- Almost 400 ships poised to transit key commodity chokepoint
- Freight rates start to dip after brief Suez boost
- Maersk warns of port congestion and lengthy delays
Southbound and northbound traffic on the Suez Canal has recommenced a day after the stricken Ever Given container ship was freed, market sources said March 30. But the backlog of almost 400 vessels is likely to take at least a week to clear, with severe port congestion expected at some commodity terminals worldwide, reports Platts.
A large impact on ports?
Some European ports have yet to see any difference in their ship call, because the ships stuck in the Suez weren’t scheduled to show up until later this week — or even early next week, in the case of The Port of Antwerp.
“Once the ships sail towards Western European ports, there will probably be a peak of traffic in all those ports,” Antwerp Port Authority Corporate Communication Advisor Annelies Oeyen said in an email. “There will be an impact on our port, but it is still too early to judge how small or large this impact will be.”
Port congestion expected
The time between when ships were scheduled to arrive and when they actually do will provide ports a lull in their operations, according to BIMCO Shipping Analyst Emily Hannah Stausbøll.
“Then as the backlog in the canal is cleared and the ships start arriving at their destinations, congestion will become a problem, especially in the European ports,” Stausbøll said in an email.
How bad port congestion gets will depend on a variety of factors, including how quickly ships get out of the canal, according to ManWo Ng, associate professor of maritime and supply chain management at Old Dominion University.
“Another key question is: What will ships do after passing through the Suez Canal?” Ng said in an email Monday. “Will they speed up to compensate for some of the lost time? Will they skip certain ports? Communication and coordination between ports and the ocean carriers is also critical.”
Carriers could change port calls
Oeyen said some carriers could still change their port calls, and terminals at Antwerp were taking steps to prepare.
“For example, PSA Antwerp has set up a 7-day timeframe within which containers for Mid & Far-East ships are accepted at the terminals,” Oeyen said. “The terminal operator takes this measure to anticipate the expected congestion at the terminals and to prevent further delays in the sailing schedules.”
What happens over the next several days will provide a clearer picture around blank sailings that could result from the Suez blockage. If ships don’t make it to their next destination in time, there aren’t enough vessels in the charter market to fill in the shortfall, so sailings could get blanked, Stausbøll said.
“We saw a few cases of this when the congestion on the [U.S. West Coast] was at its worst and ships were unable to make it back to the Far East in time,” she said.
The bottleneck in the global supply chain took place at a time when global schedule reliability is already near record lows. Carriers recorded a global schedule reliability of just under 35% in February, which was essentially flat MoM.
“The average delay for LATE vessel arrivals has been on an increasing trend for six months, increasing M/M in February 2021 to 6.76 days, which is the highest recorded delay ever,” Sea-Intelligence CEO Alan Murphy said in a statement.
Ripple effects
Many industry sources have said the repercussions on commodity markets from the week-long blockage are likely to reverberate for weeks.
Leading container line AP Moller-Maersk said the “ripple effects on global supply chains” would be for weeks to come, with severe port congestions expected.
“We estimate that the delays could have an impact on our ocean network capacity for the coming several weeks. We are doing our utmost to mitigate the impact and contingency plans are still being made, but the loss of capacity to be 20-30% over multiple weeks, depending on market dynamics,” it said on March 30.
However, freight rates on some crude oil tanker markets were already starting to dip after a brief boost to some routes.
Surge in suezmax freight rates
Suezmax freight rates jumped on March 26 in the Mediterranean and Black Sea region, supporting also the West African markets. The Mediterranean-to-East run basis 130,000 mt was assessed up to $3.2 million on March 26, up from $2.8 million on March 25. But by March 30 offer levels were now closer to the $3.10 million on this route, sources said.
But the canal closure did tighten the tonnage lists of many vessels, which could help support some freight rates, they added.
“Monthly average freight rates on some affected Suezmax routes are forecast to increase between 9%-35% for April compared to March. The LR1s are also forecast for similar increases in the region of 14%-18% for the same period,” Platts Analytics said in a note.
Almost 10% of total seaborne oil trade and 8% of global LNG trade passes through the Suez Canal.
Did you subscribe to our daily newsletter?
It’s Free! Click here to Subscribe!
Source: Platts
