X

This is not a paywall.

Register for free to continue reading.

We made a promise to you that we’ll never erect a paywall and we intend to keep that promise. We also want to continually improve your reading experience and you can help us do that by registering with us. It’s quick, easy and will cost you nothing.



Nearly there! Create a password to finish up registering with us:


Please enter your password or get a login link if you’ve forgotten


Open Sesame! Thanks for registering.

First Thing, Daily Maverick's flagship newsletter

Join the 230 000 South Africans who read First Thing newsletter.

We'd like our readers to start paying for Daily Maverick

More specifically, we'd like those who can afford to pay to start paying. What it comes down to is whether or not you value Daily Maverick. Think of us in terms of your daily cappuccino from your favourite coffee shop. It costs around R35. That’s R1,050 per month on frothy milk. Don’t get us wrong, we’re almost exclusively fuelled by coffee. BUT maybe R200 of that R1,050 could go to the journalism that’s fighting for the country?

We don’t dictate how much we’d like our readers to contribute. After all, how much you value our work is subjective (and frankly, every amount helps). At R200, you get it back in Uber Eats and ride vouchers every month, but that’s just a suggestion. A little less than a week’s worth of cappuccinos.

We can't survive on hope and our own determination. Our country is going to be considerably worse off if we don’t have a strong, sustainable news media. If you’re rejigging your budgets, and it comes to choosing between frothy milk and Daily Maverick, we hope you might reconsider that cappuccino.

We need your help. And we’re not ashamed to ask for it.

Our mission is to Defend Truth. Join Maverick Insider.

Support Daily Maverick→
Payment options

Major Shipping Firm Sees Signs of Supply-Chain Bottlen...

Business Maverick

Business Maverick

Major Shipping Firm Sees Signs of Supply-Chain Bottlenecks Easing

Shipping containers idled due to Russia sanctions, at the Port of Rotterdam in Rotterdam, Netherlands, on Wednesday, March 30, 2022. Thousands of shipping containers need careful inspection to ensure that moving them on won't somehow breach sanctions, said Port of Rotterdam Chief Executive Officer Allard Castelein. Photographer: Peter Boer/Bloomberg
By Bloomberg
28 Apr 2022 0

Port bottlenecks that have increased supply-chain congestion because of the war in Ukraine and lockdowns in China may be showing signs of easing, according to one of the world’s biggest shipping companies.

Currently, the number of ships waiting outside of the ports in Los Angeles and Long Beach have been reduced to less than 40, from more than 100 earlier this year, said Cheng Cheng-mount, chairman of Taiwan-based Yang Ming Marine Transport Corp. The waiting time for ships at Shanghai ports is two or three days, compared with 10 to 14 days at the US ports.

“I think this is a good sign that the port congestion has been easing” in the US, Cheng said in an interview on Tuesday. “We foresee in the second half, everything will become smooth. All the difficulties will be easier.”

As for China’s strict lockdowns in Shanghai and other cities to battle Covid-19 outbreaks, he sees the global impact as a “short-term phenomenon” that should be limited to second-quarter operations. He expects Beijing to adjust its Covid policy, and the nation’s economy to rebound in the second half of the year.

Cheng’s view comes as supply chains have faced years of turmoil brought on by trade wars and the pandemic. Russia’s invasion of Ukraine and China’s lockdowns threaten to escalate the disruptions, with many in the industry expecting the impact to ripple globally throughout the year.

Global Supply Chain Crisis Flares Up Again Where It All Began

While shipping operations are improving in Shanghai and factories are gradually restarting, containers are still piling up in ports because of a shortage of trucks. Once bunched-up cargo vessels start sailing again, logistics experts warn of a flood of containers clogging US and European ports.

Congestion in Shanghai ports has increased about 30% to 40% as of April 25 since the beginning of March, though it’s still lower than the peak during the third quarter last year, S&P Global Market Intelligence said in an emailed report on Thursday. With bottlenecks in northern Chinese ports, vessels are seeking alternatives, which will likely increase congestion in southern ports, the report said.

Global trade growth is projected to slow to 5% this year from an estimated 10.1% in 2021, according to an International Monetary Fund report.

“I agree that the trade is going to slow down, and this is due to the war in Ukraine, and also delayed demand from Covid,” Cheng said, adding that the global recovery is expected to “take a break” before resuming its growth momentum. “We are rather optimistic.”

Cheng expects measures by the US government to speed flows at ports – such as rules to immediately move empty containers – will gradually kick in and ease the congestion in the second half. Once the logjams improve, he said, it will lead to lower freight rates.

Cheng, who was a former Citigroup Inc chief economist, sees globalisation evolving as trading patterns shift. Supply chains will become more regional and shorter amid rising transportation costs. With tensions between the US and China continuing, supply chains will be split into two systems that each operate “inside a bubble” and navigate away from sanctions.

Yang Ming is the world’s ninth biggest container carrier in terms of fleet capacity, according to Alphaliner’s data. Surging demand amid the pandemic and supply chain crunch helped boost earnings of many shipping companies including Yang Ming to a record last year, and the strong growth momentum continued into the first quarter as freight rates soared.

The company’s sales for the first three months surged 71% from a year earlier, to a record NT$106.7 billion ($3,6 billion or R57,45 billion). Yang Ming, however, has been rated low in on-time reliability, coming in 13th among 14 major carriers in a February ranking, according to data by Sea-Intelligence.

“Our capacity is fully booked,” Cheng said, “My biggest concern now is how to satisfy clients’ demands.”

A major uncertainty for next year is whether the market can digest the supply of new ships built over the past few years amid an industry upcycle. Growth in supply in 2023 is expected to double from this year, outpacing rising demand, Cheng said, citing a forecast from Alphaliner.

“This is the reason we need to strengthen our financial structure,” Cheng said, adding that the company is watching the issue carefully. “If there is oversupply or decline of freight rates, we will be ready.” BM

 

Gallery

Comments - share your knowledge and experience

Please note you must be a Maverick Insider to comment. Sign up here or sign in if you are already an Insider.

Everybody has an opinion but not everyone has the knowledge and the experience to contribute meaningfully to a discussion. That’s what we want from our members. Help us learn with your expertise and insights on articles that we publish. We encourage different, respectful viewpoints to further our understanding of the world. View our comments policy here.

No Comments, yet

Please peer review 3 community comments before your comment can be posted