Port Omissions Hurt Importers and Exporters with Extra Costs

3-minute read

No week goes by – nor has gone by for about two years – without New Zealand importers and exporters receiving advice of port calls omitted by shipping lines.

Usually, there are one of two reasons. Either the ship is way behind schedule, and the operator is trying to recover something of the lag time, or there is congestion at a port or ports, and the operator can’t afford to have the ship sitting at anchor for a week or two.

In New Zealand, the delays at Auckland usually cause omissions, although the effects of congestion regularly spill over to other ports. Another regular occurrence is port diversions.

The number of ships that have diverted to Northport, and have found the Marsden Point operation satisfactory, has even encouraged Northport’s owners to move forward with plans to become a bigger container operation.

The downside of port diversions to shippers comes from extra costs to get their goods to and from the destination initially nominated as the gateway. The diversion port is almost always further away from where the goods are needed.

Research has now been done which shows that a global post-pandemic economic recovery is hindered by lines skipping ports or “blanking” sailings (i.e., cancelling them outright).

The MDS Transmodal (MDST) research, commissioned by the Global Shippers’ Forum (GSF), found that global ports lost over a third of their expected capacity to ship containers during 2021, creating delays and disruption for shippers.

“Lost capacity” measures the total number of container ship slots that were expected to be available at the port but did not materialise because the port was skipped or the entire service was blanked by the shipping line.

According to MDST, Tauranga lost about a third of its expected container capacity during the second half of 2021.

However, despite the supply chain delays and congestion, Tauranga benefitted from carriers diverting calls from Auckland, which lessened the impact it would have otherwise suffered from the supply chain crisis.

In 2017 the Port of Tauranga broke through the one million figure for containers handled (i.e., loaded or discharged). The throughput gradually rose to 1.23 million TEUs in 2019.

In 2020, the first year of COVID impacts, throughput rose to 1.25 million TEUs and then in 2021, it dropped only marginally to 1.2 million, according to Tauranga’s own published figures. A reduction of about 50,000 containers is not particularly significant, given the impact that supply chain delays and congestion have had on all ports.

However, looking beyond the Tauranga port, the big picture shows that the effect of missed calls has hammered many ports and shippers worldwide.

Some ports, such as Colombo (Sri Lanka) and Port Klang (Malaysia), have been especially hard hit, with about 40% of the expected container capacity failing to arrive in the last quarter of 2021.

Other ports such as Felixstowe (UK) and Jebel Ali (UAE) failed to see around a third of their expected capacity.

A skipped call means that a scheduled sailing won’t pick up cargo, and imports won’t be dropped off.

“As a result, the collapse in service levels available to shippers at the ports affected and in the hinterlands they serve over the period is stark and amounts to far more than the inconvenience of having to wait for the next ship,” the report says.

Skipped port calls also prompt rises in freight rates, as shipping lines ‘auction-off’ available slots on the vessels that do call.

Shippers also face unexpected surcharges for the handling and storage of delayed containers.

Nations lose the opportunity to deliver their exports, which hinders the recovery of their economies from the effects of lockdowns and COVID restrictions.

Such schedule alterations translate into huge capacities lost to importers and exporters. 

As the pressures caused by the COVID-19 pandemic ease, hopefully, we will see the restoration of service predictability for shippers and a return to the frequency promised by consortia and alliance operators.

But it may not be for some time yet . . .

Source: The New Zealand Shipping Gazette

P.S. Easy Freight Ltd helps New Zealand importers & exporters to save money on international freight and reduce mistakes by guiding how to comply with Customs and biosecurity rules. 

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