2023 the new normality aim as industry ‘curveballs’ continue

Los Angeles, California, USA - October 9, 2021 - Cargo Containers being offloaded at the Port of Los Angeles

Forecasts of any return to normality in port and shipping congestion has been pushed back to 2023 as external disruptions hamstring the market.

Ongoing COVID-19 lockdowns in China in port mega-hubs such as Shanghai and Shenzhen, and the geopolitical fallout of the Russia-Ukraine conflict are the latest challenges facing container flows, commented Lars Jensen, container expert.

“We are at one of the worst points [of congestion], and it’s going to take a long time to dig us out of this,” Jensen told a Hapag-Lloyd roundtable on 31 March.

A lack of container and vessel availability driven by consumer spending changes from the pandemic means supply chains suffer greater shocks when ‘Black Swan’ events occur.

“We have no container buffer capacity in the system: in the old days, a truck strike in Spain would not be a problem [to the industry]. Now, we have no buffer capacity in the system. The optimistic view is [congestion clearance] will take us at least until the end of the year with the way things are going,” Jensen said.

Jensen added that vessel availability is still a prime issue: in February, some 11.6 per cent of the global fleet of vessels were unavailable.

The challenge was even greater in January, with vessel unavailability at 13.5 per cent. Many vessels are tied up queuing at congested ports such as the Port of Los Angeles and Port of Long Beach, waiting to discharge cargo.

Consequently, schedule reliability – though improving – remains at staggeringly low levels.

“Normalisation will [now] have to be seen in 2023, in the absence of any additional curveballs. We have had one curveball after another in the past two years,” Jensen said.

Experts way back in September 2021 predicted that Chinese New Year 2023 was the “bold view” for relief of intense pressure on the supply chain.

CEO of Hapag-Lloyd Rolf Habben Jansen echoed Jensen’s comments on capacity: “Every ship we have and can get our hands on is sailing. We have bought 500,000 TEU in the past two years.

“But that still doesn’t solve all of those problems. It remains a difficult situation that we are battling every day to save as many voyages as we can, even if that means skipped sailings.

“The yards are producing vessels quicker than anticipated, and we will be starting to see some benefits towards the end of this year. We will be getting back to a normal situation in 2023.”

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