Congestion at key Asian ports is the worst it has been over the last 20 years and the situation looks set to continue, according to two executives from one intra-Asia carrier. Transport chief executive Tim Wickmann and chief commercial officer Naresh Potty said that schedule reliability was becoming increasingly difficult to maintain because of the congestion, which began around March.
Manilla – Worst Perfroming Port
Mr Potty named Manila as the worst-performing port but said that Hong Kong, Shanghai, Qingdao, Incheon and Cat Lai in Ho Chi Minh City were also badly affected. Hong Kong congestion is causing particular issues for carriers, they said. Mr Wickmann said the problem appeared to be partly caused by the complicated nature of vessel-sharing agreements, with cargo for several carriers being carried on a single ship that then needs to transfer to each of the carriers’ feeder, barge and intermodal service providers.
Inter Terminal transfers
This has greatly increased the number of inter-terminal transfers. “I have to say that I have been in this business for more than 24 years and I don’t think I have experienced anything as operationally challenging as I have over the last six months,” said Mr Wickmann. He added that the congestion is increasing costs because vessels were having to wait for days outside terminals. “The way we have been overcoming this is by omitting ports,” said Mr Wickmann. “You start by waiting, and after two or three days you wonder how you will get back on schedule. “So you take fewer moves than you were planning in certain ports and this affects vessel utilisation, or you simply omit calls.” Mr Potty added it was difficult for short-haul carriers to speed up services to make up the lost time because the shorter transit times allowed for less flexibility than longer-haul services. “It also creates a snowball effect where you still have the containers in the port waiting collection and by omitting ports you just worsen the situation in the transhipment ports,” Mr Potty said.
“The cost for us is also not exactly cheap as the port charges us on a per daily basis for storage depending on how long the container sits there.” Mr Wickmann said that MCC Transport, which offers both feeder and intra-Asia services, has also taken the step of adding ships to services in order to create extra buffer time at terminals, but this increased the cost of running a service. Asked whether it is possible to implement a congestion surcharge, the two said it would be difficult because of the competitive nature of the intra-Asia trade and because the level of congestion between the terminals at a particular port varies, meaning not all carriers willapply a charge. “Customers need to get used to the fact that fast transit times are a thing of the past because services with fast transit times don’t have a congestion buffer and that means that every time there is a delay we can’t meet our schedules,” said Mr Wickmann. ”Instead of looking for a fast transit time when everything goes well, which is happening less often, they should look for a schedule they can trust.” Mr Potty said the problem could get worse, as the typhoon season has yet to get under way and intra-Asia volumes are growing by around 6%-7% per year.