Intersped Freight & Logistics Update - 30 November 2023

Intersped Freight & Logistics Update – 30 November 2023

Good Day Clients & Partners,

This is the last update before we head into a very busy December! As always, the Inter-Sped team are ready to jump for you – So don’t hesitate to contact us for any of your freight and logistics needs.

SOUTH AFRICA

South African Ports face increasing congestion and delays. The news articles and reference links given at the bottom of this article provide more in-depth information, but below follows a condensed summary:

Over 100 000 containers (Carrying an estimated 7 billion worth of goods) are estimated to be stuck outside South Africa’s main ports – with approximately 46 000 containers waiting off the Eastern Cape Coast and approx. 61 968 containers waiting outside the port of Durban.
The Cape Town Container Terminal (CTCT) cleared most of its backlog, berthing vessels on arrival.
The delays could cause increased prices in consumer goods, and in a worst-case-scenario, a shortage of certain products over the Christmas holidays.

DURBAN

Port berthing delays continues to be experienced due to high levels of congestion. The port has reported windy weather during the week.

Pier 1 : 10 days
Pier 2 : up to 22 days
Durban Point : 3 days

CAPE TOWN

Port berthing delays has improved. The port has reported windy weather during the week. High volumes of cargo and traffic experienced at Cape Town terminals.

CTCT : 2-7 days
MPT : 0-2 days

PORT ELIZABETH

Port berthing delays has improved. The port has reported windy weather during the week.

PECT : 2 days
NCT : 2 -9 days

AFRICA & INDIAN OCEAN ISLANDS

MAURITIUS

Berthing delays of 2 days experienced at Port Louis.

ANGOLA

Berthing delays of 7 days experienced at Luanda port. Congestion experienced at the port.

GHANA

Berthing delay of 1 day experienced at Tema port.

NIGERIA

Berthing delays of 2 days experienced at Apapa port.

TANZANIA

Berthing delays of 10 days experienced at Dar es Salaam port. Slight reduced draft at berths 8-11(10m)

KENYA

Berthing delays of 2 days experienced at Mombasa port.

MOZAMBIQUE

Berthing delays of 3 day experienced at Maputo port.

NAMIBIA

Berthing delays of 12 days experienced at Walvis Bay port.

NORTH AMERICA

USA

Most USA terminals were closed on Thursday, 23rd November, and a few on Friday, 24th November due to the Thanksgiving Holiday. Delays are expected considering this.

Terminals Updates:

New York/New Jersey – Vessel waiting time is up to 1 day.
Norfolk – Vessel waiting time is up to 2 days.
Savannah – Vessel waiting time is up to 3 days. Two new cranes are currently being commissioned on berth 2, while four of the oldest cranes on the same berth are being demolished. As a result, berth 2’s capacity to handle vessels will be limited for several months.
Charleston – Vessel waiting time is up to 1 day.
Miami/Port Everglades – Vessel waiting time is up to 3 days.
Houston – Vessel waiting time is up to 2 days. Due to vessel bunching the yard is facing congestion impacting the discharge productivity and extending port stays
Los Angeles/ Long Beach – Vessel waiting time is up to 4 days.
Seattle – Vessel waiting time is up to 4 days.
Oakland – Vessel waiting time is up to 3 days.

Rail Updates:

BNSF – Rail ramp is currently experiencing congestion in Chicago, Columbus, and Los Angeles. There are delays in picking-up and delivering containers at these locations.
UP/LAX/LGB – Rail ramp is currently experiencing congestion in Los Angeles. There are delays in picking-up and delivering containers at this location.

Equipment Availability:

Due to persistent congestion nationwide, chassis shortages continue to be observed resulting in potential delays for pick-up and delivery.

CANADA

Montreal

Berthing delays of 3 days experienced at this port. Bad weather on the North Atlantic is impacting vessel schedules through Montreal.

Toronto

Berthing delays of 6 days experienced at this port.

Vancouver

Berthing delays of 2 days experienced at this port.

LATIN AMERICA

BRAZIL

Berthing delays of 3 days experienced at Santos port.

PANAMA

The lower-than-usual water levels in the Gatun Lake are causing severe draft restrictions on vessels transiting the Panama Canal. This has caused a backlog of traffic waiting to pass through.

NORTH WEST CONTINENT, UNITED KINGDOM, MEDITERRANEAN

BELGIUM

Berthing delays of 2 days experienced at Antwerp port.
AGW: Antwerp Gateways Terminal received 3 additional Gantries which are fully operational.

GERMANY

Berthing delays of 2 days experienced at Hamburg port and 1 day at Bremerhaven port.
Container Terminal Burchardkai (CTB): Berth 1+2 still closed for operations due to construction site for AGV operations, berth only usable as layby. Construction will continue until December. Ongoing construction with challenges to operations for all piers at CTB.

UNITED KINGDOM

Berthing delay of 1 day experienced at London Gateway port. Terminal received additional yard cranes for their ongoing expansion this week which led to a short time of reduced berth capacity, but all vessels remained with berth on arrival.

SPAIN

Berthing delays of 2 days experienced at Barcelona port.

ITALY

Berthing delays of 2 days experienced at Genova port and 1 day at La Spezia port.
Weather-related delays at North Tyrrhenian Ports: recent severe weather conditions, have impacted operations at North Tyrrhenian ports (Genoa, La Spezia, Leghorn, Civitavecchia, and Salerno). Terminal operational stops, continuous stop-and-go scenarios, and manoeuvring delays have been experienced. Vessel delays expected.

NETHERLANDS

Berthing delays of 2 days experienced at Rotterdam port. Seasonal winds are leading to operational challenges and slight delays.

FRANCE

Berthing delays of 2 days experienced at Le Havre and 4 days Fos-sur-Mer port. 24 hours of national strike in France saw all terminals in Le Havre without operations consequently, affected vessels were delayed.

TURKEY

Berthing delay of 1 day experienced at Istanbul port.

INDIAN SUB-CONTINENT & MIDDLE EAST

INDIA

Berthing delay of 1 day experienced at Nhava Sheva, Mundra and Chennai ports.

SRI LANKA

Berthing delay of 1 day experienced at Colombo port.

UNITED ARAB EMIRATES

Berthing delay of 1 day experienced at Jebel Ali port.

ASIA PACIFIC (Including Oceania)

Hazardous commodity acceptance out of China remains a challenge as approval for loading remains subject to carriers’ stringent acceptance protocols.
Capacity constraints are currently being experienced with carriers out of Asia.
We have also seen an increased number of carriers changing routings and introducing additional port calls and transhipments to their vessel schedules.

HONG KONG

Berthing delays of 1 day experienced at this port.

TAIWAN

Berthing delay of 1 day experienced at Kaohsiung port.

NANSHA

Berthing delays of 4 days experienced at this port.

SHANGHAI / NINGBO

Berthing delays of 1 day experienced at Shanghai port and 2 days at Ningbo port.

QINGDAO

Berthing delays of 3 days experienced at this port.

XIAMEN

Berthing delay of 1 day experienced at this port.

SHEKOU / YANTIAN

Berthing delay of 1 day experienced at Shekou port and 2 days at Yantian port.

XINGANG

Berthing delay of 1 day experienced at this port.

KOREA

Berthing delays of 2 days experienced at Busan port.

VIETNAM

Berthing delays of 1 day experienced at Ho Chi Minh port and Hai Phong ports.

MALAYSIA

Berthing delay of 1 day experienced at Port Kelang.

THAILAND

Berthing delay of 1 day experienced at Bangkok port.

SINGAPORE

Berthing delay of 1 day being experienced. No delays experienced for transshipment cargo. Delays are expected for FCL containers transshipping in Singapore. Expected delays are between 2-3 weeks.

NEWS ARTICLES

Warning as stock shortages, delivery delays and price escalations loom.

Date: 29^th November 2023

Logistics firms warn that South Africa’s port backlogs will cause further delivery delays, stock shortages and increased costs in the coming months.

According to the South African Association of Freight Forwarders (SAAFF), container ships have been avoiding the congested and delayed Cape Town harbour. They are instead docking at the Easter Cape ports of Gqeberha and Ngqura (Coega). This has ed to a massive buildup of congestion in the eastern Cape with over 46,000 containers being stuck outside the two ports.

The above combined with the 61,968 containers (onboard 79 vessels) means there are in excess of 100,000 containers stuck outside South Africa’s ports, carrying an estimated R7 billion worth of goods. [1]

Data confirms the sorry state of SA’s ports

Date: 21st November 2023

South Africa’s commercial ports handled 8 223 containers per day for the last week measured by the South African Association of Freight Forwarders (Saaff) and Business Unity South Africa (Busa), the organisations have said in their latest “Cargo Movement Update.”

The amount of overall containers handled is “slightly down from the 8 329” reported a week earlier, “Port operations in the last week were once again bedevilled by poor weather conditions as well as equipment breakdowns and shortages. “Adverse weather returned to the Port of Cape Town this week as several operational hours were lost while the estimated time of arrival for the new shore tensioning units has been shifted to the second week of December.”

Looking at the Port of Durban where extreme congestion has vessels waiting at anchor for two or more weeks, Saaf-Busa says, “there were 63 vessels at anchor by the end of the week, while equipment challenges at Pier 2 persisted, as the terminal had only 55 straddle carriers in operation towards the end of the week.”

Saaff director Mike Walwyn said last week Friday, only 42% of the required equipment at Pier 2 was working. For the biggest pier in the country’s port system, the port’s operational capacity had dipped woefully below what is required to keep pace with incoming container vessels, he said.

It has since come to light that if Transnet succeeds in improving cargo handling from 2 500 to 4000 containers a day, as it has said it would (*), it will still take the better part of four months to potentially clear the backlog. In other words, delayed throughput at the port is likely to last until the end of the first quarter in 2024. [2]

Operations ramped up to tackle Durban port backlogs

Date: 21st November 2023

Transnet’s management has announced immediate interventions to reduce the massive backlogs and congestion at the ports of Durban and Richards Bay.

The state-owned logistics utility announced in a statement over the weekend that of a total of 63 ships that were recorded at Durban’s outer anchorage on Friday, 20 were container vessels destined for the Durban Container Terminals Pier 1 and Pier 2.

Transnet Board chairperson Andile Sangqu, said management was focused on reducing the backlogs. “The problem of port congestion is […] a result of many years of underinvestment in equipment and its maintenance,” Sangqu said. We need to caution that this is going to take some time as the lead times for some of the equipment is anything from 12 to 18 months,” he said.

He said in the meantime, Transnet had prioritised the optimisation of port operations through improved planning and forecasting, leading to better anticipation of cargo volumes.

Durban port manager Earl Peters said the plan for Pier 2 was to ramp up cargo handling from 2 500 to 4 000 containers a day over the next three months. Under normal conditions, the container handling tempo at Pier 2 is 3 300 containers a day. At Pier 1, the tempo will increase from 1 200 to 1 500 containers a day.

“It is crucial that we stabilise our operations through these short-term interventions while we continue with the broad recovery plan to improve Transnet operations,”Michelle Phillips Transnet CEO said. [3]

Panama Canal proposes long-term solutions to improve issues as low water levels remain

Date: 24th November 2023

A potential solution is in the works to mitigate the effect future droughts will have on the Panama Canal.

The Canal’s board of directors submitted a proposal to the Panamanian government,

rather than focusing on specific projects, the proposal calls for defining the Canal’s watershed and modifying or expanding the limits established in the 2006 law, as well as eliminating some restrictions on the canal for the construction of new reservoirs.

A potential project involves the construction of a multipurpose reservoir on the Indio River. The Indio River is located outside the Canal’s watershed, so its construction would require government approval. The project will not likely be realized in the short-term as it first requires approval from several government entities.

Meanwhile, Canal authorities are also working on short-term solutions to improve fresh water supply to the Canal’s locks. One of them involves the construction of a new raw water intake in Gamboa as well as an abduction line to connect Gamboa to Paraíso. This project is already in the tendering phase, with the deadline to submit offers scheduled for January 2024.

Panama Canal authorities recently announced the implementation of further transit restrictions. Starting Dec. 1, container ships will be given priority over the only two booking slots LNG vessels would typically use to transit the canal, which would leave LNG tankers with no choice but to opt for auctions to expedite their transit. [4]

MSC slaps bumper surcharge on boxes through restricted Panama Canal

Date: 24th November 2023

MSC has slapped a bumper $297 per teu surcharge on shipments transiting the Panama Canal in response to the increasing capacity reductions.

It followed the announcement on Tuesday by CMA CGM of a $150 per teu ‘Panama Adjustment Factor’, valid from 1 January. MSC’s surcharge, almost double that of the French carrier, will begin two weeks earlier, on 15 December.

MSC told customers: “During Q2 23, the Panama Canal Authority decided to reduce draught from 14.94 metres to 13.41. “Despite several measures to conserve water, taken over the last months, lack of precipitation in the area is affecting the water level of the canal. Consequently, the canal authority has recently confirmed further restrictions regarding the number of vessels crossing the canal.

“These restrictions, combined with the increase of the canal tariff implemented earlier this year, are having a direct impact on overall MSC operations costs.”

Daily capacity through the neopanamx locks of the canal could be less than 50% of design capacity. And, with little sign of improving weather, Maersk warned shippers that, while its advanced planning was sufficient to mitigate potential delays, they should prepare for other issues. [5]

CMA CGM doubles-up on service for growing Africa trade

Date: 24th November 2023

CMA CGM and Maersk are releasing surplus 13,000 teu ships to their joint Far East-West Africa service, replacing the French carrier’s 5,000-7,000 teu ships on the route.

According to Linerlytica, the upgraded FW1/WAX service will start on 5 December, with the 13,302 teu Maersk Edirne and will have a 13-week turnaround.

Maersk and CMA CGM are contributing 13 ships of 13,300-13,800 teu, effectively doubling capacity on the service calling at Qingdao, Gwangyang, Shanghai, Ningbo, Shekou, Nansha, Singapore, Tanjung Pelepas, Tema, Lekki, Abidjan, Pointe Noire, Colombo, Singapore, Xiamen, and Qingdao.

The FW1/WAX will be the second West Africa service to deploy ships of this size, following MSC’s Africa Express that uses ships of 13,000-15,000 teu. And the carrier had upgraded the service with a new direct call at Abidjan, providing direct links with major markets in Asia.[6]

Shock as new Asia-n Europe FAK rate dwarfs weak spot market

Date: 24th November 2023

MSC has announced a new FAK (freight all kinds) rate from Asia to North Europe for 15 December of $2,050 per 40ft, which is at least double the level on offer in the current spot market.

Container spot rates between Asia and North Europe have lost a third of their value already this month, with, for example, Drewry’s WCI North Europe component declining another 6% in the past seven days, for an average of $1,148 per 40ft.

Moreover, carriers’ pricing via their online platforms has fallen to some $800 per 40ft for shipments ex-Chinese ports to Rotterdam, Hamburg and Felixstowe, valid until the first week of January.

Some of MSC’s peers, including Hapag-Lloyd and CMA CGM, have proposed new Asia-North Europe 40ft FAK rates of around $1,800 from 1 December, which were effectively re-sets of their failed 1 November general rate increases (GRIs).

Meanwhile, on the Asia-Mediterranean tradelane, MSC is also attempting a significant rate restoration with a new FAK rate of $2,450 per 40ft for west Mediterranean ports, effective 15 December.

More about current spot rates in the link. [7]

Container xChange: Reduced Demand and Oversupply Could Hamper a 2024 Recovery

Date: 22nd November 2023

Container xChange, a leading authority in the shipping industry, released its second annual “2023 Shipping Industry Trends and Future of Shipping in 2024” report.

The report gives an analysis of the key impacts that shaped the container shipping industry in 2023 and provides predictions and scenarios for 2024 with an aim to equip the industry to plan ahead in time for a ‘grumpy’ 2024.

Overall, the report indicates high probability of market recovery failure in 2024. The industry surveys conducted with the supply chain professionals globally indicates that in 2024, the shipping industry is predicted to grapple with persistently reduced demand and oversupply, potentially leading to fiercer competition, further reduced profits, and possible market consolidation. Although container schedule reliability is improving, persistent challenges remain. Blank sailings are expected to rise in response to market volatility, while imbalanced container availability, driven by economic crises, may continue in certain regions.

Planning considerations for container logistics players in 2024 –

(1) In the wake of longer-term factors such as inflation, increased interest rates, and a shift in consumer spending patterns from goods to services, cautious consumer spending in 2023 is expected to extend into 2024. This caution is anticipated to impact the demand for imported manufactured products, with implications for the container market. According to PYMNTS research findings, 74% of consumers have reduced nonessential retail spending, influencing the container market for an extended period.

Importers in the USA have diversified their sources to include Southeast Asia, India, and Pakistan. This strategic move has proven to be a successful business practice and should be sustained in the years to come. Relying solely on a single source is not advisable, as it allows for the growth of other countries in the production of various products.

(2) Oversupply Risks and Increased Deliveries:

The shipping industry faces the risk of oversupply in 2024 as deliveries are set to increase to 2.95 million TEUs. The surge in deliveries, including “Megamaxes” and “Neopanamaxes,” may lead to intense competition, reduced profits, and potential mergers and acquisitions.

Carriers, particularly in North America, are navigating a delicate balance between government-driven demand and rising interest rates. Overordering of ships during the economic boom could create overcapacity, turning 2023’s profits into 2024’s losses. The sector is projected to face challenges to restore supply and demand equilibrium until 2026.

(3) Geopolitical Uncertainties and Shifts in Trade Routes:

Geopolitical uncertainties in 2023, including conflicts in Ukraine, Taiwan, and Israel, significantly impacted the shipping industry. These effects are expected to persist in 2024, with potential consequences for trade routes.

(4) China Plus One Diversification:

Various factors, including ongoing trade tensions between the United States and China, rising labor costs, and concerns about potential future manufacturing disruptions, are driving companies to diversify away from China. While completely disengaging from China is challenging due to extensive electronic supply chains, companies are making strategic moves to relocate final manufacturing and assembly processes outside of China.

Impact and Potential Scenarios in 2024:

(A) Reduced Demand and Oversupply Intensify Competition:

The break of alliances, such as Maersk and MSC’s decision not to renew their 2M alliance, marks a significant shift in the industry. The resulting less demand and oversupply may lead to heightened competitive pressures and lower profits.

(B) Container Line Schedule Reliability on the Rise:

Container line schedule reliability is improving, returning to pre-pandemic levels. Although global schedule reliability declined slightly in August 2023, the industry is on a positive trajectory.

Blank sailings fluctuated in 2023 but are expected to increase in 2024 due to market volatility. Despite being more organized than in the previous year, blank sailings remain a strategy to stabilize market rates and manage demand patterns.

(D) Container Availability to Remain Imbalanced:

Economic challenges in the Euro Zone contribute to imbalanced container trade, affecting container availability. The Container Availability Index indicates higher container burdens in ports like Rotterdam. As the Euro Zone grapples with an ongoing economic crisis, the region struggles with the challenge of surplus containers causing repositioning costs exceeding the asset cost. [8]

SOURCES & REFERENCES

[1] https://businesstech.co.za/news/business/734617/warning-over-delivery-delays-stock-shortages-and-higher-prices-hitting-south-africans-this-christmas/

[2] https://www.freightnews.co.za/article/data-confirms-sorry-state-sas-ports

[3] https://www.freightnews.co.za/article/operations-ramped-tackle-durban-port-backlogs

[4] https://www.hellenicshippingnews.com/panama-canal-proposes-long-term-solutions-to-improvedrought-issues-as-low-water-levels-remain/

[5] https://theloadstar.com/msc-slaps-bumper-surcharge-on-boxes-through-restricted-panama-canal/

[6] https://theloadstar.com/cma-cgm-doubles-up-on-on-service-for-growing-africa-trade/

[7] https://theloadstar.com/shock-as-new-msc-asia-n-europe-fak-rate-dwarfs-weak-spot-market/

[8] https://www.hellenicshippingnews.com/container-xchange-reduced-demand-and-oversupply-couldhamper-a-2024-recovery/

For further reading on the state of South African ports:

https://www.firstpost.com/world/gridlock-hits-south-africas-busiest-port-60000-containers-stuck-at-sea-13437362.html

https://www.freightnews.co.za/article/cape-town-container-terminal-clears-vessel-backlog