Global Container Congestion Affecting UK Ports
What is happening?
- Container ports around the world are dealing with backlogs in containers. UK ports are experiencing particularly high volumes as a result of that combined with additional traffic from stockpiling ahead of the end of the transition period.
- Containerised trade carries consumer goods and other smaller supplies around the globe. Containers account for approximately 15% of UK port tonnage.
Why is this happening?
- UNPRECENDENTED VOLATILITY: This is always a busy time of year for the freight industry. Covid-19 has disrupted the usual flow of trade and we are now seeing unprecedented volatility and unpredictable and changing patterns of demand. We are also seeing some existing trends accelerating rapdily such as an increase in e-commerce which is adding to the surge in container shipping demand as many consumer goods are imported from Asia.
- LAGGING SUPPLY AND DEMAND: When the Chinese economy came out of lockdown earlier this year we saw a glut in containers arriving in the UK and Europe but depressed demand, which used up a lot of storage and warehousing space.
- EMPTIES: Contributing further to the congestion is a shortage of empty containers in Asia, needed to carry cargo. When the Chinese economy opened up again earlier this year there was a glut of containers coming in but not many going out as Europe and the UK stayed locked down with exports depressed. The oversupply meant some goods went into storage at the same time as exports were depressed, meaning many thousands of containers ended up on the wrong side of the world. Getting these back where they need to be has added to pressure of freight rates.
- STOCKPILING: As the end of the Brexit transition period nears, some importers are bringing goods through earlier and/or stockpiling in anticipation of potential supply chain disruption in 2021
- SEASONAL: These factors come on top of what is always a busy time for the freight industry
Which ports are affected?
- Container ports around the world, from China to the US and Europe are affected. In the UK, ports handling large volumes are containers are dealing with the knock-on effects of this congestion as well as UK-specific factors.
How will it be resolved?
- Some ports and terminals report that the peak has passed, whilst others are still experiencing significant congestion. Ports are working around the clock to clear the backlog. Industry has written to the Secretary of State for Transport to reassure Government that industry will deal with this issue, although volumes are expected to remain high for several months. The freight and logistics industry has made some specific requests of Government to temporariliy speed the flow of freight.
17 December 2020 Update: Statement on calls for an inquiry:
UK ports are working hard to keep trade flowing and most are managing some unusually high volumes as a result of unprecedented volatility this year. Whilst we appreciate difficulties that some importers have experienced in recent weeks, this is certainly not a systemic issue nor is it unique to the UK. The underlying issues are well understood and there is no case for significant intervention or change to Government policy.
The UK boasts a large number of highly competitive, highly productive ports, many specialising in particular trades or routes. The industry keeps the UK supplied and connected to global markets, and will continue to deliver for the UK as it has throughout the pandemic. Those ports handling containers and lorries are always busy at this time of year, and presently the overwhelming majority are managing increased volumes.
As unitised traffic has grown continuously in recent years, UK ports have been investing in new infrastructure ensuring that there is enough capacity to meet increased volumes and will continue to do so whilst delivering £2bn in tax revenues each year to the UK exchequer.
We are aware that some in the freight sector have seen increases in shipping costs. This is not something the ports sector has any control over and is a challenge for the shipping community.
11 December 2020 Update: Read a statement from BPA Chief Executive Richard Ballantyne here.