Congestion hurts carriers’ schedule reliability, SeaIntel says
Global schedule reliability has declined for the first time in six months, as carriers continue to deal with congestion in North Europe and the U.S. West Coast, according to a new report from SeaIntel Maritime Analysis.
“The carriers have been hit hard by severe congestion in Rotterdam and Hamburg, along with a buildup of congestion in several ports on the U.S. West Coast, including Long Beach, Los Angeles, Seattle and Tacoma, as well as Vancouver,” said Alan Murphy, COO and partner at SeaIntel, in a press release. “The congestion has had a negative impact on schedule reliability and container delivery in July, as vessel turnaround times have increased with delays spreading to inland distribution of containers. Further, the Asia-west coast of South America trade lane has been negatively impacted by a strike among Chilean port workers from July 8-10. We expect that schedule reliability will decline further in August as the ports on the U.S. West Coast and North Europe still are struggling with congestion.”
Delays topping 70 hours on arrival at major European ports are being reported amid congestion at Rotterdam and Hamburg, as well as Antwerp, Belgium, according to a report from logistics technology firm CargoSmart. Congestion on the U.S. East Coast has also been an issue recently, as the top four ports on the U.S. East Coast saw increases in arrival delays and berth times in July, CargoSmart reported.
Global schedule reliability declined by close to 4 percentage points from June to July, dropping to 71.6 percent, SeaIntel reported. Global schedule reliability in July is based on a record-high 10,966 vessel arrivals. Data from INTTRA shows that global container delivery — a measure of on-time delivery of containers — declined too, from 55.7 percent in June to 52.6 percent in July, based on more than 3.3 million containers.
Maersk Line, Hamburg Süd and Hanjin Shipping remained the most reliable Top 20 carriers in July.
SeaIntel’s global ranking of the Top 20 carriers shows that Maersk Line, Hamburg Süd and Hanjin Shipping were the three most reliable Top 20 carriers in July, just as they were in June, with a performance of 85.2 percent, 79.3 percent and 75.4 percent, respectively.
The G6 Alliance carriers Hyundai Merchant Marine, Mitsui O.S.K. Lines and NYK Line were ranked at the bottom among the Top 20 carriers. In its mid-year earnings report, MOL said that despite needing to speed up ships on certain routes due to port delays, it will implement increased adoption of slow steaming, as it saw a sharp deterioration in its container-shipping financials.
All the Top 20 carriers, except United Arab Shipping Co., experienced a decline in their global schedule reliability from June to July. UASC managed to improve its performance by 0.9 percentage point.
Schedule reliability in the trans-Pacific eastbound, Asia-Mediterranean and Asia-North Europe trade lanes declined by 1, 4 and 6 percentage points, respectively, according to SeaIntel.
SeaIntel said the considerable decline in schedule reliability from Asia to North Europe means that reliability is now 20 percentage points below the level SeaIntel recorded in the trade lane a year ago. The decline in schedule reliability in both the trans-Pacific eastbound and the Asia-North Europe trade lanes is linked to the congestion issues the carriers have experienced in a number of ports on the U.S. West Coast, and in Rotterdam and Hamburg in North Europe, according to the analyst.
The persistent congestion clogging major gateway ports in the U.S. and Europe is raising a debate about whether it’s just peak-season volumes causing delays in import shipments or the inability of ports to handle the sharp growth in container ship sizes. Nearly half of all post-Panamax ships saw delays of 12 hours or more at North and South American ports in July, according to a recent study released by CargoSmart.
SeaIntel also found that it is not only the major trade lanes that are experiencing reduced schedule reliability, as seven trade lanes reached an all-time record low performance in July. Additionally, data from INTTRA shows that the east coast of South America-Asia trade lane turned in a record low performance of just 23.2 percent in terms of container delivery, meaning that less than one in four containers are delivered on time.
“With the announcement by Maersk Line and Mediterranean Shipping Co. to form the 2M vessel-sharing agreement on the east-west trade lanes, following the rejection of the P3 alliance by the Chinese Ministry of Commerce, we have decided to analyze the difference in commercial schedule reliability between Maersk Line and MSC,” Morten Berg Thomsen, a shipping analyst at SeaIntel, told JOC.com. “This is highly relevant to the new vessel-sharing agreement, as it is well-known in the industry that Maersk Line is performing on a significantly higher level than MSC in terms of schedule reliability. The question is how Maersk Line will ensure that MSC will deliver a satisfactory service level to their customers when they load their containers onboard one of MSC’s vessels, and how they will ensure that the Daily Maersk product can continue with the same high performance.”
“Our analysis shows that if we look at the two carriers’ performance over the past year, Maersk Line is offering a commercial schedule reliability that is approximately 35 percentage points higher than MSC in the trans-Pacific eastbound and Asia-North Europe trade lanes,” Berg Thomsen said. “In the trans-Atlantic trade lane, the difference is approximately 30 percentage points, while it is only 5 percentage points in the Asia-Mediterranean trade lane. Therefore, we believe Maersk Line will face a significant challenge in maintaining their high performance, while MSC will have a great opportunity to improve their performance significantly.