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European container lines, ports brace for post-Suez bottlenecks

Highlights

Possible diversions to smaller ports

Lengthy delays, congestion expected

Container freight rates stay steady

London — Ports and shipping lines, especially those focusing on containers, are poised for a surge in demand as vessels held up at the Suez Canal arrive in Europe all at once resulting in many infrastructure bottlenecks.

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The container sector was already seeing high traffic from robust appetite for consumer goods and infrastructure under strain from coronavirus-related restrictions.

"The ongoing and unchanged congestions and delays in most European ports are leading to persistent and extreme delays of ocean vessels at the PSA terminals in Antwerp, [Belgium]," German container line Hapag-Lloyd said March 30.

The situation means a sudden demand surge across major European ports and many ships will call at, for example, the Dutch shipping hub of Rotterdam, Hamburg, in Germany, and Antwerp almost simultaneously, the Port of Gothenburg said in a statement March 30.

But things will be quieter before they are busier, a spokesman for APM Terminals, one of the world's most comprehensive port networks, said March 30. "In the short term there will be a brief period where our European ports have too little volume as the originally scheduled imports are now delayed. There will then be a surge of volume as the delayed vessels arrive along with the regularly scheduled vessel calls," the APM Terminals spokesman said.

This will create bottlenecks in the ports and hinterland logistics as imports are delayed and exports build up, he said.

Northbound and southbound traffic on the Suez Canal had fully resumed by the morning of March 30, a week after the stricken Ever Given container ship ran aground in the key waterway March 23. The closure resulted in a backlog of almost 400 vessels, which is likely to take at least a week to clear, and cause severe port congestion at many commodity terminals worldwide.

Wide-ranging impact

Market watchers expect the usual, bigger ports to be inundated but some see this as an opportunity.

The Gothenburg Port Authority and the Port of Gothenburg container terminal operator APM Terminals Nordic is offering a discount to vessels that divert to the Swedish port.

The port of Hamburg would not be the first port of call on routes between Asia and Europe, but it is preparing for higher facility utilization, by "activating additional storage space in the port (approximately. 100,000 sq m) to store the larger quantity of export containers," a representative for the port authority said.

Leading container line AP Moller-Maersk said the "ripple effects on global supply chains" would continue for weeks to come.

"We estimate that the delays could have an impact on our ocean network capacity for the coming several weeks. We are doing our utmost to mitigate the impact and contingency plans are still being made, but the loss of capacity [is expected] to be 20-30% over multiple weeks, depending on market dynamics," it said on March 30.

The backlog has impacted yard utilization capacity. "With last week's event in the Suez Canal, we know for sure that again vessels will be delayed and that the pressure on our terminals will further increase," rival container group Hapag-Lloyd said.

Initially, container carriers started redirecting some of their vessels via the Cape of Good Hope. While some ships are continuing on this path, the resumption of flows through the Suez has led some carriers to reinstate routes.

Meanwhile, container freight rates have held steady with the market taking a wait-and-see approach. The Platts Container Index, a weighted average of the spot price of key container shipping routes, was assessed at $4,495.59/FEU on March 30, stable day on day.