GLOBAL CONTAINER SHIP TRAFFIC JAM ‘THE PERFECT STORM FOR DISRUPTION IN 2022’

More than 7,000km from Australia’s east coast, an unprecedented container-ship traffic jam at China’s three major ports is now reverberating across global supply chains and compounding bottlenecks that are driving up the prices of consumer goods.

And according to One Global Logistics, an Australian global forwarding group, the situation is unlikely to improve in 2022.

James Sparke, the managing director of One Global Logistics, says the situation creates a perfect storm for disrupting the Australian economy on the back of recent Maritime Union of Australia industrial action which led to months of strikes at ports throughout the country, limiting vessel capacity and exploding container freight rates against the backdrop of COVID-19.

“From jet skis, cars and caravans, right through to farming equipment, building materials, steel and mining machinery, no industries have been spared as businesses grapple with shortages of goods and materials and enter heated bidding wars for space on vessels,” said Mr Sparke.

At the China ports of Ningbo and Shanghai last week, over 160 ships – 75 of them container vessels – were at anchor or ‘loitering’ last Friday, according to the Marine Traffic website.

There has also been heavy congestion in the main US ports of Long Beach and Oakland along with east coast ports, as well as the port of Singapore, where some containers have been stranded for up to six weeks while waiting to bring the cargo to Australia.

Mr Sparke, who has worked in the customs and forwarding industry for 30 years, says he has never seen anything like it.

“Freight costs are changing every two weeks and there’s little or no vessel space from all the main Australian ports,” he said.

“Shipping lines aren’t even quoting me or my teams because they don’t have space until February next year, and small exporters are struggling because they need to get their products out.”

One Global Logistics is a Gold Coast-based family run business that provides sea and air freight and customs brokerage services, facilitating both imports and exports to and from more than 50 countries.

While shipping container rates have plateaued recently, Mr Sparke said other challenges overseas persisted such as a lack of equipment, limited space on vessels, and unstable vessel schedules, while delays in arrivals and at ports are compounding month to month with little end in sight.

“For example, in Shanghai there’s an average delay of up to 10 days for departure of each vessel,” said Mr Sparke.

“That impacts on our freight costs and the landed costs of importers as well, because these vessels are sitting idle doing nothing and it’s costing the ship owners a lot of money.”

The Freightos Baltic Index, which measure global container prices, currently stands at $US9164 ($12,584) per 12-metre container. A year ago, the same container cost $US2375 to ship.

Container rates have eased since peaking at more than $US11,000 around mid-September, but the Freight and Trade Alliance’s John Park said there was no expectation prices would fall substantially until at least mid-2022. And even at that stage, ‘they will never get back to pre-COVID prices’.

Mr Sparke said he doesn’t see any light at the end of the tunnel in the near term.

“We don’t anticipate 2022 being any better than this year,” he said.

“The pricing structures may be stable, but we need additional tonnage of vessels back to Australia. A lot of the shipping lines are taking vessels out of the rotation to Australia and putting them into higher paying trade lanes.”

In some cases where shipping companies are taking goods from Australia, hazardous cargo is often ignored when similar revenue can be generated from shipping empty or non-hazardous containers.

Peak season surcharges in global container shipping rates could send consumer prices 1.5 per cent higher over the next year, according to United National Conference on Trade and Development report this week.