Port congestion and tight vessel capacity are easing across the globe as measures taken by terminal and ship operators alike are clearing bottlenecks and dampening spot rate pressures, reports Container News.
Consequences
Consultancy Dynamar said that supply chains have now fully adjusted to the new realities, particularly with the Cape diversions, and with other snags in the supply chains, such as the Panama Canal, also easing, “vessels and cargoes should now be flowing more freely”.
Dynamar analyst Darron Wadey told Container News: “It may just well be that the time needed to adjust supply chains, has been aided by increased vessel numbers and capacity, and is helping to provide that smooth and regular flow of vessels that ports prefer.”
According to Dynamar, in the case of Singapore, the Cape diversions have influenced its congestion issues, but it has undertaken measures to address these, such as reopening the mothballed 50,000 TEU Keppel Terminal.
Freight forwarder Dimerco said Singapore is a crucial link in supply chains and the company confirmed the port is now largely congestion-free. “Port congestion in Singapore has eased, with the waiting time for berthing reduced from five days to two days. If this improvement continues through August, fewer vessels will omit the port, leading to more sailings from Singapore,” noted the company.
Drewry Shipping Consultant’s principal consultant supply chain Advisors Hind Chitty believes the change in the market is coming, though the statistics on demand remain uncertain.
Deployed capacity is expected to increase by 5% in August, compared to July, mainly due to a 35% reduction in blank sailings, said Chitty, with carriers reducing cancellations from 70 to 52 sailings.
Eleanor Hadland, senior port and terminal analyst at Drewry, said the strong relationship between hub port congestion and blank sailings remains and the reduction in blank sailings will reduce the pressure on terminal operations. “This period of congestion has been fundamentally different to the Covid-led congestion of 2021/22,” she pointed out.
Hadland said that transshipment ports have been the most affected, but as “transshipment traffic is less captive to a specific port then carriers have responded by undertaking relay movements at less congested ports on the network. For example, carriers have increased transshipment at Kaohsiung due to congestion in SE Asian ports.”
Drewry reports that most box terminals in Asia are now congestion-free, in the US only Los Angeles and Long Beach have some congestion, however, major North European ports are still experiencing some congestion.
Reduced congestion will ultimately lead to an increase in vessel calls that will maintain or reduce freight rates for August. Despite the improvement in August, shippers should still plan their import and export shipments, according to Dimerco.
Moreover, the forwarder reports that demand may be falling with the Purchase Managers’ Index, steady at 50.9, with a value of over 50 points indicating growth. However, S&P’s Global Market Intelligence, reported that June output slowed, “but still marked the second strongest month over the past year.”
Even so, S&P’s Global PMI Composite Output Index decreased to 52.9 in June from 53.7 in May.
As such, Alvin Fuh, VP – Ocean Freight at forwarder Dimerco Express Group, said that freight rate increases have not been driven by demand but by the Red Sea diversions.
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Source: Container News
