Skip to Content

Blog Archives

How Covid-19 created a traffic jam in China

Overview of Yantian International Container Terminal

 

Roughly a month ago, the shipping industry has been with hit yet with another crisis. This time round, the world’s 4th largest container – Yantian International Port was struck yet again with the deadly Covid virus. Workers of Yantian International Port were asked to isolate themselves for roughly a week and operations came to a near halt.

As to why a lockdown can bring a massive repercussion to the world? Here is a little background of China’s lockdown that has been taken place to contribute to the congestion over in Yantian International Port. As we all know back in 2019, when the virus outbreak has just started, China declares a lockdown in a particular district, and everything is order to be shut, regardless if you are part of essential services or in the F&B industry. -With that, we can see this same effect taking place again in Yantian port.

Workers who do not live in Yantian area will be barred from crossing the district and are not allowed to cross district to go to their workplace which lead to a decrease of 80% of workforce. With thousands of staffs working round the clock at the port during its full capacity period, it is now down to only 20% and this has a massive domino effect on the closure.

With the reduction of 80% manpower, Yantian International Port has lost an estimated 357,000 Teus in the last 2 weeks. To give a comparison, during the 7 days that Ever Given was stuck in the Suez Canal, the estimated TEU that the port has lost out is an estimated 333,000 Teus in the same period of time.

With the vessel unable to discharge their cargo and load fresh cargo, this has resulted in a slow turnover time and shortage of containers.  Not only that consumers are not being able to get their cargoes on time, they are now forced to pay double of the ocean freight that they were paying 6-8 months ago. For instance, an average ocean freight cost is in the region of USD 10,000 per 40 feet. It has now doubled to USD 20,000 per 40 feet.

The average dwell time for vessels to berth at Yantian International Port is now at 15 days on average and is predicted to only get worse on from here, with each grueling day slowly passing. Customers are not only unable to get their cargo but they are potentially being charged with a high port storage charges. To go around this problem, certain shipping lines have decided to omit Yantian all together and discharge their cargo at the neighboring ports – Guangdong, Shekou, Chiwan, and Nansha which has resulted in the other ports being affected with the congestion.

Yantian Container Port

Yantian Container Port

An insider news has informed that with the current situation that is ongoing, they do not have confident that this congestion will ease in a month or two and have predicted that Christmas holidays in Western Countries will be again affected for the 2nd year.

Like the Suez Canal, Yantian International Port plays an important role to the international water trades as it consists of 30 major shipping lines operating around 80 weekly services creating a very comprehensive network for shipping routes around the world. As a rough idea, Yantian International Port has managed to handle an estimate 13.5million teus on a yearly basis.

However, there might be some light at the end of the tunnel. On the 23rd of June, Yantian International Port has announced that it will resume operation at its maximum capacity possible with hope that things can be rectify as soon as possible.

 

 

 

 

 

 

Sources:

Yantian International Container Terminals – News Centre – News – YANTIAN Resumes Full Operations (yict.com.cn)
China’s Yantian Port ship congestion worse than Suez Canal mess; ‘becoming global problem’ (republicworld.com)
Congestion Grows in China’s Yantian Port due to COVID-19 Outbreak (maritime-executive.com)
Port Congestion At Port Of Yantian And Surrounding Ports Has Been Worsening (marineinsight.com)
China shipping: Yantian port delays already worse than those caused by Suez Canal debacle in March | South China Morning Post (scmp.com)

1 Continue Reading →

2.72 million teus idle containership as of 25th May 2020!

According to Alphaliner, the inactive container shipping fleet hit 11.6% of total fleet in terms of capacity as at end of May. This is an all-time high in the industry.

As of 25th May 2020, 2.72 million twenty foot equivalent units (TEUs) of idle containership fleet has been recorded. 2 major reasons for this idling capacity are:

  • Blank sailings by major global liners in response to the lower demand due to the Covid-19 pandemic
  • Capacity removed from the market for scrubber retrofits.

Covid-19 pandemic forced the shutdown of most economies which affected employment and business adversely. As a result, consumer’s purchasing power declined significantly.

551 vessels were reported to be idling as at 25th May, 2020. Out of the number, 64 vessels were taken out for scrubber retrofits. That made up 571,858 teus, which means the vessels taken out of the trade (and purely idling)  is more than 2million teus.

Port throughput gone down by at least 10% in some major Malaysian sea ports due to the lockdown.

According to Alphaliner’s weekly newsletter the world’s two largest container lines – Maersk and MSC – account for the largest portion of the idle fleet with a combined total of 845,000 teu out of service. However, more than half this figure relates to vessels undergoing scrubber retrofits.

As countries around the world are gearing up to open their economies again, some carriers have been reported to re-instate some number of sailings, initially planned to be blanked according to Alphaliner.

Alphaliner said it expected the inactive fleet to peak shortly as lockdowns in many countries start to ease and demand recovers. “There are encouraging signs that carriers have over-estimated the level of demand contraction in May, and capacity shortages on certain routes have already started to push spot freight rates up.”

Specific to Asia, we have seen improvement in certain trading areas as compared to April and, although not representative of the global situation, some trades are starting to run full ships. With China taking lead to re-start the economy, and other Asian countries following suit to resume economic activities, outlook in the coming months is encouraging.

QEL Shipping Services

admin

0 Continue Reading →
Open chat
1
Welcome to QEL Shipping
Hello, thanks for visiting QELshipping.com. Whatsapp us for any enquiries.