The European Shippers’ Council said some shipments from Europe to Asia have been delayed up to eight weeks.
The European Shippers’ Council (ESC) said its members are continuing to face a severe shortage of space on containerships carrying goods to Asia.
Goods being shipped from Europe to Asia have been waiting up to eight weeks to be loaded onto vessels, the ESC said.
Consequently, the trade organization arranged an emergency meeting last Thursday, calling on representatives of national shippers’ councils, as well as individual export companies to discuss the situation after sounding the alarm about the huge booking crunch last Monday.
“The present capacity is insufficient to take all shipments,” the ESC said. “In addition, carriers provide no guarantee whatsoever that all goods of a shipment will be loaded. Frequently, some goods from a shipment remain in the port.
“At the same time, spot market freight-tariffs are increasing,” the trade organization added. “These developments are forcing many traders to cancel their existing sales contracts and limit further sales. For ESC, this is a reason to worry about European exports and the negative consequences for the competitiveness of European economy.
“It is important to get an answer to the following questions: Is the present situation a natural result of the market adjusting to capacity changes in the maritime sector, or is it an artificially created scenario by certain shipping lines to increase their profitability? How long will it last?”
ESC Maritime Policy Manager Fabien Becquelin said the shortage is most severe for exporters moving goods through Northern European ports to Asia. Services from Mediterranean ports such as Marseilles and Barcelona seem to be less heavily impacted.
He said the shortage is touching shippers large and small from all over Europe, regardless of whether they are direct customers of container carriers, or whether they book their cargo with forwarders.
Some shippers have benefited from very specific space protection agreements in contracts with carriers to prevent cargo from being rolled or get priority because they have volumes that are very “flat” and remain consistent week after week.
Becquelin said three theories have been advanced for the shortage of space, which include the reorganization of carriers that had been in the G6, Ocean Three and CKYHE alliances into the Ocean Alliance and THE Alliance; a large number of “blanked voyages” from Asia to Europe around Chinese New Year, resulting in space on ships that would normally be departing Europe in recent weeks not being available; and a surge in European exports.
Rod Riseborough, the chief executive officer of Container Trade Statistics Ltd. in the U.K. said the growth in eastbound trade from Europe to Asia was up about 19 percent or 90,000 TEU in January and 4 percent or 20,000 TEU in February, “so there is undoubtedly a very good growth overall, although it varies by region. There was also good growth of around 22 percent for container cargom moving from the East Mediterranean to the Far East for both months though that did not seem to be the focus of the ESC concerns.
“Overall an increase of 110,000 TEU over 2 months on a trade with a
capacity of around 900,000 to 1,000,000 TEU per month backhaul is not that much
of an increase, although there will also be out of scope cargo to take
into account,” said Riseborough.
He thought probably all three items mentioned by Becquelin could contribute to the shortage particularly as vessels returning to Asia for an alliance change will probably be calling at different ports and “may not
The ESC said its emergency meeting last week was unable to provide an answer as to why there is a shortage of capacity.
Becquelin said the ESC will now get in touch with carriers and at least try to get an explanation.
“Clearly the reorganization of the service has been planned,” he said. “The Chinese New Year is also plan-able, every year it comes back at approximately the same moment. In my opinion, they failed to prepare the customer or at least give advice that, ‘Hey guys there will be some trouble…you can start booking earlier than planned.'”
He said there has been a lack of communication between carriers and their customers even when cargo has been rolled for several weeks, or customers have been told freight rates will double or triple.
To get cargo to Asia, he said some shippers have been routing cargo through Mediterranean ports, using air transport or even booking space on breakbulk ships.
The ESC said it plans to meet with the European Commission’s Competition Directorate “in the early summertime to give them an informed view on the present crisis and discuss strategies to prevent this from happening again in future.”
Jennifer Hedrick, executive director of the National Industrial Transportation League in the U.S. and Bob Ballantyne, president of the Freight Management Association of Canada said they had not heard similar concerns about a capacity crunch on backhaul services to Asia from their members.
European shippers remain concerned about capacity shortage
