Global supply chain issues set to escalate, says new report on Tuesday, as China’s COVID-19 lockdowns, Russia’s invasion of Ukraine and other tensions lead to delays even longer in ports and increase costs.
The study by analysts at the Royal Bank of Canada (RBC) found that one-fifth of global containers ship fleet was currently stuck in congestion at several major ports.
In China, ships awaiting berthing at the Port of Shanghai now number 344, a 34% increase from last month, while shipsending something from one warehouse in China to another in the United States currently takes 74 days longer than usual.
In Europe too, shipGoods from China arrive on average four days late, causing a number of ripple effects, including a shortage of empty containers to get European-made goods to the US east coast.
“Global port congestion is worsening and becoming more prevalent,” RBC’s head of digital intelligence strategy Michael Tran and his colleague, Jack Evans, said in the report, acknowledging that it was difficult to say when things would get better.
ShipBoth s and containers need to be available at the right time and in the right place to avoid canceled reservations. Any incompatibility entails ships operating below full capacity, so more are needed to move the same amount of freight.
RBC said the plethora of problems had a “negative domino-like compound effect on various markets.”
The Russian invasion of Ukraine at the end of February and the sinking of several ships in the Black Sea meant that insurers raised premiums between 1% and 5% of the value of the ship compared to pre-war levels by 0.25%.
Marine fuel prices in Singapore, the world’s largest bunker port, have meanwhile jumped 66% over the past year.
“Many market participants believed that supply chains would now be untangled, but this scenario did not materialize,” the report said.
Although ship delays have improved slightly over the past two months, the average overall delay of a shipThe arrival of was still 7.26 days in March, a figure that rarely exceeds 4.5 days in normal times, RBC noted.
On the West Coast of the United States, the ports of Los Angeles and Long Beach continue to struggle to keep pace.
A 19-ship queue in Los Angeles and port-level inefficiencies saw turnaround time (ToT) drop to 6.9 days from 5 days a month ago, though still down compared to the peak of 8.7 days during the Christmas rush last year.
In Europe, what Russia calls a “special military operation” in Ukraine has resulted in several shipping lines suspended transport to the Baltic and Black Seas.
Several key European countries have also banned Russian-flagged vessels from their ports. This redirected the flow and pushes the container increase ship activity in European ports.
Aggregated ToTs for the three largest European container ports, Rotterdam, Antwerp and Hamburg, are respectively 8%, 30% and 21% higher than their normal five-year levels.
“Significant compression of ToT times is needed before we can confidently suggest a path to normalization shipping costs,” RBC analysts said. ” The problem ? Things are getting worse.”
(Reuters – Reporting by Marc Jones; Editing by Emelia Sithole-Matarise)