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situation, it is often the reloading of empty containers that has been sacrificed, increasing the problem of equipment being in the incorrect place. This ‘ripple effect’ has impacted Southampton and London Gateway in the UK and in the near-EU both Zeebrugge and Rotterdam were affected when carriers diverted away from Felixstowe. Most observers seem to believe that in all


probability everything should return to normal by the end of Q1 2021. But have recent events raised questions about deeper structural issues within the container sector? Many have noted that this is a key global


industry and without it trade would speedily grind to a halt. Certainly, the container market has been unstable since the 2008 financial crash. On one hand, there are largely unregulated carriers meeting the demand for oceanfreight services, whilst on the consumption side many see this service as being little more than a price-sensitive commodity.


and importers were either difficult to contact or unable to take delivery of goods because their storage facilities were either shut or full, further exacerbating the situation. Drewry Consultants has carried out some


detailed research into last year’s events which highlighted various factors that drove the current high congestion levels. These were: • Tight capacity management and increased blank sailings by carriers,


• The previously mentioned unexpected strong increase in demand,


• Cost management policies adopted by ports to counter the impact of COVID-19,


• The ripple effect of congestion at nearby ports, • Additional health and safety measures introduced to prevent COVID-19 infections, which did have a negative impact on productivity.


It should be remembered that ports have a


relatively fixed capacity and therefore cannot easily or quickly increase it to meet short-term fluctuations in demand. In addition to the unusual pattern of consumer spending, the UK was impacted by the consequences of re- opening the economy, the usual increased demand for Christmas, importers re-stocking


February 2021


depleted inventories and stockpiling to minimise supply chain disruption stemming from a second wave and the end of the Transition period on 31 December 2020. There were some ports which had underlying


operational/system problems prior to COVID-19, and the pandemic disrupted programmes designed to rectify these. Also some ports, in the initial phase of the pandemic and faced with very large declines in the volume of traffic, revenue and profitability, reacted by implementing cost- cutting strategies. Where the two combined, as at Felixstowe, congestion and delays occurred that have been widely commented on, including by ourselves.


Safety measures Most port operators have introduced COVID-19 related health and safety measures, whether they be additional cleaning of equipment, screening of drivers, etc, and these additional safeguards have reduced productivity both nationally and internationally. Several Chinese ports reported issues, as did the port of Colombo. In order to keep to sailing schedules faced


with port congestion and slower loading/ unloading of vessels, carriers have had to divert vessels to other ports or cut and run. In the latter


Growing inflexibility Supply chains have become rather more inflexible with many manufacturers becoming ever more dependent on ‘just-in-time’ deliveries and carriers, particularly on the crucial Far East to Northern Europe route, using ultra large container vessels (ULCV), which in many ways have exceeded the ability of ports to handle them efficiently. In addition, there is not enough shore-based


capacity to undertake customs activities and transport the cargo effectively. Many BIFA Members have commented that


the increasing reliance on moving goods on a ULCV creates significant, almost unmanageable, peaks and troughs in workflows. In effect we have a situation that just about copes in normal operating circumstances but has encountered significant difficulties when faced with two additional factors: namely the disruption caused by the COVID-19 pandemic and the following sudden and unprecedented demand. These have placed supply chains under


tremendous strain, which in certain cases the system has failed to cope with. The question is: “What can be done about the


situation?” The hope is that, during Q1, the market will readjust and some form of stability will return. However, given the lack of co-operation within


the sector, finding long-term solutions to the problems will be much more difficult. But given the forthcoming challenges that will have to be faced, such as reducing carbon emissions, a better dialogue would be a useful first step in starting to resolve these issues.


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