South China's Congestion Surpasses Suez Canal's Blockade

4 mins read  Sealuminati TeamJune 10, 2021
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Cargo movements across Southern China are declining fast as congestion spreads beyond pandemic-affected Yantian International Container Terminals, causing disruption on a magnitude greater than the Suez Canal's six-day blockage in March.

Supply chain managers and experts worry about a rapidly growing instability due to Yantian, with eastbound trans-Pacific demands surpassing vessel capacity and ocean reliability falling well below 25% on both China-US and China-Europe shipments.

Lars Jensen, CEO of Vespucci Consulting, posted on LinkedIn recently, “Shippers should not underestimate the extent of the approaching ripple effects.”

According to Jensen, Yantian has been unable to handle 357,000 TEU in the 14 days since the disruption began. To put the blockade in context, he stated that it lasted six days and impacted a daily flow of 55,000 TEU or around 330,000 TEU in total. Additionally, the impact of the Yantian congestion on the other Shenzhen terminals must be considered, as their production is also being reduced by COVID-19 regulations.

“Every day adds to the mountain of backlogged cargo,” Jensen observed. “Once the ports resume normal operations, we should anticipate an increase in cargo – at least to the extent that vessels are available to handle it. This may result in ripples of potential congestion at the destination, with a lag period of around two to five weeks.”

Yantian, one of Shenzhen's biggest deep-sea terminals, is estimated to handle 25% of China-US trade, with 13.3 million TEU passing through its bustling docks in 2020. However, as a result of a COVID-19 outbreak on May 21, the company's west terminal was closed and production at the east terminal plummeted to 30%. Carriers have responded by announcing a slew of Yantian timetable changes through the first week of July.

Maersk and Mediterranean Shipping Company (MSC) said that 40 vessels will skip Yantian calls until July 5, while THE Alliance will eliminate 16 calls over the next four weeks and 11 boats from CMA CGM would skip Yantian calls until June 19.

Over 40 vessels are estimated to be waiting to enter the facility at the moment. With export containers piling up and quarantine restrictions restricting truck driver availability, the disruption is spreading throughout South China ports.

According to data from visibility solutions provider FourKites, dwell duration at Yantian has increased over the last two weeks, from five days in mid-May to eight days for the week ending May 30. Additionally, FourKites reported a 44 percent and 39 percent decline in shipment volume during the weeks of May 23 and 30, respectively, when compared to the week of May 9. Cargo movements across Southern China are declining fast as congestion spreads beyond pandemic-affected Yantian International Container Terminals, causing disruption on a magnitude greater than the Suez Canal's six-day blockage in March.

Supply chain managers and experts worry about a rapidly growing instability due to Yantian, with eastbound trans-Pacific demands surpassing vessel capacity and ocean reliability falling well below 25% on both China-US and China-Europe shipments.

Lars Jensen, CEO of Vespucci Consulting, posted on LinkedIn recently, “Shippers should not underestimate the extent of the approaching ripple effects.”

According to Jensen, Yantian has been unable to handle 357,000 TEU in the 14 days since the disruption began. To put the blockade in context, he stated that it lasted six days and impacted a daily flow of 55,000 TEU or around 330,000 TEU in total. Additionally, the impact of the Yantian congestion on the other Shenzhen terminals must be considered, as their production is also being reduced by COVID-19 regulations.

“Every day adds to the mountain of backlogged cargo,” Jensen observed. “Once the ports resume normal operations, we should anticipate an increase in cargo – at least to the extent that vessels are available to handle it. This may result in ripples of potential congestion at the destination, with a lag period of around two to five weeks.”

Yantian, one of Shenzhen's biggest deep-sea terminals, is estimated to handle 25% of China-US trade, with 13.3 million TEU passing through its bustling docks in 2020. However, as a result of a COVID-19 outbreak on May 21, the company's west terminal was closed and production at the east terminal plummeted to 30%. Carriers have responded by announcing a slew of Yantian timetable changes through the first week of July.

Maersk and Mediterranean Shipping Company (MSC) said that 40 vessels will skip Yantian calls until July 5, while THE Alliance will eliminate 16 calls over the next four weeks and 11 boats from CMA CGM would skip Yantian calls until June 19.

Over 40 vessels are estimated to be waiting to enter the facility at the moment. With export containers piling up and quarantine restrictions restricting truck driver availability, the disruption is spreading throughout South China ports.

According to data from visibility solutions provider FourKites, dwell duration at Yantian has increased over the last two weeks, from five days in mid-May to eight days for the week ending May 30. Additionally, FourKites reported a 44 percent and 39 percent decline in shipment volume during the weeks of May 23 and 30, respectively, when compared to the week of May 9.

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