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Navigating Port Congestion After the Suez Canal

Navigating the Impact of Port Congestion following the Suez Canal Blockage

By
Jesper Jepsen
April 5, 2021

Even before the Suez Canal blockage the shipping industry was facing extreme congestion levels in many ports across the globe, including those in the USA, Canada, South Korea, China, Singapore, and the United Kingdom. With demand remaining high, port congestion challenges will continue for months to come with increased volumes, restrictions due to COVID-19 requirements, and missed berthing windows.

Even if the Suez Canal is now open, the operational impact of a week blockage will have a ripple effect lasting for weeks:

  • A further deterioration of schedule reliability and additional equipment unbalance is to be anticipated even on Trade-Lanes not directly related to the Suez Canal.
  • Some steamship lines have stopped accepting new bookings from Europe to USA until end of April.

Marine terminals at the U.S. ports of Los Angeles and Long Beach are experiencing some of the worst congestion, with anchorage times often exceeding a week. In March, the United States passed another stimulus bill, while at the same time, COVID-19 infection rates are decreasing, multiple states are relaxing COVID-19 restrictions, and the number of people vaccinated continues to grow. Consumer spending and retail imports are predicted to remain high, and even increase, throughout the spring and summer months, providing the ports with no relief when it comes to congestion.

While it can be challenging to avoid port congestion, there are some ways to minimize the impact of port congestion and plan for success.

  1. Explore alternative gateway ports that face less congestion. With the congestion on the U.S West Coast, many are exploring other port options such as the Port of Seattle. Alternatively, some are choosing to bypass the U.S. West Coast altogether in favor of going through the Panama Canal and up the East Coast.
  2. Plan ahead. At this time, planning ahead is key and booking shipments as soon as possible can help keep your supply chain moving. With the current equipment shortages and severe congestion at ports, some levels of delays are almost unavoidable. Therefore, it is important to build extra time into your schedule to account for the current conditions.
  3. Consider utilizing other shipping methods. As in non-pandemic times, ocean freight affords the opportunity for cost reductions when compared to airfreight. However, the lead time is much longer than airfreight. When facing time constraints, air freight may be a more viable option. Another option to consider is LCL Ocean freight, smaller but more frequent shipments can keep your supply chain moving. While LCL also faces congestion issues it is much easier to be flexible and by splitting product on more vessels, better chance that cargo gets moved using multiple vessel/ports to get product through. Talk to your JAS representative for options on alternative shipping methods that fits your needs.
  4. Stay in contact with your JAS representative. With the increased port congestion, it is more important than ever to stay in contact with your local representative so that you are aware of arrival times, equipment availability, and market conditions.

For more information on how to navigate the current port congestion, contact a JAS representative.

For more information about current ocean market conditions, read our most recent ocean market update: https://www.jas.com/market.

Latest News

This year Earth Day takes place on April 22nd and focuses on the theme of restoring Earth. Since its beginning over 50 years ago, it has been a day focused on bringing about awareness and action for the protection of the Earth.  

While every April the world celebrates Earth Day, at JAS, we are committed to sustainability year around. One way JAS does this is through our eco-friendly buildings and warehouses located across the globe.

JAS Germany’s Green Roof Extensive:

Located just 5 minutes from the Frankfurt Airport, JAS’s multi-user warehouse in Frankfurt, Germany, is JAS’s first to feature a green roof extensive. The green roof extensive spans close to 11,000 sqm and is characterized by its shallow-rooted and hardy plants such as grasses and succulents. The green roof also helps with energy savings by protecting the warehouse from direct solar heat when it is hot and minimizing heat loss through the roof due to the extra insulation provided by the plants on the rooftop when it is cool.

JAS Italy Roof Top Solar Power: 

When constructing the JAS Segrate site, sustainability was of high importance. Therefore, solar panels to harness sunlight and generate electricity were installed. The solar panels allow the office to replace most of its electricity usage with renewable energy, creating a more sustainable energy solution. By utilizing this energy-efficient renewable energy source, JAS is able to combat greenhouse gas emissions and reduce our collective dependence on fossil fuels such as coal and natural gas, from which traditional electricity is sourced.

As the world comes together to celebrate Earth Day this week, JAS is continuing its commitment to promote environmental sustainability by creating an environmentally friendly atmosphere within every aspect of our organization. We believe that with the implementation of sustainability globally, we can work together to effectively reduce concerns such as pollution, the use of natural resources, and harmful greenhouse gasses.

The Ever Given was successfully re-floated within the Suez Canal at 15:04 local time on March 29th.

Yesterday it was revealed that the Suez Canal Authority (SCA) formally arrested the Ever Given pending settlement of around $916 million. An Egyptian judge granted permission for the SCA to seize the vessel after it lodged the compensation claim against its Japanese vessel owner, Shoe Kisen.

The SCA says it intends to maintain the vessel’s arrest until the claim is paid, a position that has caused fury among the ship’s insurers and ship managers, and led charterer Evergreen to investigate whether it could use a court order to treat vessel and cargo separately.

The SCA claim includes $300m for salvage and $300m for “loss of reputation”, which appears set to be rejected by the vessel’s insurer, the UK P&I Club, which revealed it had already made a compensation offer to the SCA this week.  

Release from the UK P&I Club:

“Despite the magnitude of the claim, which was largely unsupported, the owners and their insurers have been negotiating in good faith with the SCA.
“On 12 April, a carefully considered and generous offer was made to the SCA to settle the claim. We are disappointed by the SCA’s subsequent decision to arrest the vessel today. We are also disappointed at comments by the SCA that the ship will be held in Egypt until compensation is paid, and that its crew will be unable to leave the vessel during this time. The SCA has not provided a detailed justification for this extraordinarily large claim.
“The grounding resulted in no pollution and no reported injuries. The vessel was re-floated after six days and the Suez Canal promptly resumed its commercial operations.
“The claim presented by the SCA also does not include the professional salvor’s claim for salvage services, which owners and hull underwriters expect to receive separately. The P&I aspects of the claim are relatively modest, with the exception of a claim for loss of reputation, which is disputed.”

Ian Beveridge, CEO of the vessel’s manager, Bernhard Schulte Shipmanagement (BSM), also voiced his concern over the arrest.

“The SCA’s decision to arrest the vessel is extremely disappointing. From the outset, BSM and the crew on board have cooperated fully with all authorities, including the SCA and their respective investigations into the grounding.

“This included granting access to the voyage data recorder and other materials and data requested by the SCA,” Mr Beveridge added.

Evergreen said it had begun to look at other ways to free cargo trapped on board, adding: “In order to lift the arrest order as soon as possible, Evergreen is urging all concerned parties to facilitate a settlement agreement to be reached.

“Meanwhile, Evergreen is investigating the scope of such a court order and studying the possibility of the vessel and the cargo on board being treated separately,” it said.

BMS said the Ever Given’s classification society, the American Bureau of Shipping, had completed its inspection following the incident and it had “been declared suitable for onward passage to Port Said, to be assessed again before departing for Rotterdam”.

March 21, 2021, marked the end of the 7-month truce period between the employer of the longshore men working at Canada's Port of Montreal and the Union representing its longshoreman. Once the truce period ended, a strike could be called at any time with only 72 hours pre-notice. This weekend, the Union sent a notice to call a partial strike.

The union management has stated that as of April 13, the longshoremen will no longer work overtime or participate in any training activities. If no agreement or truce is reached by April 17, union members will no longer work on the weekends.

This comes after the port, which is the largest in Eastern Canada, saw a substantial drop in volume reduction after many businesses began to divert cargo to other ports such as the Port of Halifax due to fears that a strike would occur.

The looming strike threatens to put further pressure on ports that are already under stress due to a global container and equipment shortage.

As the situation continues to develop, please do not hesitate to contact your local JAS representative to discuss alternative options and raise any questions you might have.

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