The Decisive | Season 3 Ep.25 - Happier Berth Days: Why Congestion at the World's Ports Matters

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Kristen Hallam:

You're listening to The Decisive Podcast. Insights and analysis to empower confident decision making. Welcome to the Decisive Podcast, brought to you by S & P Global Market Intelligence. I'm your host, Kristen Hallam. In this episode, we're discussing congestion at the world's ports. Joining me for this discussion is Max Janthur, the product specialist for Port Performance. Welcome to the podcast, Max. It's great to have you on.

 

Max Janthur:

Hi Kristen. Thank you. It's great to be here.

 

Kristen Hallam:

So Max, what prompted you and the team to put this report together?

 

Max Janthur:

So we think that port congestion remains a real risk for global trade and economies, and therefore, we think it's something we should always monitor. And the unique nature of the data puts us in a position to provide an accurate assessment of what's going on at a time of great uncertainty.

 

Kristen Hallam:

All right, so before we get into the key findings, Max, let's talk about some of the terminology in the report which may be unfamiliar to some of our listeners. What do we mean by arrival process time?

 

Max Janthur:

So with arrival process time, we look at a total elapsed time of when a vessel arrives at a port, either in a waiting zone or one of the port limits. And then we stop counting when the vessel has arrived at berth and all lines are fast.

 

Kristen Hallam:

And what is port efficiency and why is that important?

 

Max Janthur:

With port efficiency, we refer to how quickly a port can handle cargo. This is important for a few reasons. One reason is cost reduction. Efficient ports reduce operational costs for shipping lines by minimizing turnaround times and optimizing cargo handling processes. This leads to lower shipping rates, benefiting industries reliant on shipping. Secondly, supply chain optimization. Ports serve as critical nodes in global supply chains. Efficient operations ensure timely delivery of goods and answer the reliability of supply chains and reducing inventory costs for industries.

This also increases customer satisfaction in industries that are reliant on timely deliveries. Thirdly, economic growth. Ports contribute significantly to national and regional economies by facilitating trade. Efficient port operations can attract more shipping traffic, leading to increased economic activity, job creation and, for example, tax revenue. And lastly, I also would like to highlight that efficient port operations can lead to reduced emissions and environmental impact. Efficient logistics reduce congestion and delays, contributing to greener supply chain practices. 

And then in the analysis we look at a few metrics to quantify the port efficiency. So we look at the vessel turnaround time, so the arrival process and port hours, which either waiting zone or port limits until it leaves the berth. Then we also look at port moves per hour and berth moves per hour. Port moves per hour is call size or total moves divided by port hours and berth moves per hours is call size or total moves divided by berth hours. This metric shows how many moves port was able to execute within an hour.  

So the more moves it was able to perform within an hour, the more efficient it is, but the lower amount of moves, the less efficient. And then we also look at dwell time. Their productivity is linked to the port's performance. The flow of new arrivals can be interrupted if port is experiencing long dwell times.

 

Kristen Hallam:

So a lot of different measurements go into it. That's really interesting. And that was also quite a list of reasons why this information is important. Max, how many ports are included in the report?

 

Max Janthur:

So in this report we included about 70 ports. So how we eventually decided those 70 ports was we looked at the data on a regional level including all our ports. And once we saw there was a big increase in arrival process time year on year, we started to look further into it and find out which port ports were the main contributors to that big increase of arrival process. And after that process we were able to make sample groups for each region including the ports that had the biggest year on year increase in arrival process time.

 

Kristen Hallam:

So Max, what are the risks and impacts of port congestion and what are the key findings of the report?

 

Max Janthur:

So I'd like to highlight three risks and impacts of port congestion. So one is, as mentioned before, increased costs. So congestion often results in longer turnaround time for vessels leading to increased operational costs for shipping lines. And these costs can include higher fuel consumption due to idling, additional port fees and increased labor costs for handling cargo. Ultimately, these costs may be passed on to consumers leading to higher price for goods. And secondly, we also have, port congestion can cause supply chain disruptions, so it can cause delays in the delivery of goods disrupting the entire supply chain. Industries that rely on timely shipments may force production halts, inventory shortages and missed deadlines, which can damage relationship with customers and affect overall business performance. This can also lead to a ripple effect impacting suppliers and distributors throughout the supply chain.

And then thirdly, an impact that it can have is as well on the environment. So increased congestion often leads to higher emissions from vessels and vehicles waiting to load or unload cargo. This can contribute to air pollution and negatively impact local communities. Additionally, prolonged congestion can lead to inefficient use of resources and increase the environmental footprint of port operations. In our analysis we found that there are multiple port congestion events happening in Q1 2025. Our main finding was that arrival process time increased year on year in many ports. And after collecting all the data, we were able to split the sample group into two sections. So the first section was that we saw ports that had a very big increase in arrival process time, but they did not have a lower berth productivity.

And then in the other group we saw there were ports that had a year on year increase in arrival process and also a decrease in berth productivity. So in North America, arrival process increased notably. It was the second largest year on year increase we saw in the report. But the berth productivity stayed relatively the same. So even though more vessels had to wait in terms of how quicklythe  port was able to handle the cargo, once the vessels at berth, it didn't get affected that much.  

And then in Southeast Asia we have seen as well that arrival process increased, but berth productivity decreased. So that means that the cargo operations were also slower than usual compared to the same period last year.

 

Kristen Hallam:

So that's very interesting. Who else, other than myself and yourself, would be interested in these findings, Max?

 

Max Janthur:

First and foremost, I think governments would find this report interesting because as I mentioned before, port congestion has an impact on the country's economy. Port congestion affects trade flows which causes delay in delivery of goods. And this can in turn have a ripple effect on the economy and cause, for example, inflation. Having more visibility on what's going on at the ports can help them determine if there's a need to act. And they can also then see, okay, where exactly are the issues? And that can help them to more efficiently enforce policies if needed. 

Then we also have carriers. Operational efficiency is very important. Understanding congestion patterns allows carriers to optimize their shipping routes and schedules, reducing delays and improving turnaround times.

And then, as well, besides operational efficiency, customer satisfaction is also important. So timely delivery is crucial to achieve that. And carriers can enhance their service reliability and maintain customer loyalty by mitigating congestion issues.  

And thirdly, I think port operators would also be interested in this. Port operators can use data and the report as a benchmarking tool. They can compare their performance with the performance of other ports and they can see okay, what are some areas they could potentially improve in. 

And then lastly, supply chain strategy executives could be interested in this. So for them, having the access to the port data could help them with strategic decision-making process. So insights into port congestion can inform high level strategic decisions regarding sourcing production locations, distribution networks and ensuring alignment with market conditions. Understanding congestion trends can help develop good long-term strategies.

 

Kristen Hallam:

So it's time for us to wrap up our conversation. Any final thoughts for our listeners, Max?

 

Max Janthur:

Yeah, I'd like to emphasize again that poor congestion remains a very real risk for global trade and many global economies, and we must therefore keep a close eye on trends so we can prevent or limit consequences of major disruptions. And while life is full of uncertainties, one undeniable truth remains global supply chain disruptions are an inevitable recurring challenge.

 

Kristen Hallam:

All right, thank you so much, Max, for taking the time to share your insights with us. That concludes this episode of The Decisive Podcast. Until next time. Thank you for listening to the Decisive Podcast from S & P Global. Please subscribe and join us for next week's episode. Until then, stay curious and stay informed.