Shipping lines were thrown into chaos by coronavirus lockdowns — first in Asia, then Europe and finally in the U.S.
It wasn’t just manufacturing plants that were shut down, disrupting imports and exports.
Many ports were thrown into lockdown, either as a specific policy or because workers failed to turn up.
But lockdowns have eased just about everywhere now.
Supply chains are recovering fast. However, the disruption to shipping services is almost more acute now than in the spring.
Take the India subcontinent to Europe service, for example.
Shipping lines adopt ‘desperate measures’
In interviews with MetalMiner, brokers report a series of desperate measures shipping lines are adopting to handle the drop-in cargoes, previously unprofitable rates, and port disruptions. In many cases, the measures appear to be causing more problems than they are solving.
Lines are currently running blank sailings on almost every route. A blank sailing is when shipping lines temporarily terminate a service and switch the vessel to another route or even anchor up.
As a result, containers are building up at ports because sailings fail to materialize as scheduled. Containers are arriving at ports booked for a particular sailing but are being shut out or rolled over to the next vessel resulting in port delays of a week or more.
The situation is exacerbated by vessels only being given a limited window at ports due to manpower shortages in India, where the pandemic is still spreading even as the government tries to encourage workers to return to full employment for economic reasons.
Carriers are voiding sailings on alternate weeks to some destinations in North America and Europe, a situation that our sources suggest will continue until at least the end of August.
So when companies look at the posted schedule and try to book containers, they are finding carriers are not able to accept for the preferred sailing. In some cases, the carriers are offering sailings with a delay of up to 2-3 weeks.
Trade patterns experience disruption
Established trade patterns have been severely disrupted by the different stages that countries went into and have come out of lockdown.
The result? Empty containers piling up at ports.
U.K. ports, for example, are becoming overwhelmed with empty containers stacking up and causing congestion in limited port storage yards.
Freight rates on the rise
Not surprisingly, freight rates have risen since the early part of the year.
India-Europe rates have risen by up to 60% despite volumes being down.
The situation is not limited to the Indian subcontinent.
Transport Topics reports all North American ports continue to see depressed volumes.
The region’s largest Los Angeles port suffered nearly a 10% drop in June compared to last year. At No. 2, Long Beach was over 11% down, while Seattle/Tacoma was down over 16% as lines canceled sailings continued into Q3.
Nor was the West Coast alone, despite losing market share to the east. New York, Virginia and Savannah all continued to suffer double-digit falls compared to the same period last year.
Importers or those with supply chains dependent on some level of imports will likely see cost pressures continue to rise through the summer.
Industry sources suggest rates could stay elevated through the end of the year and delays only gradually subside as the market comes back into some new form of balance in the fall.