Around 300 large cargo vessels have been cooling their heels until being allowed to enter the Chinese and Australian ports due to traffic bottlenecks.
What happened?
This traffic bottleneck in China and Australia has highlighted the country’s demand for coal and iron ore and also highlights China’s huge and global commodity supply chain as demand peaks this winter.
The ship tracking screen highlighted how dry bulk ships are waiting for over a month waiting to load coal and iron ore in the Australian ports, since the key charter rates have reached their highest in three years. If the waiting vessels are placed end-to-end in a sequential manner they would stretch more than 40 miles, enough to span the English Channel from Dover to Calais and back.
Increase in shipping cost:
According to the fixture data on the Eikon terminal, this traffic bottleneck to the world’s second-biggest economy, the clog is costing extra in a shipping sector operating on tight margins, just as it recovers from its worst downturn in more than three decades. Charterers of capesize ships for the largest bulk dry cargo carriers are currently paying an extra $1 million per vessel, assuming a 45-day wait.
Ziad Nakhleh, managing director of Greek ship owner Teo Shipping said, “There are some ports in east Australia that have 80 vessels anchored, which translate into 20-25 days of delay and congestion”.
Congestion due to winter demand:
The shippers and brokers allege that the delays are usually expected during the peak winter season further fuelled by bad weather including fog and strong winds in China and infrastructure issues in Australia exacerbate increased demand for vessels to satisfy China’s soaring minerals appetite.
Australian ports affected include Queensland export terminals at Hay Point and Dalrymple Bay, where there are 76 capesize and panamax vessels – named for being the largest size than can navigate the Panama Canal waiting to load.
Nicolaus Bunnemann, joint managing director of the ship’s German owner, Atlantic Lloyd said, “It must be congestion. I don’t think it’s normal to wait six weeks”.
Delays at Hay Point and Dalrymple Bay were caused by a combination of port maintenance and the ongoing impact and disruption caused by Cyclone Debbie in March.
Ian Macfarlane, chief executive of the Queensland Resources Council said, “It’s business as usual off Hay Point but we’re still seeing queues for Dalrymple, however it’s declining steadily and we’re expecting a return to normal sometime in January”.
Ports shut down:
Once the cargo is finally loaded, the vessel will proceed towards China where they are estimated to wait for over a period of two weeks for unloading.
A Singapore-based capesize ship broker said, “There have been several incidents where ports in China have been closed for two or three days at a time. Changjiangkou (or CJK, the anchorage outside Zhoushan-Ningbo) and Bayuquan were all closed at one stage, although CJK was the worst affected”.
Ship owners with ships stuck in the maritime traffic jam miss out twice around: they are unable to hire out their vessels at the higher rates the congestion has caused.
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Source: Reuters
