Overview and background
Global container trade has increased every year since the introduction of unitisation to deep-sea routes in the late 1960s. Since 1980, global container port handling has grown at an average annual rate of 9.5%, a growth rate which has continually exceeded underlying trade growth by several percentage points.
The growth in container trade
World container trade is driven in the first instance by the growth of output and of consumption. However, in addition to economic growth there are several structural factors, which also impact upon global container trade, so that even in periods of economic difficulties the volume of container traffic can continue to rise. For the resilience in demand, the container shipping market has primarily to thank the globalisation process, with manufacturing moving away from high cost production areas to regions with a much lower cost base. This process has been ongoing over the past two decades. However, China’s accession to the WTO at the beginning of 2002 and the resulting shift in manufacturing patterns provided a further boost to world container trade. Indeed, growth in world container handling activity has grown at double-digit rates over the past three years, by far surpassing the average growth rate witnessed over the past two decades. And whilst container carriers have been enjoying high vessel utilisation rates for the past three years, this situation has put existing port facilities under a considerable strain.
Table 1 provides an overview of container activity by region since 1995, along with estimates for 2004, whilst Table 2 translates regional port handling volumes into year-on-year growth on an historical basis.
Table 3 identifies the ports in the world with the highest utilisation for 2003. There are key points that need to be mentioned about these facilities:
There is a good geographic spread – most regions are included;
Lower quality, with low volumes and capacity – it takes far fewer containers for a small facility to become congested;
Many of the countries highlighted are in “developing” economies/regions;
In most cases, these are not major container-handling ports.
The impact of growth on port congestion
Although the ports contained in Table 3 may be the ports with the highest utilisation levels, they are by no means the most important when talking about port congestion. For the purpose of this report, we have picked out the likes of Antwerp, Rotterdam, Los Angeles or Long Beach because of their size and – as a consequence – the severe impact which congestion there has on carriers’ service networks. They may have lower utilisation rates than the small outports which are mentioned in the league table, but the congestion there is causing havoc – to all parties concerned. Arguably, 2004 was the worst year on record for congestion at the world’s container ports and concerns are growing that the 2005 peak season could be even more difficult.
The congestion hotspots during 2004 were: • Southern California in the US • Benelux and UK in northern Europe • Mediterranean, particularly the hub ports; Gioia Tauro, Piraeus and Marsaxlokk • India • West Africa and Durban in South Africa • Brazil, particularly the southern ports of Sao Francisco do Sul and Santos.
What set 2004’s congestion apart from that of previous years was that ports in developed economies experienced the worst delays. Multi-million teu container ports, such as Los Angeles, Long Beach, Vancouver (BC), Montreal, Rotterdam, Antwerp, Southampton and Singapore, long lauded for their ongoing investment in developing modern cargo handling facilities, all experienced periods of extreme difficulty in handling cargo. In general, congestion occurred because port authorities/ terminal operating companies failed to forecast and plan for the huge demand that would be placed on their infrastructure and resources. In particular, the growth in Chinese exports was severely underestimated and this is why those leading ports importing Chinese goods, ie Los Angeles, Long Beach and Rotterdam, were some of the worst affected.
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