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The COVID-19 pandemic has resulted in an accumulation of cargo in warehouses, port terminals and inland depots, either in containers or removed from transport units, as consumer demand and production output decline in many parts of the world.
The current pandemic has disrupted global supply chains, particularly due to the delay in its impact between major sourcing regions in China and other parts of Asia and consumer markets in Europe and North America. This has resulted in goods that were made in the previous regions but no longer need to be built up later, says TT Club, an international cargo and logistics insurer based in Sydney and regional headquarters in London, Hong Kong and Jersey City, New York Jersey.
These accumulations include containerized cargo at transshipment and destination terminals, as well as imported shipments that have been delivered to warehouses and distribution centers (DC). These are primarily non-essential products or supplies for production lines that are either static or of reduced capacity, says TT Club.
In the UK, for example, the latest estimates show that 90 percent of the country’s storage capacity is full, and the UK Warehousing Association (UKWA) predicts that there will be no more space available within two weeks.
According to TT Club, such supply chain bottlenecks can only be temporary due to the lack of demand for goods as declining orders hamper flow. However, some port terminal operators, along with their shipping company customers, are trying to help importers by delaying delivery and / or temporarily storing containers.
A recent survey by the International Association of Ports & Harbors (IAPH), Tokyo, shows a mixed picture in ports around the world. “35 percent of the ports reported an increase in the utilization of storage and distribution facilities for food and medical care, with some ports reporting capacity bottlenecks,” the analysis shows.
FIATA, the International Federation of Freight Forwarders Associations, Zurich, says the problem of container imbalances in the maritime supply chain is not new, but has reached a tipping point with the COVID-19 pandemic that has led to congestion in ports and terminals. abandoned freight and container shortages.
A recent report by FIATA on the current imbalance states: “Imbalances in containers are a persistent problem in the supply chain. In addition to the inherent imbalances in specialty equipment and reefer containers, the increase in ship capacity over the past decade and the collaboration of shipping companies in just three major alliances have generally resulted in higher peak values for container terminals and shore-side infrastructure. In the global nature of global supply chains, the effects of major regional holidays are included, with the Chinese New Year period being particularly important as it can greatly affect the global manufacturing base and logistical supply chain. In the current environment, these imbalances are exacerbated by shipping lines that use a significant number of empty runs to adjust supply, which affects the availability of containers for backhaul (export) shipments in importing countries. “
According to FIATA, this year’s Chinese New Year holiday took place in connection with a general increase in empty runs and excess capacity. The lack of container export shipments during the extended Chinese New Year holidays and the COVID-19 outbreak further exacerbated this problem. “This had a serious impact on the target’s backhaul (export) space and equipment due to a lack of sails and containers,” added the association.
When China began to get its economy going again, many of the world’s other economies stayed closed to contain the spread of COVID-19, which continued to affect global supply chains. “Although containers from China will continue to arrive at ports, factory closures will continue to prevent the easy delivery of containers,” says FIATA.
Orders for new shipments are canceled, which in turn leads to an increase in empty trips. Terminal congestion is mounting as the imbalance between import and export of containers persists and the economy slowly emerges from lockdowns, the association adds.
FIATA summarizes: “The effects of such imbalances in containers will continue to be felt as economies strengthen and revitalize the supply chain. For example, if the demand for backhaul (export) increases, the current high level of empty runs may mean there is insufficient shipping space or container equipment for backhaul (export) containers, and as such, imbalances in containers and available vessels will persist .
“Given the current economic climate, the global maritime supply chain appears to be facing stormy weather in the coming months.”