ONE CEO Jeremy Nixon says the growing number of typhoons is “creating disruptions to vessels passing up and down within Asia.”
An escalating number of typhoons and other adverse weather events are playing havoc with carrier schedules and creating a “major challenge” for the shipping industry to recover from the record-low levels in schedule reliability experienced in 2018, according to Jeremy Nixon, chief executive officer of Ocean Network Express (ONE).
Speaking at the TOC Asia Container Supply Chain Conference in Singapore on Tuesday, Nixon (pictured above) said across key shipping lanes, global warming has triggered a “remarkable increase” in adverse weather since 2016, when there were only nine major typhoons in Asia, compared with 13 in 2017 and 17 in 2018.
“Unfortunately, the typhoons go straight through the middle of our key shipping lanes,” Nixon said. “And they track at a relatively slow pace, so when that happens, it’s creating disruptions to vessels passing up and down within Asia. But also, critically, it’s impacting the actual ports themselves — particularly those in China, as well as in Korea and Japan.”
Nixon noted that the Port of Shanghai was closed for eight days in August last year, compared with just one day during the same month in 2017. In total, there were 28 days of terminal closures between April and August 2018.
“This is major disruption, and previously when there were low terminal utilization levels you could catch up relatively quickly in terms of operations. But because now the terminals are working at a much higher occupancy, particularly in mainland China, the ability to recover is slow and that has an additional impact,” Nixon said.
Recent weather in North America had a big impact on rail operations, according to Nixon, while Europe has suffered from flooding and strong weather systems in the Bay of Biscay and the transatlantic.
Alan Murphy, Sea-Intelligence Consulting’s chief executive, said carrier schedule reliability fell to record-low levels in 2018 — the worst in seven years since the analyst began recording reliability data.
“Service levels have been very bad, especially on the transpacific trade, where two out of three vessels arriving are more than a day late,” Murphy said.
Comparing the reliability between the three major carrier alliances, Murphy said THE Alliance had struggled in the past, but now “we’re seeing a close in that gap because, unfortunately, the other alliances are going down, rather than THE Alliance going up.”
ONE is part of THE Alliance with Hapag-Lloyd and Yang Ming. Nixon said the group plans to adjust schedules to help mitigate the impact of the adverse weather and high port utilization levels in Asia.
“What we’re doing now as THE Alliance, as we bring our new product to market in April/May, is to make some changes to the network to build in more buffer time,” Nixon said.
He said this includes reducing the number of port calls in China on a single loop, as vessels calling at both Shanghai and Ningbo end up queuing for a berth twice when operations at the two major ports are disrupted by typhoons.
To achieve this reduction, Nixon said THE Alliance will split its Ningbo and Shanghai calls, with some loops calling fewer ports and others with additional vessels in rotation for “more buffer and recovery.”
“We are working on it,” he said. “But to get back to the days of 90 percent schedule reliability for the whole industry is really a major challenge in light of where we are with the terminal occupancy and with the weather these days.”
