New data reveals berth inefficiency of US ports

9:40pm 26th September 2021

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When 55 container ships were reported at anchor or drifting outside Los Angeles–Long Beach awaiting a berth on Sept. 13, according to the Marine Exchange of Southern California, it was not just an unsightly new all-time record for the busiest US port gateway. Rather, it was further evidence that North America leads the world in port congestion and is therefore a key culprit in the global meltdown in container supply chains.

On Sept. 15, there was a total of 87 container ships at anchor or drifting outside North American ports, including 33 off the East Coast (22 off Savannah alone), compared with just 41 in Europe, which has experienced much less port congestion this year compared with the US, according to forwarder Kuehne + Nagel.

IHS Markit port performance data “show a much higher percentage of calling vessels required to drop anchor at the North American ports in the first half of 2021 compared with Asia and Europe, and when they do so, the average number of hours they need to spend at anchor before getting a berth is five times more than in Asia and three times more than in Europe,” said Turloch Mooney, ports analyst at IHS Markit, parent company of JOC.com.

This is substantiated by the experience of individual carriers such as Hapag Lloyd, which told JOC.com that the average time its vessels were forced to wait outside ports in North America grew much more than in other regions in the first half of 2021.

Hapag-Lloyd saw its average waiting time for ships to enter port in North America increase 650 percent, from an average of four hours to an average of 30 hours, in the first half of 2021 versus the first half of 2020. The number of total days of ship idling owing to its vessels waiting outside of North America ports also expanded by six times, from 142 days to 1,006 days. This was by far the largest increase of any region in the world that the Hamburg-based line — the world’s fifth-largest carrier by fleet capacity, according to analyst Alphaliner — experienced in terms of both measurements.

The unfavorable comparison of North America to other regions can be seen in berth productivity, a proxy for overall efficiency in terminal throughput. The North American West Coast gateways of Los Angeles, Long Beach, and Vancouver require an average of 76 seconds to move a container on large vessel calls, a measurement that accounts for all vessel waiting and cargo operations time, according to IHS Markit. This compares with 46 seconds at the three largest North European ports — Rotterdam, Antwerp, and Hamburg — and 27 seconds at the Chinese ports of Yantian, Ningbo, Yangshan (Shanghai), and Singapore.

All of this points to an uncomfortable conclusion: the current disruption cannot simply be viewed as a global system buckling under the weight of the overall impact of the COVID-19 pandemic on supply chains, which includes such factors as the shift in consumer spending from services to home improvement, labor shortages, and the spike in e-commerce growth, which has strained warehouse capacity, contributing to containers piling up at ports and forcing ships to wait at anchor.

Rather, it exposes a glaring deficit in productivity, infrastructure, and information that predated the pandemic, causing any number of earlier port backups in the face of unexpected surges of volume. That long-term underinvestment and underdevelopment of the end-to-end container system is a reality US regulators and policymakers are confronting as they evaluate potentially viable long-term solutions to the current mayhem.

For example, information sharing among supply chain participants remains in its infancy in the US, with various port-led initiatives finding little traction among users because of “data protectionism.” In this area, the US is “three decades behind other nations,” Gene Seroka, head of the Port of Los Angeles, said in recent long-term recommendations submitted to US Secretary of Transportation Pete Buttigieg.

The result is that although some short-term fixes may relieve pressure — such as expanding working hours at Southern California terminals or encouraging dual truck transactions — leaders say the only real relief will come from external forces, namely a slowdown in the volume of trade, which is hardly a long-term solution.

“What is going to have the most significant impact on fluidity is a reduction in consumer spending that has a pretty material effect on overall demand, and that does not appear to be in the cards given the massive amount of economic stimulus that continues to be poured into economies globally, not only the US,” Ron Widdows, CEO of Flexi-Van Leasing, told JOC.com.

Contrary to Widdows’ view, however, such relief may be coming. Consumer spending decelerated sharply in the third quarter, in contrast to the first and second quarters, according to IHS Markit. But the lower freight volume one would expect to accompany that reduction has not arrived yet, and in the meantime, many on-the-ground indicators such as average container dwell times on terminals are rising.

As Nariman Behravesh, senior economic advisor at IHS Markit, put it, “The worsening congestion in the West Coast ports is occurring as consumer demand is moving in the opposite direction.”


by Peter Tirschwell
source: joc.com

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