- Global container supply chains are facing a congestion crisis.
- Boxes pile up at ports, and container freight stations expand and spread.
- Social lockdowns have prevented dockers from going to ports to unload cargo from the ship.
- Lack of equipment could create liability issues for exporters.
- COVID-19 has dramatically affected consumer demand in the US and Europe.
According to an article published in The Loadstar and authored by Gavin van Marle, global container supply chains are facing an unprecedented congestion crisis.
Containers pile up
Isolated hotspots of boxes pile up at ports, and container freight stations expand and spread.
As news this week emerged of huge backlogs of containers building up at key Indian gateways such as Nhava Sheva, Mundra, and Chennai, forwarders warned that over the next month port congestion in some parts of the world would lead to shortages of equipment elsewhere and create significant liability issues for shippers globally.
Social lockdown prevents dockers to unload
Key to the problem is the social lockdowns that have prevented dockers from going to ports to unload cargo from ships, as well as truckers being unable to collect import cargo from container terminals and container freight stations – at India’s east coast gateway of Chennai there is a reported build-up of some 50,000 boxes.
And while current reports have largely focused on the problems that social lockdowns are causing importers in terms of the huge decline in demand for goods, and the subsequent scramble for locations to store those goods, those loaded boxes have effectively been removed from the supply chain, which will create a looming shortage of equipment for exporters.
Lack of equipment causes liability issues
And in a further twist, this lack of equipment could create liability issues for exporters that have booked shipments with carriers.
“Usually this is being reported from the importers’ perspective, but in three-to-four weeks’ time, when boxes that have arrived aren’t being collected, then the liability comes back to the shipper,” one forwarding source told The Loadstar.
The source added, “So exporters are at jeopardy from the consequences of seaports overseas that they would not usually consider as the liability is discharged on arrival. But not when you look at the lines’ B/L T&Cs – it comes back to them.”
Exporters sell their goods under the CPT Incoterm
He explained that because many exporters sell their goods under the CPT Incoterm, [Carriage Paid To – whereby the seller delivers the goods at their expense to a carrier or another person nominated by the seller and assumes all risks, including loss, until the goods are in the care of the nominated party] destination costs and charges are not normally their issue or liability.
“But they will be if a consignee does not accept the freight, or is unable to take freight because of perhaps going bust. The liability then, as per the B/L terms, comes straight back to the shipper – so it really could be a major problem that many exporters won’t consider until three-to-four weeks from now, when shipping lines start to implement their T&Cs,” he explained.
Global supply chain to be affected
And he predicted that this would quickly spread across global supply chains: “It’s not just India – generally it’s the story everywhere, regardless of the continent or country or port of destination. Other ports are filling up with inbound flows – the point is it effects the exporters ultimately if containers are abandoned or start to hit storage and incur charges that the importers can’t pay.”
This assessment was backed up by the Container Availability Index (CAx) produced by an online container logistics platform Container Xchange, which forecasts a similar congestion problems at the beginning of this month.
Ports to face congestion issues
“Container ports all over the world, with the exception of China, are faced with imminent congestion when a multitude of boxes sent for shipment from factories in Asia arrive at their import destinations,” it said in a blog post.
It explained that during late March, containers had piled up in Shanghai, “due to multitudinous blank sailings, something that would normally not happen often”.
It forecasts that during April the CAx values for Shanghai will “indicate that equipment will become more scarce again”.
Decrease in customer demand across the globe
“The effects of COVID-19 have dramatically affected consumer demand in the US and Europe. Buyers have begun to cancel orders as most of these countries are now in a severe lockdown situation and warehouse capacity is being maxed out. The incoming containers are most likely causing congestion, and incurring storage and demurrage charges at, for instance, the Port of Los Angeles or the Port of Hamburg,” it said.
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Source: TheLoadstar
