Logistics News

Asia-Pacific Shipping Update – June: Navigating your logistics through turbulent times

As increased congestion continues to disrupt ocean freight, analysts estimate that 8-10% of global vessel capacity is absorbed by delays. Find out more about the situation in the Asia-Pacific region.

Anna-Sophia Metzel, 24 June 2021

If you are involved with logistics in any way, you’ve probably noticed that the shipping situation has been turbulent in the last few months. The cause of this difficult period has been both expected and unexpected. One driver is a sudden bounce back in economic activity, particularly in the United States but also in Europe, as consumers emerge from COVID-19 lockdowns looking to spend. While this economic resurgence was expected, what wasn’t expected is the bottlenecks that have emerged at certain port hotspots around the world, as a result of incidents or the impacts of COVID-19, to cause congestion and delays.

Difficulties at Yantian Port, South China

Global supply chains are called chains for a reason; they are a close-knit network of different links – from warehouses, suppliers and manufacturers, to ports, vessels, trucks and trains – all playing their part and relying on everyone else to play theirs. Like a chain, if you disrupt
or remove one link, the whole chain can break apart – and at Yantian Port in South China, a key chain has been disrupted.

Yantian Port is the third biggest port in Asia and one of the busiest ports for exports out of Asia. In late May, after a local outbreak of COVID-19, the port was forced to impose stringent disinfection and quarantine measures – and eventually close its West terminal. While the terminal has re-opened from 10th June, there continues to be berthing delays of two weeks or more – while the East terminal is currently working at 50% of normal capacity.

The Yantian port closure has had a knock-on effect too. As sailings omit Yantian to make calls at other ports – including Shekou, Nansha and Hong Kong – the waiting times, congestion and restricted gate-in times at these ports has increased.

Our advice is, where possible, to explore switching export containers to other ports in the coming weeks – and to use 20-foot containers where possible to overcome the current shortage of 40-foot containers.

The shipping situation for major trade lanes

Looking at the broader Asia-Pacific shipping updates, the story is one of high demand and tight space. Understanding the status and demand for major trade lanes will help inform your supply chain forecasting – which is crucial to guiding your business through this uncertain
time. Here are the key updates to be aware of:

Asia to Europe – In this lane, the focus is on Germany, where the Port of Hamburg is
currently facing severe congestion in the face of strong demand. To protect schedule reliability, Maersk’s AE7 service will omit Hamburg for the next four weeks and will instead discharge cargo at Bremerhaven.

Asia to North America – Demand remains strong on this lane and steps are being taken to
respond. Amongst them, Maersk will adjust its TP Alaska service by adding vessels and rationalising port coverage to provide a more stable service. Elsewhere, the large Elly Maersk vessel has been deployed to clear container backlog and service has been launched to the US East Coast, with calls at Tanjung Pelepas, Vung Tau, Yantian, Savannah, Charleston and Newark.

Asia to Latin America – After a period of a national strike in Colombia where road blockades
resulted in three weeks of service close, booking acceptance for the Port of Buenaventura will resume from 21st June. You should expect port congestion after reopening – and the Cartagena port in North Colombia remains an alternative option if needed.

Asia to West Central Asia – While demand is currently flat on this lane, Maersk will continue to offer a weekly Chennai Express service to South-East India and fortnightly service to North-West India. It is worth noting that road transportation has seen some constraints due to driver shortages and lockdown restrictions – so we suggest customers explore rail solutions for inland transportation.

Asia to Oceania – Space remains tight on all export services from Asia to Oceania. Vessel
sliding and port omissions may impact your cargo planning, so we recommend placing
bookings in advance wherever possible and, in light of the latest news from Yantian port, we suggest shifting that demand to alternative ports.

Asia imports – There is a shortage of dry containers in Europe and certain inland points in North America; so early booking is essential to secure space and equipment.

The Latest APA ocean freight update

Looking beyond Yantian to the wider ocean freight picture, there will be continued pressures for logistics as demand remains strong and ocean space is tight:

We expect strong export demand from Asia to continue in Q3 and ocean space is projected to be tight. Our focus remains to secure coverage, equipment and reliable capacity solutions.

Australia and New Zealand vessel space remain tight. Schedule reliability remains below 30% due to port congestion, the suspension of berthing windows in New Zealand and industrial action in Australia.

As we referenced in our last update, equipment shortages remain an industry-wide challenge in Asia Pacific. The supply of 20-foot dry containers is sufficient but 40-foot
and 45-foot- dry containers are in short supply.

"In this period of uncertainty and intensified congestion around the world, we suggest SMEs consider using more 20-foot containers that are in greater supply; and switch exports from Yantian to other ports in the next few weeks. It may also be worth exploring the possibilities of other service modes – for instance, intercontinental rail and air". "

Lisa Nan Ding, Head of Greater China, Twill

Disruption for inland transportation

Inland transportation – whether rail, road or barge – is often the essential final link in your supply chain; so getting it right and avoiding delays is crucial. Unfortunately, much like its partner in ocean freight, trucking services across Asia is facing a range of challenges right now– from trucker shortages to congestion – which is ultimately impacting availability, scheduling and capacity.

For Mainland China, Hong Kong and Taiwan there are two stories to tell. In North and East China, there is sufficient trucking capacity to meet demand. However, in South China,
ground transportation has been affected by the port congestion at Yantian, with strict controls on gate-in at Yantian (Shenzhen) and Shekou (Shenzhen). Road congestion around Nansha port (Guangzhou) is also increasing as carriers divert calls to this port. Trucking services into Yantian port now need to be pre-booked and export laden containers gate-in are subject to confirmation issued by Yantian port.

With the logistics summer peak around the corner, alongside the ripple effect from Yantian’s port disruption, we expect space restrictions to continue in Q3.

In Japan and Korea, inland demand remains limited from the impacts of COVID-19. The upcoming Tokyo Olympics and Paralympics (July – September) may impact deliveries and turnaround times at the Tokyo container yard. Maersk’s AE19 ocean-rail service from Asia to northern Europe has seen an increase in customer demand and space constraints, particularly on the ocean leg to Vostochny in Russia and this is expected to persist into Q3.

Tight capacity is the story for Vietnam, Myanmar and Cambodia. In Vietnam, trucking capacity is tight due to COVID-19 related labour shortages; but a new inland hub has been created at Tan Cang Cai Cui in the Mekong Delta, offering increased flexibility to move cargo with the added convenience to pick up and return containers closer to production hubs. The ongoing political crisis in Myanmar continues to constrain trucking capacity.

The news is brighter in Indonesia and the Philippines, where trucking capacity is sufficient
for export, import and domestic inland delivery.

If you want more insights and updates like this, head to our Knowledge Hub, where we have a range of resources to explore – from introductions to basic logistics know-how, to solutions, trends and customer stories.

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