Snarled up ports point to worsening global supply chain problems

The world’s three biggest container shipping groups including Denmark’s Maersk have said they are suspending non-essential deliveries to Russia following its invasion of Ukraine – Copyright AFP/File Nhac NGUYEN

A study published on Tuesday by analysts at the Royal Bank of Canada (RBC) found that one-fifth of the global container ship fleet was currently stuck in congestion at various major ports.

The report details several major issues, including China’s COVID-19 lockdowns, Russia’s invasion of Ukraine, and other strains on the supply chain, creating long delays and worsening port congestion, reports Reuters.

Global ports, from China, the U.S., Canada, and Denmark have gone from a pre-pandemic elasticity – able to easily flex to match demand – to one of stasis or nearly complete stoppage of activity.

“The way we look at the global economy needs to change,” said Steven Barrow, a currency strategist at Standard Bank, according to Supply Chain Brain. “No longer should we look at growth, inflation, and monetary policy through the lens of demand. Instead, it is supply that’s key.”

Trying to measure the degree of stress on the supply chain involves taking into account local stresses, such as the COVID-19 lockdowns in China, and right now, the Russian invasion of Ukraine. These issues have far-reaching effects on the global economy.

Not only that – but ships and containers must both be available at the right time and place to prevent canceled bookings. Any mismatched results in ships running below full capacity mean more are then required to move the same amount of freight.

RBC said the plethora of problems was having a “domino-like negative compounding effect across various markets.” Though vessel delays have improved fractionally over the last couple of months, the average global delay of a ship’s arrival was still 7.26 days in March, a figure that rarely tops 4.5 days in normal times, RBC noted.

At Canada’s Montreal Port Authority, President and CEO Martin Imbleau said supply chain challenges will likely continue according to the annual report, The Suburban reports.

The shipping industry is experiencing difficulties accessing containers according to Imbleau but he said the crisis in Ukraine does not have a direct impact on the Port of Montreal since trade with Russia and Ukraine is ‘marginal.”

Imbleau attributed the challenges to the fact that many containers are ‘in the wrong place and the wrong time’ and that costs have increased significantly. Additionally, the situation is difficult in some west coast ports due to long waits for ships.

On the U.S. West Coast, the ports of Los Angeles and Long Beach continue to struggle to keep up. Time of Turnaround (ToT) for vessels waiting to unload has jumped to 6.9 days from 5 days a month ago.