Global port congestion limits raw material supply! Factory capacity cannot keep up with market demand

According to the latest research by analysts at the Royal Bank of Canada (RBC), one-fifth of the world's container fleet is currently stranded in several major ports around the world, and China's ongoing epidemic blockade continues to damage the supply chain and increase costs.

According to the report, there were 344 ships waiting for berths at the Port of Shanghai, up 34% from the previous month. Michael Tran, head of digital intelligence strategy at RBC, said in the report: "Global port congestion is worsening and becoming more common."

Shanghai Port Situation

At Shanghai port, import containers have been sitting unattended at the yard for up to 12 days, longer than the 4.5 days before the closure, according to Freightos. Meanwhile, the time ships are waiting for berths at Yangshan has increased to two days from 12 hours at the end of March.

A shortage of port workers has become another problem at Shanghai Port, even though the two main container terminals, Yangshan and Waigaoqiao, have been operating under a so-called “closed loop” system, with workers having little contact with the outside world, since the lockdown began on March 28.

However, Shanghai International Port Group (SIPG), the state-owned operator of the two terminals, did not disclose the size of the workforce deployed in the operation, while industry officials claimed it was only half of what it normally is.

SIPG reported that it was still able to transport 100,000 TEUs per day in April. Considering that the total throughput last year was 47 million TEUs, the daily transportation volume in 2021 is about 129,000 TEUs. However, shipping executives are not convinced and strongly doubt the official figures.

Exporters from China said the lockdown forced them to abandon exports from Shanghai because the storage hub [in Shaoxing] prohibited trucks from moving between the two cities. Another option was the port of Ningbo, which also faces congestion and where actually booking space is a feat.

Chinese authorities have pledged to issue more passes to make it easier for trucks to move between Shanghai and surrounding cities such as Suzhou and Hangzhou, but support measures during a prolonged lockdown may not be enough to ease congestion.

Outside Shanghai

RBC research points out that while the reliability of ship arrivals has improved slightly in recent months, the average overall delay per ship in March was still as long as 7.26 days, a figure that rarely exceeds 4.5 days in normal times. At the same time, ships arriving in Europe from China were four days late on average, hindering the supply of empty containers.

In the US, turnaround time (ToT) at the Port of Los Angeles jumped to 6.9 days from 5 days last month, although it is still below the peak of 8.7 days before Christmas last year. Meanwhile, total volumes at Europe's three largest container ports, Rotterdam, Antwerp and Hamburg, were 8%, 30% and 21% higher than normal five-year levels, respectively.

But the problem is not limited to ports, and persists inland as well. Survey figures from the Institute for Supply Management (ISM) show that manufacturers are waiting an average of 100 days to receive production materials, the longest delay since records began in 1987.

In addition to transportation and logistics delays, labor shortages are also complicating producers' problems. According to the ISM survey, about 34% of companies that are hiring said they have difficulty filling vacancies, up from 28% last month. Worsening capacity constraints in labor and logistics have led to slower growth in production and new orders.

“Demand remains strong, but factories simply can’t keep up because supply constraints are preventing them from ramping up production,” said Stephen Stanley, chief economist at Amherst Pierpont Securities.

Editor✎ Ashley/

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