Source: Lloyds Loading List
Date: 24th June 2021
But it will take several weeks to clear backlogs of cargo from south China’s biggest container export port, freight sources warn, especially as peak season approaches.
China’s key southern container port of Yantian is expected to return to full operations today following several weeks of partial closure – although it will take weeks or even months to clear backlogs of cargo, freight sources warn, especially as peak season approaches.
Following almost a month of partial closures due to local Covid-19 outbreaks, Yantian International Container Terminals (YICT) operator Hutchison Ports yesterday told customers that “with the full support of relevant government departments and on the premise of strict epidemic prevention, Hutchison Ports Yantian has taken proactive measures to steadily resume normal terminal operations. Currently, Covid-19 has been effectively under control in the port area, and the operational capacity of the terminals has steadily recovered. It is now decided that from 00:00 on June 24, Yantian will resume full operations.”
It said all berths – including the West Port area – “will essentially resume normal operations”, noting that “the number of laden gate-in tractors will be increased to 9,000 per day, and the pickup of empty containers and import laden containers remain normal”.
And it said the arrangements of accepting export laden containers will return to normal, with export laden containers accepted within 7 days of the vessel’s estimated time of arrival (ETA).
Hutchison said Yantian “will continue to strictly implement epidemic prevention, control measures and promote products in a safe and orderly manner”.
It is good news for local businesses and shippers with cargo in the region, who have been waiting for an improvement in Yantian’s productivity. However, even with the increased efficiency at the terminal, it will take weeks to work through the backlog of container stacks in the terminal, with productivity impacted across Shenzhen, Chiwan, Shekou, and Nansha.
Queue of vessels
Even with the terminal itself back to normal operation, this does not instantly normalize the situation. There is a considerable queue of vessels waiting to be serviced – and the queue can be said to be ‘artificially short’ with the many port omissions both executed and still planned into July from the carriers.
Furthermore, there is a huge backlog of cargo to be handled – which, essentially, is cargo now on top of all the other normal flow of export cargo out of Asia.
While detailed statistics are not available, a “ballpark estimate can be made” on the basis of YICT handling 13.3 million TEU in 2020, equivalent to an average of 36,400 TEU per day.
With the terminal operating at around 30% of capacity for much of the past month, this means an estimated shortfall of 25,500 TEU/day. The problem has lasted for some 30 days – i.e. a shortfall of 765,000 TEU of handling.
With the terminal handling record load of 45,800 TEU/day in August 2020, at the record load, they could clear the backlog in 17 days – but that is before taking account of the fact the normal cargo flow also needs to be handled.
82 days to clear the backlog
If we assume normal flow to be 36,400 – in line with average – then there is an excess capacity of 9,400 TEU/day up to the record performance with which to chip away at the backlog. In this case, it will take 82 days to clear the backlog.
Those numbers were very approximate, and the reality will be somewhere between these extremes. And another bottleneck will be the available vessel capacity in Asia as deep-sea services are already quite full.
Other industry insiders questioned how much the recent vessel diversions to other ports in the region, such as Nansha, would have on these estimates.
To some degree, you see cargo being diverted through such other ports, which can help somewhat with the excess cargo pile – and this has also been done over the past few weeks. The problem here is that this also leads to congestion problems in these ports, hence impacting the normal flow of cargo.
Indeed, another freight source yesterday highlighted that nearby Nansha port in Guangzhou was reported to be “stopping operations – if true this will also cause issues where shippers have tried to divert”.
A cargo sourcing at Yantian International Container Terminals said he “can’t fully agree” with the backlog assumptions, adding: “We will try our best – see how we go.”
As long as the terminal deploys more internal trucks – all-hands-on-deck mode – to maintain the high OEE of quay cranes and RTGs, YICT can clear the backlog earlier than the expectation.
However, others believe the estimates could understate the length of time the catch-up may take. One European import manager noted that the estimated 82 days to clear the backlog would only happen “if there is no any new ‘black swan’ ahead” – a reference to how vulnerable the ocean freight chain has been in recent months to any further disruptions.
And a major international retail group noted: “Considering the summer peak is coming, 82 days is a really optimistic estimation.”
Damage ‘already done’
Commenting last week on the wider impact of the disruptions in southern China, the world’s largest container line Maersk said the damage to already-disrupted supply chains had already been done. Maersk noted: “Fighting to get reliability back into operations and services back on schedule after the Suez incident in March, the port congestion in Yantian, with neighboring ports Shekou and Nansha also affected, is an added pain at a time where global supply chains are already stretched.”
Please do not hesitate to contact our Logfret team in China if you have questions.