DMR Examines Container Terminal Congestion Issues

Container port congestion has been hitting the headlines recently, but the reasons for it vary widely and in many cases it is only a short term issue. Certain world regions though may be at greater risk of persistent congestion in the longer term, considers Drewry Maritime Research in this extract from the latest 'Container Insight Weekly'.

The map shown here provides a snapshot of some of the main container ports which have reportedly experienced congestion issues in recent months. Asia features strongly, as does North Africa, along with North Europe and the US. The issue of congestion is not restricted to one part of the world therefore, nor is it solely an emerging or developed market problem.

Whether off-schedule ships are a short term or persistent problem remains to be seen but past experience shows that the industry should not hold its breath. One thing is for sure – bigger ships (and the volume peaks that they generate) are here to stay.

However, when analysing port congestion it is important to take a longer term view as this indicates where the problem may be more persistent:  three selected ocean carriers have imposed congestion surcharges over the last five years. Tunisia and Venezuela top the list, closely followed by India. Bangladesh and the Philippines are also amongst the more regular offenders.

The US also figures prominently but in this instance it is mainly a case of carriers warning about precautionary surcharges when there is a heightened likelihood of labour unrest, with wording typically along the lines of “a port congestion surcharge will be levied on all shipments originating or destined to the United States in the event of a slowdown or work stoppage at any US port(s)”.

Smaller regional carriers and feeder operators usually experience congestion more frequently, partly because they are serving smaller, more remote ports with more limited facilities which can more easily be over-whelmed, and partly because in the large ports, they are further down the pecking order when it comes to the allocation of berths and resources.

It should also be noted that this analysis of congestion is from the shipping line point of view. Congestion experienced by landside transport providers such as trucking companies is another, highly important issue which is largely under the radar.

Drewry’s recently published report Global Container Terminal Operators: Annual Report 2014 provides a comprehensive analysis of the industry and includes five year port demand and capacity forecasts for 20 world regions. The projected regional utilisation levels from this report provide pointers as to where there is an increased likelihood of port congestion in the medium term.

Three world regions are projected to see double digit increases in their average regional terminal utilisation levels by 2018: Greater China, West Africa and Southern Africa. Of these, Greater China is clearly highly significant given the scale of volumes in the region (198 million teu in 2013 compared with just 8.4 and 5.4 million respectively in the two African regions). The sheer size of the Chinese market means that even modest percentage demand growth rates generate large absolute increases in volumes. As a result, capacity has to be added rapidly and usually in very large projects.

Other regions forecast to see a marked increase in average utilisation levels are the West Mediterranean, North Asia, South East Asia and East Coast South America, with increases in the 7-10% bracket.

These regional changes should be seen in the global context where average utilisation levels are projected to increase by nearly 8% (reaching 75% by 2018 compared with 67% in 2013).

What must also be remembered is that the average regional utilisation levels almost always have significant variations at more granular levels (e.g. at the country, port and terminal levels). Certain locations or certain types of capacity (e.g. big ship capacity) can be under significantly more pressure even if the regional average utilisation suggests there is nothing to worry about. The higher the projected regional utilisation level, the more likely congestion is to be seen at the granular level.

Drewry's view
Short term port congestion will always be evident in certain places but in the longer term, several world regions will need to be watched carefully as their susceptibility to congestion appears likely to increase markedly over the next 5 years.

(Global Container Terminal Operators – Annual Review and Forecast 2014 is published annually by Drewry Maritime Research and is priced at £1,895.)

Source: Drewry Maritime Research