Rising COVID-19 cases in China, large-scale fuel stock-outs in Sri Lanka, and developments in Europe, among other global supply chain disruptions, have had an increasing impact on shipping volumes in Quarter 1 of 2022 and have exacerbated port congestion across the world.
Demand remains incredibly strong, which continues to put increased pressure on the global supply chains, as capacity is still tied up outside ports in the US, Europe and Asia. Despite the disruptions witnessed across various regions, the overall global container trade market has been stable over the last two years.
Global operational environment remains challenging
Globally, the operational environment remains challenging, with the main bottlenecks in the US, Europe and Asia. The spread of the Omicron variant of the COVID-19 virus has reduced the workforce by 10-15% in Northern Europe and there is also an impact due to the worsening weather conditions in the region and the ongoing situation in Eastern Europe.
The US witnessed a workforce reduction of up to 20-25%, across functions in terminals, warehouses, trucking and others, leading to continued high waiting times outside US ports, with no improvement seen in Los Angeles or Long Beach and the outlook worsening in Norfolk, Charleston and Houston, in the USA.
Enacted stricter border controls
Low truck driver capacity could impact both vessel and air freight, resulting in longer delivery time
As a result of the rise in COVID-19 cases in China, the country has enacted stricter border controls, extensive testing and lockdowns, which could lead to an increase in delays, in the movement of freight through the region. Low truck driver capacity could impact both vessel and air freight, resulting in longer delivery time and a possible rise in transport prices.
The economic crisis in Sri Lanka also led to a buildup of containers in Colombo Port due to major truckload service disruptions. Furthermore, a sharp decline of the Sri Lankan rupee against the US dollar has contributed to the tightening of the foreign exchange market, further disrupting the movement of cargo between Indian ports and Sri Lankan terminals.
Equipment availability remains challenging in certain pockets and the shortage are expected to continue for the foreseeable future, across many locations throughout the region, as the number of factors, impacting their ability to reposition them continues.
Enhanced predictability and reliability
To increase predictability and reliability, they increased capacity for equipment and vessels, and significant effort is also being made to prioritise contracted volumes - long-term contracts now representing 65% up from 50% a year ago.
Additional global capacity of 6.4% added in 2021 resulted in an increase in loaded volumes of 3.6% as compared to 2020. They have also been expanding their overall fleet and as of Q1 2022, they have 13 vessels in the newbuilding programme.
Close monitoring of supply chain disruptions
In the Indian Subcontinent and the Middle East, they have been closely monitoring supply chain disruptions
In the Indian Subcontinent and the Middle East, they have been closely monitoring supply chain disruptions and taking steps to mitigate any impact on the customers. In December 2021, a new direct vessel service from Far East Asia into the Middle East was launched, to insulate their customers in the region against capacity bottlenecks in Tanjung Pelepas, Asia.
Their overall utilisation in 2021 remained high at 94.5% and despite port congestions and network disruptions, Maersk’s schedule reliability is still above the industry average. According to the latest Sea-Intelligence Global Liner Performance Report in February 2022, A.P. Moller - Maersk delivered an on-time performance of 46.9% in January 2022, when compared to an industry average of 30.9%.
Indian Subcontinent and the Middle East face disruptions
The Indian Subcontinent and the Middle East region witnessed the impact of port congestions in Europe, as schedule reliability on this route, dipped in January 2022. The region also recorded an increase in schedule reliability for exports from the Middle East to Asia, and imports from Asia to the Indian Subcontinent.
They are also starting to see the resulting effect on global supply chain flows, such as delays and detention of cargo by customs authorities, across various transhipment hubs, overall resulting in unpredictable operational impacts. They are continuing their ongoing efforts, in order to ensure the efficient and timely delivery of their cargo, while mitigating the impacts of disruptions across the globe.
