major trade lanes such as transpacific, Asia-Europe and transatlantic will be impacted," it said.
"Maersk is securing commercial airlines and ad hoc charters to address capacity issues and secondary airports to help overcome COVID-19 related airport restrictions. We are also offering our multimodal Sea-Air service to customers on the Asia-Europe trade lane to meet demand."