It accumulates in the world’s major goods transshipment centers. Freighters are not being unloaded, containers are scarce and therefore expensive, and in China the ports are also cut off from electricity. The whole thing “adds up to a huge delay,” says Hapag-Lloyd expert Kühnbaum. “Nobody has ever experienced a situation like this before.”
Ms. Kühnbaum, what’s going on in the oceans right now?
Julia Kühnbaum: That is a good question. Of course, there is no general answer to this. There are many different reasons why ships are jammed in front of the ports.
Which are they?
We see that there is just a lot more cargo on the way. The need for capacity is therefore higher than usual. At the same time, there are performance losses at many terminals. This is because, for example, the shift schedules had to be adjusted in accordance with the Corona ordinances. Dock workers could often no longer be deployed so flexibly and not so many were allowed to work together at the same time. Fortunately, the rules are gradually being relaxed in the individual countries. In addition, there are many cases of illness and quarantine and ultimately bottlenecks in the removal of the containers due to a lack of truck drivers and train drivers. But there is also an additional problem in China.
Where is the problem?
Some ports there cannot work for a short time because the energy supply is cut off. Due to the energy shortage and to meet the emission requirements, the Chinese government is rationing the electricity supply. This usually takes place at short notice and means that terminals cannot work during this period.
How do these many factors affect the company?
All of this has meant that capacity utilization at the ports is currently at a very high level. The storage space for containers is at the limit of capacity at many ports. And that in turn leads to terminals working more slowly. If there are many containers in the port at once, the transport routes on the terminal are longer, for example. This means that a container takes longer to handle. And that adds up to a huge delay.
And at the same time you read again and again that the shelves are empty and companies cannot get parts.
Exactly. It’s like a wave that has just been kicked off. When the pandemic started, many companies started planning more cautiously. In other areas, however, a great deal was ordered. Sports equipment, for example, or furniture. The logistics were not prepared for this. We cannot simply cover such a phenomenon. This means that we saw a large imbalance, which then led to the shelves being empty in some areas. In addition, it is not only the containers that take longer at the ports, but also the ships.
Are you talking about the traffic jams at the ports like those off Los Angeles / Long Beach?
Exactly. In such a situation, you can think of a ship as a floating warehouse waiting to be dispatched. But the traffic jams in front of and in the ports are far from everything. The drivers of the trucks and the trains are also scarce. In short: the entire logistics is under stress.
Can you say when that will be over again?
First you have to understand what that actually means in the entire supply chain and I have to go back a little to do that. Our current situation is not driven by just one factor. Increased demand, a shortage of truck drivers, quarantine rules and others are fueled by additional factors such as extreme weather, the power outages in China or forest fires, for example. One extreme case this year was, for example, the blockade of the Suez Canal. As a result, the entire delivery volume from Asia has been postponed by a week. And that doesn’t just go away with such a tight terminal situation. So the problem is being carried on from week to week for the moment. Because the utilization of the ports is not going away. So you can’t just work through the traffic jam right now. We will only see relief when both transport demand falls and at the same time we see lower utilization of the terminals again, and thus improved productivity.
The Suez Canal blockade was in March. Is that dragging on until now?
This is one of the many pieces of the puzzle. But the ports were already in full swing before the canal was blocked. Then the whole thing provided a brief deceleration. But the ports were still unable to return to sea level. And when the canal was clear again, a massive amount of freight suddenly came into the ports. You can’t just work it off, it is now shifting from week to week.
Back to my question: can you predict when this will go away again?
There are many forecasts. We at Hapag-Lloyd see an improvement in the course of the first quarter. But that also depends on how the situation at the terminals will develop now. For example, we see weather phenomena that spoil one thing or the other.
How exactly does it look at Hapag-Lloyd? Can you tell me how many ships are stuck in the oceans?
We state that a little differently. We take different measures depending on the region. Take Los Angeles, where there is really a lot going on right now. We are currently trying to send as few ships as possible. What we do then is that we combine the calls from different services and call this terminal with a smaller number of services. This enables us to ensure that we have fewer ships waiting in front of the port, but that at the same time we can continue to offer our customers this port. But we also look to see whether we can call at alternative terminals or ports or whether certain ports with a service do not call at all. In this way we can ensure that everything is spread out a bit and that then not ten ships are stuck somewhere, but maybe only three or four.
It is working?
Yes, that spreads out a bit. What we often see, however, is that we relieve one terminal and relocate the ship to the next and that this is already under stress again. This is a daily balancing. We have an employee here who keeps saying, ‘ah, things are slowly going again’. He is now forbidden to speak, because usually the next bad news comes afterwards.
Can you tell how many ships there are?
As Hapag Lloyd, we operate 250 ships. In addition, there are ships from our alliance partners, with whom we operate our network and with whom we coordinate the measures together.
What does that mean?
We are not responsible for all ships ourselves, so we don’t just have containers on our own ships. We drive in an alliance. We also take care of these ships. That means that we also check where they are and how late they are. But then there are also competing ships on which we have cargo.
Is it actually the case everywhere that the market is under stress?
There are a couple of extreme ports. There are a few ports in China that we have a long way to go. We have been lying in Asia for a long time. But also in North America and Northern Europe. Los Angeles is of course very extreme. But there are bottlenecks almost everywhere at the moment. There are also only a few ships whose timetable is not disrupted in one way or another and which we have to take care of. For this reason, we start the day in which we check for each ship whether additional delays have occurred, for which we have to define measures to make up for them.
How does it look in Germany?
That fluctuates a bit. In Germany, Hamburg is particularly important to us, and here, too, we come to the border every now and then. In Hamburg, containers are unloaded, but also always loaded. This enables the terminal to better balance its capacities. It looks different in Rotterdam. There are some ships there that are almost exclusively unloading. And a ship that only unloads leads to a higher occupancy of the parking spaces.
What measures are there to get the situation under control again?
The first and most important measure is quite simple: drive faster. So we can try to make up time. Sometimes I can also switch the order of the ports a ship calls at. However, this must make sense from the routing, and the containers must also be properly stowed on the ship. As a next option, we will leave out ports. For example, I can leave out one with high waiting times or low productivity. Sometimes we shorten the port call, a so-called “cut-and-run”.
What happens then?
This means that we do not make all the container movements before a canal crossing, which only takes place once a day, in order to save time. Another possibility would be to employ another ship in a service. Unfortunately, there are hardly any free ships left. What we can still try at the moment is to push ships back and forth between the services. The most dramatic measure is surely that we postpone all ships by a week. At the moment, this happens a lot in some shipping areas. But actually we try to avoid that because it means that our customers cannot be guaranteed a departure in one week.
Have you ever experienced something like this?
Nobody has ever experienced a situation like this before. I also don’t know that there had been a problem for such a long time before. There are always ports where things get tight. That’s not new. But if there have been such heavy traffic jams in front of the ports in the past few decades, it was because there was a strike somewhere or that something else happened. But that the entire system is under global stress and we can hardly manage to provide empty containers on our own? I don’t think anyone saw anything like that at all.
Bastian Hosan spoke to Julia Kühnbaum.
The interview first appeared at Capital.de