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Maersk – Dean Rodin new General Manager West Coast of South America

Maersk – Dean Rodin new General Manager West Coast of South America

Maersk announced that Dean Rodin will take over as General Manager West Coast South America, based in Santiago, Chile, replacing Francisco Ulloa from August 15, 2022.

Rodin has been with Maersk for 22 years and has held various positions in Europe and Africa. He was head of the Ivory Coast cluster in 2008, and then moved to Latin America in 2011 as Maersk Line’s Cluster leader for the Caribbean. He then moved on to Europe to become head of maritime trade for Maersk in Latin America in Copenhagen, eventually returning to the region leading the Regional Ocean Management team in Panama.

“The last two years as part of the Regional Ocean Management team have been very rewarding, both professionally and personally. The team achieved excellent results in the Maritime Transportation business line, while transforming and growing the Latin American client list. I am taking on this new challenge of working with the South American West Coast team while reinforcing our role as a logistics integrator for our customers in the region,” said Rodin.

Francisco Ulloa will take the position of network and market director for East-West trade routes, also from August 15, 2022, from Denmark. The executive has more than 27 years of experience. He joined Maersk in 2010 in Trade Management and was then responsible for the launch of Sealand on the west coast of South America in 2015, later serving as general manager of the west coast of South America, in Chile, during the last six years, during which time the area has grown from 250 to more than 2,000 employees.

“A core element of our integration strategy is offering reliable shipping products, which are the foundation of our logistics integrator strategy. For this, it is essential to understand the needs of our clients in the main east-west maritime routes, with a view to the digitalization and decarbonization of the industry,” said Ulloa.

Top 5 Most Expensive Ports in the World Located in the U.S.

Demurrage and Detention (D&D) charges imposed on the US shippers by container lines continue to be the most expensive in the world and have increased this year even as global average fees have fallen from the record highs of 2021, according to Container xChange, the world’s leading online platform for the leasing and trading of shipping containers.

Container xChange’s Demurrage & Detention Benchmark 2022 report, published today, ranks the most expensive global ports for D&D charges (see definitions below) levied by container lines on customers two weeks after a cargo arrives at the port or is discharged from the vessel.

Even as U.S. regulators have taken a keen interest in container line behavior amid soaring U.S. inflation and historically high shipping costs, U.S. ports occupy the top five spots in Container xChange’s rank list of “60 ports ranked by highest to lowest D&D charges across shipping lines”.

New York leads the way in 1st place followed by the ports of Long Beach, Los Angeles, Oakland and Savannah. All five ports are more than 2-3 times more expensive than Hong Kong in 7th spot and at least 20 times more expensive than leading Asian container hubs such as Dalian in China and Busan in Korea.

Political spotlight on D&D 

Under heavy pressure from shipper lobbyists, President Biden signed the Ocean Shipping Reform Act into law on June 16, 2022. OSRA gives the Federal Maritime Commission the power to act more assertively on D&D charges and shifts the burden of proof for the reasonableness of fees to ocean carriers instead of shippers.

“Throughout this pandemic as shipping costs have soared and inflation has become a threat to the U.S. economy, the focus on container line behavior by politicians and regulators has magnified,” said Christian Roeloffs, co-founder of Container xChange.

“U.S. agricultural shippers have been particularly outspoken about their inability to find affordable empty containers for exports. But importers have been equally outraged by what many believe has been profiteering on D&D charges by container lines. Some have started legal actions against carriers.

“This really came into the cross hairs of President Joe Biden this year when he has been highly critical of container lines. His administration addressed D&D in the Ocean Shipping Reform Act and we’re now waiting to see how this will be implemented and whether it will change shipper or carrier behavior significantly.”

Global average D&Ds fall; US hubs see rises 

Container xChange’s Demurrage & Detention Benchmark 2022 report notes that global average D&D charges levied by container lines on customers two weeks after a cargo was discharged from the vessel increased by 38% for standard-sized containers from $586 in 2020 to $868 in 2021.

So far in 2022, average D&D charges by major ports have declined to an average of $664 per container by 26%, although fees remain far higher than pre-pandemic at around 12%.

Even so,​ the U.S. shippers are not benefitting from these global declines in D&D charges. For example, in May 2022 the average charges levied by container lines on customers two weeks after a box was discharged from the vessel at the port of Long Beach was $2730 per container, up from $2638 a year earlier. At the port of Los Angeles in May 2022, the average D&D fees increased from $2594 per container in 2021 to $2672 per container.

Fees vary by port and carrier 

Container xChange’s Demurrage & Detention Benchmark 2022 report also notes that D&D charges vary widely by port and by the carrier.

Of the leading container lines across ports, COSCO currently has the lowest D&D charges while HMM’s D&D fees are the highest.

By region, D&D charges in May in the US were the highest at £2,692 per container. This compared to $549 in Europe, $482 in India, $453 in China and $366 in the ‘Rest of Asia’.

Container xChange’s Demurrage & Detention Benchmark 2022 report also outlines how choosing the right carrier for a specific port can significantly impact D&D costs.

For example, notes the report, at Rotterdam in mid-year, average D&D charges at the end of the two-week period were $564 per container. However, shipping with ONE cost $809 container “which, when compared to the port’s average D&D charges, will escalate your container shipping costs by 43%”.

Methodology 

To compile the report, Container xChange collected more than 20,000 data points from publicly available sources. These were used to compare D&D rates imposed on customers by the world’s eighth-largest shipping lines across 60 container ports in the world. The data was then compared against data collected by Container xChange mid-year 2021 and 2020.

Commenting on Container xChange’s Demurrage & Detention Benchmark 2022 report, David Lademan, Associate Editor of the Container Markets division at S&P Global Commodity Insights, said, “The issue of demurrage and detention as a part of the overall cost of freight has been brought to the fore because of the market imbalances that we have seen over the past two years.

Many shippers have reported that demurrage charges have been levied against them despite cargo being buried under stacks of containers at logjammed ports, which leaves them functionally unable to retrieve their containers. ​

On the other hand, cargo owners have altered their behavior with inland moves, as detention fees have grown in value and frequency, with many ocean carriers stripping free time in a bid to keep container velocity elevated. Many shippers are now in the practice of cross-docking cargos, to return containers quickly and avoid elevated fees.​ This comes amid an already protracted period of turbulent market conditions.​”

Cutting D&D costs 

Dr Johannes Schlingmeier, CEO & Founder of Container xChange, said using shipper-owned containers (SOCs) instead of shipping line/carrier-owned containers (COCs) could help reduce shipper supply chain costs.

“Taking the SOC options means you’re not leasing a container from the shipping line,” he said. “So, if your container gets held up inside or outside of the terminal, you won’t have to pay late fees to them. ​

 “More generally, I think we need common sense to prevail on D&D fees rather than regulatory intervention. Better planning by all supply chain partners and better communication between logistics partners and stakeholders can help reduce liability and exposure.”

Top 5 Most Expensive Ports in the World Located in the U.S.
MAERSK Rainbow Containers World Tour

MAERSK Rainbow Containers World Tour

In July 2020, two fully functional Maersk containers were skillfully painted with a rainbow to join Maersk’s fleet. On March 11, 2021, they will embark on their World Tour.

First part of the journey for the 40 and 20-foot rainbow containers will be aboard the Maersk Edmonton from APM Terminals Pier 400 in Los Angeles to Yokohama and stopping at several locations across Asia, Europe and finishing their tour in Denmark for Copenhagen Pride 2021.

During their World Tour, the containers will be available to A.P. Moller Maersk employees during strategic points in its journey for them to sign. Already APM Terminals and Maersk employees in Los Angeles, have started this signage tradition.

The rainbow containers will have a few more stops where employees will get this opportunity to see and sign the units before their arrival in Copenhagen.

“We are really excited that our rainbow containers have now started their way around the world. While the outside of these containers represent the company’s stand on diversity and inclusion, the inside of the containers will represent our Employees’ personal commitment.”

Rachel Osikoya
Head of Diversity & Inclusion, A.P. Moller – Maersk
When asked of his involvement in the making of these two containers and coming up with the idea, Rob Townley, Regional Head of Special Project for Maersk, mentioned “When we initially thought of this idea, it was during a time we launched our Maersk for Inclusion Excellence groups in the North America region – a group of 100 employees joined by their passion and commitment to lift diversity and inclusion within our company. Then and now, these containers somewhere along their journey will be a reminder to those who feel different or like they don’t belong that they are not alone, and someone, somewhere, is standing with them and accepts them regardless of their race, gender, age, ethnicity, sexual orientation, religion or disability.”

An investment beyond a symbol

Maersk’s rainbow containers have served as a symbol of inclusion and diversity, boldly sharing with the world the company’s stand on creating a culture where all employees, partners, and customers feel welcomed and can be themselves without judgment.

They not only serve as a symbol for the company, but they have also been involved in important humanitarian work, including the delivery of relief cargo to hurricane survivors in the United States just this past year. Maersk’s clients are also showing interest in the use of these rainbow containers to move their goods around the world.

Spot the Containers and share on social media

Throughout their voyage, if you are lucky to see one of these rainbow containers, take a picture and share on social media platforms like Instagram, LinkedIn, Twitter, or Facebook using the #InclusionAllTheWay. It will sure be a sight you will never forget!

Thieves steal 20 freight containers loaded with gold, silver ore and TVs at port Associated Press

Thieves broke into a freight storage area at the Pacific coast seaport of Manzanillo and stole 20 freight containers loaded with partly refined gold and silver ore and television sets, the Mexican Employers Federation said Monday.

José Medina Mora, president of the federation, said the large-scale robbery was a sign of rising crime in Mexico.

“There is a growing lack of safety, and this is a sign of what is happening in the country and it requieres that authorities take action,” Medina Mora said.

The state of Colima, where Manzanillo is, has not officially commented on the June 5 robbery.

But Horacio Duarte, the head of Mexico’s customs service, confirmed the robbery and said organized crime was involved.

“This was a very serious organized crime operation,” Duarte said.

According to local press reports, about 10 armed thieves forced their way into a private freight dispatch yard near the port, subdued employees and then took several hours to search for the shipping containers they wanted.

The thieves then apparently hooked up the containers to trucks and drove way with them. No sign of the containers, or their contents, has been seen since.

Freight theft is a serious problem in Mexico, but it usually involves thieves hijacking one truck at a time on highways – not driving off with 20 freight containers.

Articles like television sets are usually quickly sold off in the country’s extensive black markets, but it was unclear where thieves could sell tons of partly processed gold or silver ore. Any refiner would be likely to ask questions about where it came from.

Thieves steal 20 freight containers loaded with gold, silver ore and TVs at port Associated Press
ongsberg receives fleet digitalisation contract from MSC

ongsberg receives fleet digitalisation contract from MSC

Switzerland-based Mediterranean Shipping Company (MSC) has chosenNorwegian technology firm Kongsberg Digital to digitalise its fleet.

Under the five-year contract, Kongsberg Digital will be responsible for the digitalisation of approximately 500 MSC vessels.

The scope of the contract includes Kongsberg Digital’s data infrastructure service, called Vessel Insight, and the company’s Vessel Performance application being installed on MSC’s owned fleet.

MSC is expected to achieve transparency and enhance the utilisation of data through Kongsberg Digital’s Vessel Insight vessel-to-Cloud data infrastructure.

By using Kognifai Marketplace applications as well, data can be collected and contextualised to lower emissions into the air by optimising voyages and cutting down fuel usage.

It also helps automate reporting processes, enabling stable connectivity to improve safety and crew welfare.

Kongsberg Digital president Hege Skryseth said: “We are very proud to announce this contract with MSC. As the world’s largest shipping container line, MSC is playing a key role in facilitating trade all over the globe, but also in setting the standard in making the industry more sustainable through digitalisation.

“With Vessel Insight, MSC can contextualise data created by their vessels through our vessel-to-Cloud infrastructure and use this to reduce emissions and optimise their entire fleet of container ships.”

Last month, Kongsberg Digital won a contract to digitalise more than 100 vessels.

The contract was awarded by an undisclosed industrial shipowner in the tanker segment.

Maersk develops alternative Asia-Europe sea-rail service, via Central Asia

Maersk is offering an alternative Asia-Europe rail-sea service via Central Asia and the Black Sea, after Russia’s invasion of Ukraine closed the China-Europe rail network going via Russia and Belarus.

Since war broke out, which soon led to the closure of the Poland-Belarus border and cessation of operations at key hubs, the Danish carrier has been looking to develop alternative overland routes.

Its newly revamped Middle Corridor service departs from various locations in China, crosses the China-Kazak border at Khorgos and continues by rail to Aktau, where containers are loaded on a barge to Baku in Azerbaijan.

At Baku, they are reloaded onto a train to the APM Terminals facility at the Georgian port of Poti and then feedered to the Romanian hub of Constanta, from where they are railed to destinations across Europe.

Maersk began started developing the new route in March and saw the first departure from China serve customers from the lifestyle, automotive and household appliances industries last month.

“This revamped service comes at the perfect time to help ease current logistics woes,” said Maia Parlagashvili, global product manager for intercontinental rail at Maersk

“We have listened to our customers and developed a solution that provides them an alternative and eco-friendly intermodal connection between Asia and Europe. Over 90% of the Middle Corridor rail service is electrified,” she added.

Transit time from origin to destination is around 40 days, and Maersk said the rail route had an annual capacity of 150,000 teu.

“The corridor has sufficient open capacity, allowing our customers to strengthen their supply chain resilience by having alternative route to ocean and air services,” Ms Parlagashvili said.

The launch of the service comes on the back of a mini-surge of investment in Balkan infrastructure, with Dubai-based port operator DP World, also the operator of the container terminal in Constanta, taking a lead in the region.

A fortnight ago, DP World launched a project to develop a road-rail terminal in Aiud, Romania, linked by rail to Constanta, to operate as a bridgehead for cargo moving into Europe, and which is scheduled to open in the first half of next year.

The port operator also broke ground on a new €30m container terminal in Serbia’s Danube port of Novi Sad on Friday, which will be the first box terminal in the country.

“In two years, the first container terminal will be built on this part of the Danube, which will be critical for the development of logistics and the economy in Serbia,” said Serbia’s minister of construction, transport and infrastructure, Tomislav Momirović.

Maersk develops alternative Asia-Europe sea-rail service, via Central Asia
Shipping delays are back as China’s lockdowns ripple around the world

Shipping delays are back as China’s lockdowns ripple around the world

Global shipping was just starting to recover from the chaos of the pandemic. Now port congestion and delays are back and could be around for a while.

Covid lockdowns in China have wreaked havoc at Shanghai, the world’s biggest container port, and are now causing problems at other major ports around the world.
Some Chinese cities, including Shanghai, have started easing Covid restrictions in recent days, but experts say that the damage has already been done, and global shipping will suffer well into the summer. That could exert even more pressure on global supply chains already reeling from Russia’s invasion of Ukraine, and keep inflation running hot.
Data from Project44, which tracks global supply chains, showed that shipment delays between China and major US and European ports have quadrupled since late March, when China shut down the city of Shanghai, which has the world’s busiest container port.
By the end of April, ships from China to Seattle were taking four days longer than expected to arrive, up from about one day the previous month.
The time it takes ships to leave China and arrive at major ports around the world increased steadily over the past year, but there had been some signs of relief since December with transit times between Shanghai and Long Beach, for example, dropping in January and February.
Since March, however, there’s been a sharp increase again in transit times on that route.
To add to the problem, many truck drivers have struggled to reach ports in China to pick up containers because of travel restrictions and Covid testing requirements. Shipping giant Maersk warned in an advisory last month that trucking services in Shanghai would be “severely” impacted by these restrictions.
“With the manufacturing industry being shuttered [in Shanghai] and truckers unable to travel quickly, exports have been reduced, and shipment delays have increased,” said Josh Brazil, director of Supply Chain Data Insights at Project44.
Delays will “continue into the summer months,” as factories struggle to return to normal operations in Shanghai, he added.
Although authorities have allowed some businesses to restart production, many workers are still stuck in quarantine at home. Factories that do reopen are facing component shortages and difficulty in securing trucks to carry goods into or out of the port.
“The ripples in shipment delays are only beginning to become visible and are expected to extend well into the next few months,” said Brazil.
Shanghai — China’s leading financial center and most populous city — has been under a strict lockdown since late March. More than 8 millionresidents are still banned from leaving their residential compounds. The Covid restrictions have spread to other cities, including Beijing — the nation’s capital.
Shanghai port remained open throughout the lockdown, but data from various shipping firms show an increasing backlog of ships and containers.
US supply chain companies have expressed concerns about fresh chaos heading towards American ports, which are still recovering from the severe congestion and delays they suffered last year.
Shelley Simpson, chief commercial officer for JB Hunt Transport Services, said late last month that while there has been “a temporary relief” at US ports, things may get a lot “a lot worse” this summer because of what’s happening in China.
It “just takes a little bit of disruption to really change the environment all over again,” she added.

Ships and containers jam the ports

Shipping queues are getting worse in China — and other parts of the world.
Nearly 20% of container vessels globally are currently waiting outside congested ports, according to a survey published last Thursday by Windward, an Israel-based global maritime data firm.
Almost a quarter of those unberthed ships are stuck outside Chinese ports. That’s 412 ships, up 58% since February, the survey added.
It’s clear that lockdowns in China have caused a bottleneck, the firm said.
Across China, at least 27 cities are under full or partial lockdown, which could be impacting up to 185 million residents across the country, according to latest CNN calculation on Wednesday.Beijing effectively shut down its largest district this week.
President Xi Jinping signaled this week that China would continue with its zero tolerance approach to Covid. On Thursday, Xi told all levels of government to “resolutely adhere to the zero-Covid policy.”
China is home to seven of the world’s top ten container ports, including Shanghai, Ningbo-Zhoushan, Shenzhen, and Hong Kong. In Shanghai — the epicenter of China’s current Covid outbreak, the situation remains severe.
The number of vessels waiting at the Port of Shanghai had increased to 384 by April 25, up 27% from a month earlier, according to most recent data from S&P Global Market Intelligence.
Pressure is also building on other Chinese ports, as vessels try to find alternative ports to berth. Ships have faced growing delays since late March outside Ningbo-Zhoushan port, the world’s third largest port, less than a hundred miles from Shanghai, according to Lloyd’s List Intelligence.
Containers are also piling up because of truck shortages.
At the peak of the lockdown in Shanghai, containers were sitting for as many as 15 days at the port before being picked up by truckers, up from fewer than 5 days when the restrictions first took effect, Project 44 data showed. The average wait time has since come down but was still 10 days last Wednesday.
Zhang Wei, vice mayor of Shanghai, acknowledged last week that the city is seeing “reduced efficiency” in cargo transport and “poor logistics” since the lockdown.

Get ready for the next supply chain shockwave

Concern is growing that the spread of COVID cases and city lockdowns in China will have massive downstream effects for global supply chains that could dwarf previous disruptions since the start of the pandemic.

Last May, the huge Yantian container terminal at the Port of Shenzhen throttled down to 30% of normal productivity for a month to stamp out a handful of positive cases there. Hundreds of thousands of shipments that couldn’t enter the port accumulated in factories and warehouses, and many vessels skipped the port to avoid waiting seven days or more at anchor. It took weeks after the port reopened to clear the cargo backlog. The effects cascaded to the U.S. and Europe, resulting in port traffic jams, transit times triple the norm and missed retail deliveries for the holidays.

The difference this time is that an entire metropolis — and highly interconnected global trade center — is essentially shut down. Not since the initial 2020 COVID-19 outbreak in Wuhan have lockdowns been this extensive in China.

“It’s probably worse than Wuhan,” said Jon Monroe, an ocean shipping and supply chain expert who runs a consulting firm. “You’re going to have a lot of pent-up orders. It’s going to be an overwhelming movement of goods” that will drown shipping lines and ports once the lockdowns are lifted.

Freight is piling up

Twenty-five million people in Shanghai have been sequestered for 18 days. Chinese authorities this week slightly eased the restrictions, dividing the city into three categories based on previous screenings and risk levels. People can wander outside their apartment buildings but are encouraged to stay home in neighborhoods with no positive COVID-19 cases in the past two weeks. Those in high-risk areas must still shelter at home.

Spanish financial services firm BBVA predicts Chinese authorities will stick to the “zero-COVID” strategy and lockdowns until at least June. Other China observers say it could take even longer to meet China’s infection standard.

Shanghai is one of the largest manufacturing centers in China, with heavy concentrations of automotive and electronics suppliers. It is home to the largest container port in the world and a major airport that serves inbound and outbound air cargo. Exports produced in Shanghai account for 7.2% of China’s total volume and about 20% of China’s export container throughput moves through the port there, according to the BBVA report.

Most warehouses and plants are closed, nine out of 10 trucks are sidelined, the port and airport have limited function, shipping units are stranded in the wrong places, and freight is piling up.

More and more, the logistics impacts are rippling beyond the contagion epicenter.

Impacts spread beyond Shanghai

Export containers that were already at the Port of Shanghai when the lockdown started are making it onto vessels, but most goods booked on outbound vessels are stranded at warehouses because shuttle trucks can’t make pickups or deliveries.

Truckers require special permits, which are only good for 24 hours, as well as negative COVID tests to get in and out of the city or enter certain zones, according to logistics providers. Checking COVID certificates has led to huge traffic jams at the port.

The French logistics provider Geodis reports that truck drivers in the Shanghai area are being forced to wait up to 40 hours at certain highway entrances. Trucking rates have soared because of the limited supply, and shippers are waiting three to five days for cargo to get picked up, according to San Francisco-based Flexport.

Reduced manufacturing output, along with limited truck access to the port and airport, are causing a significant drop in air and ocean export volumes. Less demand is translating to lower freight rates.

In response to the lack of labor and cargo, air carriers have announced widespread cancellations, and some ocean carriers are skipping Shanghai port calls.

Several shipping lines have also begun offloading refrigerated containers at other ports along their voyage because the storage area with electric plugs is too crowded in Shanghai. Customers face extra port fees and delays routing the cargo to its intended destination. Maersk, the second-largest container vessel operator, said Thursday it has stopped accepting bookings to Shanghai for refrigerated cargo, some types of gas and flammable liquids.

More omissions are expected and liner companies may temporarily idle vessels or cancel some outbound Asia sailings altogether, according to Crane Worldwide Logistics and other service providers.

Asia-U.S. East Coast rates have fallen 7% since the outbreaks in March, said freight booking site Freightos, which also publishes an ocean rate index.

“But even if the lockdown persists and demand drops significantly, ocean carriers will likely reduce capacity which could keep rates from plummeting, just as they were able to do in the first few months of the pandemic when ocean volumes fell significantly but transpacific rates declined by less than 15% and were about level year on year,” it said.

The supply chain is backing up like water behind a dam. When water is released, the landscape gets flooded.

At Shanghai Pudong airport, ground handling companies are operating with skeleton staff.

Shanghai Eastern Airlines Logistics, a cargo terminal operator, ceased bulk loading of containers after a positive COVID case, which will further slow cargo processing, said Dimerco, a Taiwan-based freight forwarder. Airlines report that Pactl, which operates three other cargo terminals, has suspended acceptance of dangerous goods and temperature-controlled cargo because the warehouse is full.

Flexport said in a market update that 80% of commercial freighter services have been canceled and airlines are considering shifting operations to nearby airports. Qatar Airways announced that freighter flights will remain canceled until next Thursday, saying “the latest COVID-19 restrictions announced by local authorities limit our ability to operate flights in and out of Shanghai with sufficient cargo loads.”

Freight forwarders have been rerouting cargo to alternative airports such as Zhengzhou, Xiamen, Shenzhen and Beijing, as well as the Port of Ningbo, but those facilities are beginning to feel congestion effects themselves. Rates to ship from those locations are increasing.

Flights at Zhengzhou Xinzheng International Airport are reduced by 50%, according to Geodis. Most inbound cargo there is transit cargo to other cities, such as Shanghai — which is compounding backlogs because the cargo isn’t allowed to move to the final destination. That means logistics companies can only clear shipments that customers can pick up in Zhengzhou.

Dimerco advises that Zhengzhou airport is not accepting loose cargo – only palletized shipments – because of labor challenges. And it has just implemented a 14-day closed-loop program in which workers live on-site to minimize the potential for virus transmission, forcing the logistics provider to pivot again and reroute shipments to other airports, including back to Shanghai’s second airport – Hongqiao International.

Everstream Analytics, which helps companies manage supply chain risk, predicts U.S. and Canadian automotive assembly plants will quickly face delays and disruptions because the lockdowns will affect shipping of parts such as seats, tires, engines, bodies and brakes.

Ships delayed at port of Hong Kong and Yantian

Shipping schedules in South China are being impacted by irregular feeder vessels and large barge services, creating delays for transoceanic vessels at the ports of Hong Kong and Yantian, according to a situational update from supply chain data platform project44. Both ports have been coping with disruptive COVID restrictions for months.

Nearby manufacturing hubs in Vietnam and Cambodia are already suffering from a shortage of Chinese components for their manufacturing industries, project44 reported. And pharmaceutical companies in India, which source 70% of their active ingredients from China, are facing limited supplies.

Ocean shipping delays from the top three Chinese ports to Hamburg, Germany, and Amsterdam had already doubled to more than 12 days during the first quarter, before the Shanghai lockdown fully materialized, according to project44 data.

Ocean freight expert Lars Jensen, CEO of Vespucci Maritime, summed up the situation on his LinkedIn page this way: “Until this situation is resolved — which appears next to impossible when matching the omicron variant with zero-tolerance — we should expect drops in export demand, port omissions and more blank sailings in the near term future as well as Shanghai-bound cargo increasingly being discharged elsewhere.”

COVID lockdowns spread

Meanwhile, COVID infections are spreading beyond Shanghai, according to news reports and logistics companies. The southern manufacturing hub of Guangzhou, for example, has started mass COVID testing, introduced travel restrictions and shifted schools to online learning — steps that often portend a wider lockdown.

The city of Kunshan — an important production center for electronics near Shanghai — is closed down until April 19. Part of Taicang, another manufacturing area in Jiangsu province, is also locked down. A surge of new COVID cases is hitting the coastal cities of Dalian and Tianjin in the north, Ningbo in the east, and Xiamen and Dongguan in the south.

Ningbo officials ordered residents in two downtown districts to sequester at home, but so far the seaport is not affected. Nantong is on a partial lockdown until April 15. Port operations have been severely impacted, with logistics companies diverting shipments to Nanjing. Zhangiagang is also under partial lockdown until April 19, resulting in slower port operations and some factory closures.

Many shippers are exercising contingency plans and using alternative import/export gateways when possible, but road transport is increasingly difficult.

The outbreaks have led to a virtual ban by authorities on truck drivers from high- and medium-risk areas transporting cargo to low-risk areas. That includes transporting cargo from Shanghai and Kunshan to the Port of Ningbo. No cargo will be accepted if drivers have been to medium- or high-risk areas within the last 14 days or the factory is located in medium- or high-risk areas, said UPS Supply Chain Solutions in a customer update.

As of Friday, Dalian, Tianjin, parts of Beijing, Shanghai, and Dongguan are all in high- and medium-risk areas.

Dimerco said in a notice that traffic control for road transportation is getting more strict and it is difficult to secure trucks to bring freight to Shanghai or alternative ports.

Lockdowns ease U.S. supply chain strains before flood of cargo

The slowdown in China exports should provide temporary relief to congestion-plagued U.S. ports on both coasts, as well as in Europe, but logistics experts say the breather is likely to be followed by a tsunami of deferred cargo once the lockdowns are lifted. The cargo volume will far exceed the handling capability of the ports, with containers jamming up terminals faster than they can be transferred to inland transport and pushing vessels into long queues at sea.

Delta Air LInes (NYSE: DAL) President Glen Hauenstein said on an earnings call Wednesday that once the Shanghai restrictions are lifted, the airline expects a boom in cargo bookings that more than offsets the current export lag.

A mass quarantine that lasts until June could mean the drawdown of backlogged air and ocean freight pushes into the peak shipping season, as more volume enters the system.

“Even with air and ocean ports open, the length of the shutdown could make this iteration the most significant logistics disruption since the start of the pandemic,” Freightos said in its update.

Get ready for the next supply chain shockwave
Maersk Runs Back To Russia For Empty Containers Reuters

Maersk Runs Back To Russia For Empty Containers Reuters

Shipping group Maersk still has vessels calling at Russian ports to deliver containers booked before the invasion of Ukraine began and to pick up around 50,000 containers stranded in Russia, Chief Executive Soren Skou said on Tuesday.

The company has temporarily halted new container bookings to and from Russia, as a consequence of what the Kremlin calls a “special military operation” in Ukraine.

“We have about 50,000 of our containers in Russia today. Most of them are empty, they are our property,” Skou said.

“We need them, and we are very reluctant to leave them in Russia. For this reason, we still have some port calls in Russia,” he said.

Maersk was also trying to get the containers out of Russia via rail, a spokesperson said.

Maersk is unlikely to be able to deliver all the containers booked into Russia before the invasion of Ukraine started, due to bottlenecks at Russian ports.

The company last year generated roughly 2.5% of its total revenue from Russia. It operates containershipping routes to St. Petersburg and Kaliningrad in the Baltic Sea, Novorossiisk in the Black Sea, and to Vladivostok and Vostochny on Russia’s east coast.

Maersk, which has been active in Russia since 1992, said last week it would sell all its assets in Russia, including its 30.75% stake in Russian port operator Global Ports Investments GLPRq.L, whose shareholders include Russian state nuclear company Rosatom and Russian businessman Sergey Shiskarev.

“Russia has for many years been a large and important market for Maersk, but naturally we cannot continue operating critical infrastructure in Russia as if nothing has happened,” Skou said.

“We may not be able to return to doing business in Russia for many years to come. This is a price we are both willing to and able to pay.”

 

Port delays are getting worse in Shanghai. That’s very bad news for global supply chains

China’s strict lockdown in Shanghai is heaping even more pressure on global supply chains.

On Friday, Shanghai extended restrictions in many parts of the city, which is home to China’s financial hub and one of the world’s busiest ports. The Port of Shanghai had already been suffering from major holdups, and the extension may worsen congestion and increase transportation costs further, experts said.
The coastal city imposed a two-phase lockdown on its 25 million residents earlier this week. Authorities placed the western part of the city under lockdown on Friday, and extended an existing lockdown in eastern neighborhoods with positive cases by up to nine days.
These restrictions have caused major delays at Shanghai port, which is in the eastern part of the city and was already congested. It is the world’s busiest container port, handling more than four times the volume seen at the Port of Los Angeles in 2021,according to data from both cities’ port authorities.
VesselsValue, a global shipping data provider, said the number of ships waiting to load or discharge at Shanghai’s port had skyrocketed to more than 300 this week, a near five fold increase in the past two and half weeks.
“Congestion at Shanghai usually worsens at this time of year. However, the recent increase is far higher than both last year and normal seasonal levels,” the firm said in a statement on Tuesday.
It remains unclear what impact the lockdown will have on the port’s vessel backlog, the firm said. But it suggested that supply chain managers and analysts around the world “start planning for knock on effects.”
Maersk, one of the world’s largest container shipping companies, also said the Shanghai lockdown can cause transportation delays and higher costs.
“Trucking service in and out [of] Shanghai will be severely impacted by 30% due to a full lockdown on Shanghai’s Pudong and Puxi areas,” Maersk said in an advisory to clients on Monday. Shanghai is separated into two parts, Pudong and Puxi, by the Huangpu River.
“Consequently, there will be longer delivery time and a possible rise in transport costs,” it added.
The city’s government, meanwhile, has said that freight operations will remain normal under the lockdown.
Shanghai International Port Group, which runs the port, said last month that it would implement a “closed-loop system” that requires employees to stay in specific areas and adhere to certain protocols to prevent the spread of coronavirus.
However, due to the travel restrictions, extended waits at checkpoints, coronavirus test requirements, and potential quarantine upon return, many truck drivers are struggling to get the cargo containers delivered in and out of the port on time, according to state-controlled media outlet The Paper.

A global issue

Congestion in Shanghai is bad news for consumers and companies around the world.
“The citywide lockdown in Shanghai is a setback to global supply chains already stretched by geopolitical tensions,” wrote Bansi Madhavani, senior economist for ANZ Research, in a report on Friday.
Global supply chains have been strained for months due to the Covid-19 pandemic and Russia’s invasion of Ukraine.
Although the Shanghai port remains operational, activities such as warehousing and staffing will be affected, causing delays, he said, adding that cross-country transportationmay be hindered too.
“These restrictions could … send freight rates soaring,” Madhavani said.
Nomura analysts also expect “additional shipping delays, port -congestions and logistics undercapacity” as Shanghai remains in lockdown.
“Markets so far have underestimated the severity of the situation in China,” Nomura analysts said Thursday in a research note. “In the next couple of months, we expect global investors to better reflect these shocks in their valuations of various asset classes.”
Port delays are getting worse in Shanghai. That’s very bad news for global supply chains