SUPPLY CHAIN PERFORMANCE
BOX TERMINALS TAKE THE HEAT... …BUT THE SOURCE OF THE PROBLEMS LIE ELSWHERE Dig beneath the surface and you will see that container terminals are unjustly identified as the cause of congestion problems. Johan-Paul Verschuure diagnoses the real situation
8 It is simply wrong to lay the blame of poor supply chain performance at the door of ports – they have actually done a good job in very difficult circumstances
Container terminals are the only place where congestion is obvious. Pictures of full stacks lead to scapegoating of terminal operators. However, the problems are actually focused on other parts of the supply chain and even institutional. Shipping networks have rapidly adjusted to the conditions leading to dropped calls, longer port stays and rerouted volumes. In normal times these indicators suggest something is off. However, in current conditions it is showing how logistic players respond to changing conditions and how terminals support this process. CONTRASTING DYNAMICS Kuehne+Nagel launched its widely cited disruption indicator in late January 2022 indicating that roughly 80 per cent of global port disruption is in the US. Out of this at least 80 per cent is focused on San Pedro (Los Angeles and Long Beach). The remainder of global congestion is taking place in just a few ports. Overall the majority of ports are very busy, operating near capacity with occasional congestion, but nevetheless managing the inflow of containers relatively well. North American TEU volumes rose by just over 13.2 per cent in 2021 in comparison to pre-Covid 2019. This is the same growth rate as was recorded by North American ports between 2016 and 2018, albeit that the growth back then was spread more gradually over both years. Demand growth is mostly isolated to North America. In contrast, the Hamburg-Le Havre range recorded a volume growth of a more normal 5.4 per cent over the 2019-2021 period. This growth is healthy but has been accommodated by capacity developments already in place. This confirms that it’s not just available terminal capacity causing the problems. To really diagnose potential demand problems we have to drill deeper into port activity and the core theme of ‘cause and effect. A remarkable difference between the North American market and the Northwest European port sector has been the great variation between ports. On the West Coast only Los Angeles/Long Beach had a CAGR exceeding five per
cent per year. Prince Rupert saw a decline over the pandemic and Oakland – relatively near to the San Pedro Bay ports had stable volumes. Growth on the East Coast was much higher, mostly with CAGR in the range of 7-10 per cent over the pandemic period. In Europe growth was spread much more evenly and at lower levels. Available capacity in Zeebrugge, Le Havre and Wilhelmshafen enabled these ports to jump to the rescue of other ports with operational problems. These demand growth rates would not normally cause problems. Other issues were at play. Frankly, however, supply chains in Northwest Europe adjusted more rapidly to different operational conditions and lockdowns ensuring continuing operations in an efficient way. TRANSSHIPMENT AS A CURE The transshipment structure in place in Northwest Europe actually diluted congestion across the major ports. Deepsea calls to the UK were partially temporarily replaced by feeder services from other European hubs when hinterland logistics were struggling to keep up. Feeder services being more flexible to berth were better able to find a slot. Services were shuffled to ports with available capacity in Zeebrugge and Le Havre, with these ports also benefiting from a shift from Ro-Ro to Lo-Lo. Rather than direct mainline calls, feeders were used to fill up smaller pockets of capacity. Although the last minute changes in scheduled vessel calls caused major problems for the terminals, it did result in the optimal use of European port capacity. Examples of this in Europe include reports of feeder services calling at nearby breakbulk terminals and at shortsea terminals. Also, global operators having multiple terminals in the range worked together by actively rerouting volumes to partner terminals and thereby using all available capacity. This ad-hoc and temporary reshuffling of networks resulted in a massive shift away from published schedules. Alphaliner reported, for example, a large number of dropped calls between Asia and North Europe. However, rather than
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MARCH 2022 | 23
