Spotlight on the state of the sector

It has been immensely challenging year for the ports and terminals industry so far. Supply chain disruptions have put a spotlight on the importance of digital technologies and collaboration between stakeholders.

There have been significant crises which have emphasised how vital container shipping is to the global economy and society.

It could be argued that at no point in peacetime has ensuring the flow of goods, medicines and other products been as critical as it has during the COVID-19 pandemic.

Seafarers, lorry drivers and warehouse workers and others who work in the supply chain are now certainly seen as key workers, and governments have increased investment in the movement of goods.

In many ways the pandemic has exacerbated problems that were already long in the works for maritime industry, and it has accelerated the need to upgrade processes and improve visibility as demand growth shows no sign of slowing down.

As we enter the latter half of 2021, we have looked back at a handful of the biggest news stories and insights.

Biggest consumer shift in 50 years

During a press briefing in February 2021, Hapag-Lloyd CEO Rolf Habben Jansen said the surge in consumer demand represented the biggest change in market behaviour since the 1970s and indicated that consumers had rediscovered their appetite for goods over services.

However, Jansen also described the surge as a “perfect storm” for growth but also as a “temporary market phenomenon” driven by lockdown restrictions in many regions.

“The spending spree of the past half year – how much of that has been on goods people would have bought anyway, but have merely bought earlier?” Jansen said.

“And the people who have ended up with larger savings than usual – how will that be spent after lockdowns? This to me makes all of 2021 very unpredictable in terms of demand (both up and down).”

The surge in demand for containerised goods has caused record profits for the world’s largest carriers and congestion at many of the busiest ports in the US, which has led to calls for more government intervention and digital innovation.

Los Angeles urges greater digitalisation

In January 2021, the Port of Los Angeles said that US ports needed to pursue greater connectivity and supply chain digitalisation if the nation is going to recover as a world economic and trade leader.

Gene Seroka, Executive Director at the Port, made the claim during the annual State of the Port of Los Angeles 2021, during which he also announced the development of the Port’s Control Tower, the latest in a series of cloud-based data initiatives to improve visibility.

“If we want America to improve as a leader in global trade, we need nationwide port data connectivity with agreed-upon data standards and open architecture system that provides interconnectivity between major US ports, service providers and the freight they move,” Seroka said.

The call came following months of unprecedented traffic at the Port and others on the West Coast, such as Long Beach and Oakland, which has led to allegations that carrier alliances have broken contracts at the expense of US exporters.

It was followed by confirmation in August 2021 that the Port will work the Federal Maritime Commission (FMC) and it will share its data-led insights to improve the US maritime industry and supply chain.  

FMC acts against global carriers

In March 2021 members of the US Congress signed a letter calling on the FMC to explore said allegations, with particular reference to the plight of US agricultural exporters. The issue transcended party politics, and the 111 members said that US producers and exporters had grappled with delays, bottlenecks and increasing fees at the country’s major ports.

“Should it be found that VOCCs [vessel-operating common carriers] are predatory or unreasonable in refusing to export these American agricultural products or imposing unreasonable fees, they must be held accountable by the Commission for the harm they are causing our producers,” according to the letter.

Since then, the FMC has launched an investigation into practices of the carrier alliances amid increasing delays at ports and pressures across the supply chain. In July 2021, FMC Chairman Daniel B. Maffei welcomed the action and also President Biden’s call for “fairer price competition” in the US maritime and logistics competition.

“In recent months, we have increased our scrutiny of the ocean carrier alliances to identify evidence of anti-competitive behaviour regarding rates and capacity,” Maffei said.

“We will continue to do so as the COVID-19 and import surge crisis continues. We welcome the assistance and cooperation from other agencies, including the Department of Justice.

“With regard to detention and demurrage charges, it remains a top priority of the agency to identify and take action against those who flout the Commission’s recent interpretive rule on reasonable regulations and practices.

He added that President Biden’s action reinforces these efforts and indicates his prioritization of a fair and reliable supply-chain.

Suez and Yantian cause supply chain chaos

Perhaps the single biggest story of 2021 so far has been the obstruction of the Suez Canal in March. Caused by the grounding of the 20,000 TEU Ever Given, the obstruction threatened the entire global supply chain and threatened to cause a fresh port congestion crisis, mirroring that seen on the US West Coast.

Approximately 12% of global trade passes through the Suez Canal – and according to Drewry Shipping Consultants, 5% of global sailings were cancelled as a result of the obstruction.

For some experts the obstruction emphasised how fragile the global supply chain is and demonstrated how important it is for governments to understand how damaging delays to transportation can be.

Obstruction of major container hubs and throughfares have been a theme of 2021.

Shortly after the Ever Given ran aground in the Suez Canal the Port of Yantian was partially closed due to a COVID-19 result.

In June 2021, data from supply chain specialists project44 said blanks sailings in the Shenzhen region had increased by 300% and warned of “significant chaos” across the global logistics chain.

Since then, the Port of Ningbo-Zhoushan has also suffered its own COVID-19 outbreak and subsequent closure of one of its terminals.

TradeLens rolls out across China’s major ports

The ensuing chaos from the congestion has made ports and other maritime stakeholders more aware of how digital technologies can make operations more efficient and resilient to such unforeseen events.

In June 2021, TradeLens, the blockchain-based innovative solution launched by A.P. Moller-Maersk (Maersk) and IBM, announced it will connect China’s ports after signing a partnership with China Unicom Digital Tech, citing the COVID-19 pandemic as a key driver of the technology’s rapid implementation.

Speaking to PTI, Thomas Sproat, Senior Director Network Development at GTD Solution and TradeLens, said there has been “rapid uptake” of TradeLens’ Electronic Bill of Lading (e-B/L) since the beginning of the pandemic.

This has been caused by the increasing need for “touchless, digitised trade”, Sproat said, before noting that China has been host to “many strong use cases”.

Sproat described the agreement with China Unicom Digital Tech as an “important milestone” in TradeLens’ development as the country is a “very important market for its customers”. 

It is another sign that the e-B/L is becoming more popular as supply chain stakeholders look to become more resilient amid major crises.

Jerry Guan, Senior Commercial Manager Network Development at GTD Solution and the TradeLens platform, said the Chinese market has built a “good awareness” of the technology’s potential and is increasingly “open for its adoption”.

Guan said China sees blockchain as “an important breakthrough for independent innovation of core technologies”.

According to Guan, the project to roll out TradeLens in China was launched following a stringent evaluation of the market to find a partner that could help it meet the country’s specific regulations around telecom licensing.

GreenTech 2021: Ports must collaborate in carbon-cutting fight

Ports must collaborate in carbon-cutting fight

Greater collaboration among stakeholders is key to making sure investment projects designed to cut carbon emissions at major ports and terminals succeed.

In addition, authorities need to do more to bring separate initiatives together in order to meet emission cutting goals.

Speaking to PTI ahead of the Green Tech 2021 event, Tim de Knegt, Manager, Strategic Finance and Treasurer, Port of Rotterdam, said bringing different parts of port together is the biggest hurdle.

Tim de Knegt will be speaking at Port Technology’s GreenTech for Ports & Terminals on 22 and 23 September 2021. Register now!

“The key challenge as a landlord is to ensure that everyone cooperates when investing,” de Knegt said.

“A lot of times these investments happen independently from one another, making the entire system sub optimal.

“When taking each other’s investments into account, the entire system can become much more effective and efficient.”

The need to cut emissions has made it more important for ports and authorities to work with private sector parties and investors.

According to de Knegt, ports should collaborate with private investors and “show them that investing in environmental, social and government (ESG) friendly” plans provide “much more stable as well as higher returns”.

When it comes to launching such projects, the criteria for investments varies depending on the port and its partner, according to de Knegt.

“[Criteria for investment] depends highly on the investor, but obviously sufficient return is most important as well as a good mechanism to ensure the investment is and remains classified as sustainable,” de Knegt explained.

Is hydrogen the answer?

According to de Knegt, the biggest trend ports will see in the near future is the development of “hydrogen supply chains”, but there will also be other areas of investment, including waste-heat networks and “digital efficiency development”.

“It really depends on the type of goods that you port(s) handle as to what you should prioritise, it should be a decision based on maximum ESG and Financial impact,” de Knegt explained.

As a zero-emission fuel, hydrogen liquid can be transformative for ports due to its ability to reduce greenhouse gases, urban pollution, and fossil fuels, according to an exclusive insight from PTI in May 2021.

Hydrogen can also provide benefits in reducing noise pollution and NOx compared to fossil-fuelled operations.

It can unlock numerous benefits for ports in cargo-handling equipment, supply chain stakeholders, and, in the future, potentially hydrogen-powered vessels.

The emphasis on developing an efficient logistics network for clean fuels has become a key area of investment and collaboration, in particular for the Port of Rotterdam.

In August 2021 the Port and a coalition of its partners including Koole Terminals, Chiyoda Corporation and Mitsubishi Corporation signed an agreement to jointly study the commercial-scale import of hydrogen from overseas.

The Port Authority’s role predominantly is to connect major hydrogen end-users in Northwest Europe and competitive overseas hydrogen suppliers.

In addition, de Knegt says the Port Authority is planning further initiatives and projects to improve its carbon emissions, including in the digital sphere, but that ports and all stakeholders need to cooperate if they are going to be successful in becoming cleaner.

“There are quite some investments planned in the short and medium term in terms of sustainable and digital investments, these are all aimed at making the supply chains and clusters more efficient. However, we also continue with expansionary investments.

“There is a portfolio of €1.5 billion ($1.75 billion) for the next 5 years, with sufficient projects on the “bench” to ensure that we always choose the most impactful investments.

“It is important to share learnings to ensure that everyone can benefit from these. We have a shared obligation to make this transition happen together, sharing information and learning from one another supports that. 

Port of Los Angeles confirms data sharing pilot with FMC

Port of Los Angeles to work with FMC on data sharing

The Port of Los Angeles is set to launch a pilot with the Federal Maritime Commission (FMC) to explore how its data collection and sharing system can improve supply chain fluidity.

The US gateway has responded to comments made by Commissioner Rebecca F. Dye, who is leading the FMC’s Fact Finding 29 Mission into the state of the US maritime sector and supply chain, Gene Seroka, Port of Los Angeles Executive Director, confirmed during a 17 August media briefing.

Seroka said the Port will conduct a pilot with the FMC “very soon” to explore where and how data accessibility and sharing can improve the flow of trade.

“We’ve talked about a nation-wide port information sharing system for some time, we’re decades behind those in Asia, Europe and the Middle East, but Commissioner Dye has called for work on a pilot with Port of Los Angeles and Wabtec using Port Optimizer,” Seroka said.

“The idea is collaborative work across the industry to see what soft points we can find which can be improved for all going down the line.”

Dye had said in her initial recommendations to Fact Finding Mission 29 at the end of July 2021 that the FMC and the Port were in discussion over exploring how data collected in the port information system can aid in enforcing demurrage and detention and address “supply chain dislocations”.

Describing it as “exciting opportunity”, Dye said it will “illustrate the immense benefits of visibility to supply chain performance”.

Supply chain visibility has become a key area of investment for stakeholders in the US and around the world.

In January 2021, the Port called for the US to pursue greater port data connectivity and supply chain digitalisation to recover from the worst effects of the COVID-19 pandemic.

In addition to the launching of the pilot with the FMC, Seroka welcomed the passing of the infrastructure bill by the US Senate, saying the US is “long overdue” an upgrade and that will be a “major boost” for US jobs, manufacturers and competitiveness.

“There is about $17 billion for ports and waterways, but we’ll be looking at specific areas like money for power grids, multimodal infrastructure, cybersecurity and electric vehicles, along with charging.”

Los Angeles’ empties exports soar amid rising trade disparities

Empty containers continue to be Port of Los Angeles' biggest export

The Port of Los Angeles’ highest export commodity continues to be empty containers which saw an increase of 20.4% in July 2021, amid an increasing need to improve the US trade imbalance. 

In a media briefing, Gene Seroka, Executive Director at the Port of Los Angeles, said the ratio of empty containers against exports is running at 3:1 in a sign that the US consumer’s buying strength remains uninterrupted as the Port “repositions its empty containers back to Asia”.

Trade in empty containers has increased as exports from China and the rest of Asia has risen substantially. This has led to allegations of carriers breaking contracts with US exporters to meet demand from Chinese companies.

This phenomenon, according to Seroka, “has inspired many of us to work on a national export policy”, in line with the government’s supply chain national strategy.

The deficit between imports and exports continues to widen. The Port imported 469,361 loaded TEU, a YoY increase of 2.9%, and Seroka said retailers are switching from back-to-school goods and Autumn fashion to Winter-related products.

Looking ahead, Seroka cited the National Retail Federation’s (NRF) prediction that August will be the business month on record for US imports.

As for exports, the Port saw a decrease of 27.6% year-on-year (YoY) and only handled 91,440, the lowest since February 2005; the ration between imports and exports is 5:1, the widest gap on record.

Seroka said the US consumer’s buying strength remains in full force as demand for containerised goods continues to cause YoY increases in traffic at the Port of Los Angeles, where overall volume rose by 4% in July 2021.

The gateway moved 890,800 TEU to mark exactly 12 months of consecutive growth. Seroka described the latest figures as “a great indicator” of how sustained the unprecedented buying surge has been.

The Port received 79 vessels in July 2021 compared to 88 in 2020, and Seroka said while it was welcoming fewer ships, cargo is still rising. He explained that this is due to “bigger ships and better utilisation”, saying that the Port is averaging an exchange of 11,000 TEU per vessel call.

Port of Ningbo-Zhoushan surpasses 20 million TEU despite terminal closure

Ningbo reaches 20 million TEU milestone

The Port of Ningbo-Zhoushan has surpassed 20 million TEU in the calendar year even though one of its container terminals remains closed following an outbreak of COVID-19.

In a statement, the Port said it has handled 20 million TEU a month faster than it did so in 2020. It is the seventh year in a row it has reached the milestone and this year marks the first time is has done so by August; the 20 millionth container was processed at 08:55 on 15 August.

However, the third busiest port in the world has been partially suspended for a seventh day following the closure of the Meishan Island International Container Terminal (MSCIT) on 11 August.

According to data from Bloomberg the Port has 141 vessels at shared anchor for Shanghai and Ningbo, 60 more than the average number between April and August.

The congestion has reached the major gateways on the US West Coast, including the ports of Long Beach and Los Angeles, where reports say more than 30 vessels are waiting to offload.

Carriers have diverted services to other gateways in China, A.P. Moller-Maersk (Maersk) said in its latest update that vessels from the 2M Alliance are waiting for approximately two days to call, but landside and warehouse service have been entirely suspended at the MSCIT.

The suspension of the Port is the latest challenge for the maritime. A similar outbreak at the Port of Yantian earlier in 2021 caused logistics delays across the world, as did the obstruction of the Suez Canal.

Supply chains have been crippled by COVID-19 outbreaks at major ports and terminals around the world since the beginning of the pandemic.

DP World completes crane rail extension at Port of Southampton

DP World completes rail extension at Port of Southampton

DP World today has announced the completion of the crane rail extension at its terminal at the Port of Southampton, which will allow the world’s largest cranes to service the full length of the quay. 

In a statement, DP World said the extension is part of its £40 million ($54.67 million) investment in its Southampton operations. The 120m crane rail extension has foundations reaching 26 metres below the ground and took 16 weeks to build.

It will facilitate the movement along the quay of some of the terminal’s 12 Liebherr cranes which stand up to 130m high, with flexibility being the highest priority for the equipment. 

 The new configuration is designed to maximise utilisation and will save customers’ time by speeding up quayside loading and unloading.  

Together with the granting of permission for a third berth to be dredged down to a depth of more than 15 metres, and the addition of a second empty containers park scheduled for September, the investment will take Southampton up to the next level as a smart logistics hub.  

Ernst Schulze, Chief Executive of DP World in the UK, said, “Our aim is to be a partner in our customers’ business success, providing fast, reliable and flexible links to international supply chains and markets.

“DP World Southampton is the most productive port in Britain – turning container trucks around faster than any of its competitors and at over 30 per cent has the highest proportion of its containers moved by rail. 

 “The completion of the crane rail extension builds on the progress already made this year with the opening of a new Border Control Post and the dredging and widening work on a number of berths.

“Our next step – a £3m investment in the redevelopment of the yard for the storage and delivery of customers’ empty containers – will increase capacity by 25 per cent and create even more flexibility and resilience for our customers.” 

In March 2021, London Gateway and Southampton became the first deep-water ports in Britain capable of handling Freightliner’s new 775m intermodal container trains, which are the longest in use on the national rail network and generate significant cost and environmental benefits.

US Congress called to act as West Coast TEU traffic skyrockets

US Congress called to act as West Coast TEU traffic skyrockets

The National Retail Federation (NRF) has called on the US Congress to upgrade the country’s supply chain to prevent a shortage of retail goods, as US West Coast traffic continues to break records.

Businesses require action from lawmakers if the country’s supply chain is to keep up with demand, said Matthew Shay, NRF President and CEO.

According to Shay, businesses need “meaningful, bipartisan infrastructure legislation that is critical to retailers who depend on a safe, reliable and efficient transportation system”.

The statement comes at the same time one of the US’ major West Coast import hubs, the Port of Oakland, looks to set new traffic milestones.

The Port said it will break its existing volume record and handle 2.6 million TEU in a calendar year for the first time if current traffic holds pace.

In its latest financial results, the Port announced it handled 1.3 million TEU in H1 2021 and said the year-long boom in containerised US imports is continuing to drive record traffic.

Additionally, it expects the trend to last based on three factors: record freight rates being charged by carriers indicating high demand for vessels space, rising US inflation as consumers spend more on overseas goods, and the upcoming August-November peak season when retailers stock up on holiday merchandising.

According to the Port, containerised import volume in Oakland has increased year-over-year (YoY) for five consecutive months. Oakland reported that June 2021 imports were up 15% compared to the same period last year, and exports edged up 0.8%.

On average, vessels are loading and unloading 66% more cargo in Oakland than they did in 2020. One consequence has been cargo delivery delays. Oakland said it expects delays to ease by late summer with the addition of more dockworkers.

Bryan Brandes, Maritime Director, Port of Oakland, said, “We’ve never seen this level of activity and based on the outlook we’re preparing for more.

“Our challenge is serving customers who expect us to handle their cargo efficiently.”

Ports on the US West Coast have experienced a substantial increase in cargo volumes since the summer of 2020, with e-commerce and US consumer spending restricting space on container vessels and capacity in warehouse and yards.

According to the NRF, the trend is set to continue following record retail sales in June.

Earlier, in July 2021, the Port of Los Angeles’ CEO Gene Seroka said the US supply chain required leadership from lawmakers if it is going to solve the numerous challenges, such as congestion, a lack of data visibility and disputes between carries and ports.

The statement from Seroka came after an Executive Order from President Biden for Congress to investigate allegations of anti-competitive practices by the carriers.

US supply chain needs leadership to overcome challenges

The US supply chain will need sustained leadership and collaboration if it is to overcome the challenges of congestion, lack of visibility and disputes between carriers and other stakeholders.

An unforeseen increase in consumer demand has led to carriers allegedly breaking contracts and pricing US exporters out of the market, something that has prompted an Executive Order from President Biden to investigate and possibly punish major carriers in breach of the law.

Speaking during a media briefing on 14 July 2021, Gene Seroka, Executive Director, Port of Los Angeles, described the Executive Order as “an acknowledgement that addressing the challenges of the supply chain is a national priority” and that the Federal Maritime Commission (FMC) is right to be looking into allegations of unfair practice as part of Fact Finding 29.

“The issues facing our supply chain are complex and could benefit greatly from sustained leadership,” Seroka explained.

“President Biden is taking a solutions-orientated approach to restoring reliability and predictability for American consumers and businesses alike.”

During the briefing, Seroka announced that the Port had broken both its June and financial year (FY) records and said he does not expect throughput to slow down for the rest of 2021.

The results also included a 47% year-on-year (YoY) increase in empty container exports due to “heavy demand” Asia.

The availability of empty containers has been a matter of dispute, with carriers allegedly sending them back to Asia at the expense of domestic exporters who have not been able to move their goods.

Carriers have benefitted greatly from the surge in demand caused by the pandemic and some industry experts expect their aggregate profits to surpass $100 billion in 2021.

Nils Haupt, Senior Director, Hapag-Lloyd, said the current market situation is down to “tremendous demand” from US customers and infrastructure shortages on the land side, such as terminals, depots and trucking capacity, and penalising carriers would do little to help.

“All carriers are doing their utmost to cope with this, and all carriers fulfil the needs of their customers,” Haupt told PTI.

“If regulations are intended, they should target to get the infrastructure issues eased.”

Rather than contribute to the problems in the US supply chain, A.P. Moller-Maersk (Maersk) told PTI that the alliance structure has helped build “flexible solutions” during the “unusual circumstances” and “perfect storm” of the pandemic.

Doug Morgante, Vice President, US Governmental Relations, Maersk, said everyone in the supply chain needs to accept that managing global supply chains are an “inherently complex and collaborative effort”.

Volatile markets are not in the interest of anyone and that the current environment shows how poorly the supply chain reacts to demand-induced pressure, Morgante said.

“Only through true partnerships – including regulators and policy makers – will we be able to make progress toward a less volatile and a more efficient port ecosystem,” he claimed.

“Maersk will continue the good and collaborative working relationships we have with the FMC and the United States Congress on these highly complex matters.”

Fire extinguished after container explodes at Port of Jebel Ali

Emergency services in Dubai have extinguished a fire after a container exploded at the Port of Jebel Ali, according to the Dubai Media Office (DMO).

In a series of online updates, the DMO said there were no casualties and authorities had ensured port operations were not interrupted. The fire, the DMO said, was caused by a container holding “flammable material” while it was still onboard a docked vessel.

“The concerned authorities highly efficiently controlled the last stage of a fire that broke out in a container on a ship preparing to dock on one of the berths of Jebel Ali Port without causing any injuries or death,” it said.

“We are taking all necessary measures to ensure the normal movement of ships in the port continues without any disruption.”

The vessel carrying the container in question is believed to have a capacity of 130 TEU but the DMO has not disclosed its name or which carrier it belongs to.

It is the latest such incident to affect of the maritime industry and will raise more questions of its safety and storage procedures.

In August 2020, an explosion at the Port of Beirut, caused by storage of dangerous materials, killed at least 215 people. Earlier in 2021, the X-Press Pearl sunk after a fire caused by a leak of nitric acid.  

Carrier profits to surpass $100 billion in 2021

Carrier profits to surpass $100 billion

Container shipping liner profits will surpass $100 billion in 2021 despite continued operational disruption to ports and the global supply chain, according to Drewry Shipping Consultants (Drewry).

In its latest Container Forecaster, Drewry predicted freight rates will increase by 50% on average “against a backdrop of huge operational disruptions to the port and ship systems”.

Carriers have consistently made substantial profits since the outbreak of the COVID-19 pandemic, driven by rising consumer demand, especially in North America, and freight rates.

Carriers posted a record earnings before interest and taxes (EBIT) result in 1Q21 of $27.1 billion, up from what now looks a miniscule $1.6 billion in same period one year ago. So impressive are the latest quarterly results, they even eclipsed the full-year 2020 EBIT of $25.4bn.

The earnings boom has been so great that carriers could make a decade’s worth of money from 2020 and 2022, according to Drewry.

However, there remains the danger of carriers being seen as “profiteering villains” that are unsympathetic to the needs of their customers, Drewry pointed out.

“We hope they will be good global citizens and do more to help improve the efficiency of the supply chain.”

This view is shared by some in the US, where port congestion has put immense pressure on the inland supply chain.

The actions of carriers are currently investigation by the Federal Maritime Commission (FMC) after allegations contracts with US exporters have been broken.

According to Drewry, the demand for containerised goods is increasing so fast it is unlikely carriers will be able to keep up.

“The containership fleet is not growing fast enough to meet insatiable demand right now,” Drewry said.

“A scarcity of open charter fixtures means that some lines are scouring the second-hand market for expensive new assets to add to the pile, but others can only supplement with newbuild deliveries, or are simply having to make do with what they have.”

The company said it does not believe a solution will be found to the problem of supply chain disruption and predicted the market will face under-supply in the extended medium-term.

The recent congestion at the Port of Yantian, China, following a COVID-19 outbreak among workers demonstrates how fragile the supply chain is and that port congestion is a permanent risk; this will inevitably lead to yet higher freight rates.

“Supply side disruption has become the key driver of freight rates and remains the top sensitivity to our forecasts,” Drewry said before forecasting the “lower port productivity” will continue into 2022.