- Congestion levels at ports in mainland China have increased between 30-40% since March
- High rates on shipping routes departing Asia combined with port delays incentivises carriers to return with empty containers
- Governments and others looking at ways to discourage ships operating at less than full capacity
Supply chain issues are worsening, compounded by increased port congestion and shipping delays at Shanghai and other Chinese ports as a result of Covid-19 lockdowns as reported by S&P Global.
Ongoing congestion
Coupled with ongoing congestion at ports elsewhere in the world and low backhaul rates to Asia, container demand is far exceeding capacity.
Congestion at Chinese ports increased in March and April as Covid-19 lockdown measures were introduced in Shanghai and later extended to other parts of the country.
Since the beginning of March, total dry bulk congestion levels at ports in mainland China have increased between 30-40%, according to S&P Global Commodities at Sea.
The port congestion at Shanghai has shown signs of easing in May, as traffic has been diverted to alternative ports throughout northern and southern China.
The average rate from ports in China/East Asia to ports in North Europe was $10,565, compared with $754 in the other direction.
Global issue
In the US, tree nuts, produce, and dairy products in California are struggling to find container capacity, according to the California Farm Bureau Federation.
Many carriers are no longer stopping at the Port of Oakland, instead opting to send empty vessels directly from the Ports of Los Angeles and Long Beach to take advantage of high rates from Asia to the US West Coast.
Back in January, The Journal of Commerce reported that shipping companies had increased vessel capacity between Asia and the US East Coast by 25% at the beginning of 2022 compared with the previous year.
Port congestion and container capacity have been terrible in China and the US but remain a global issue.
Products including table grapes, blueberries, apples and kiwis have been significantly affected by port congestion and transport delays.
US market over China
Transport delays in 2021 led Chilean exporters to place greater emphasis on the US market over China, where transport and unloading times are comparatively lower.
Some exporters, however, have been able to take advantage of the disruption.
A key driver of delays and capacity constraints is that many ships are operating at less than full capacity.
The bill is opposed by the World Shipping Council.
The House and Senate versions of the bill still need to go through the reconciliation process and will require another vote before becoming law.
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Source: S&P Global
