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port congestions causes and effects

A port is a place within a harbour where a ship can dock for the purpose of handling commercial cargo or passengers or taking care of the ship’s requirements.

Port is also a place where water and land meet and therefore there are trains and trucks that come into the port for the purpose of delivery (for exports onto a ship) or picking up cargo (from imports off a ship).

While some of the ports may handle only specific cargoes, a vast majority of the ports around the world handle multiple cargoes within the same port. These demarcated areas handling different types of cargoes are known as Terminals.

The majority of the ports around the world have dedicated Container Terminals for the handling of containers.

Port Congestion and its causes

Port Congestion is a situation wherein a vessel arriving at a port for the purpose of cargo or other operations is unable to berth and has to wait outside at anchorage for a berth to become available.

  • Port congestion is a major challenge faced by many ports globally and can occur due to various reasons like:
  • port or terminal is booked to more than its capacity
  • delays caused by bad weather which results in vessels lining up outside
  • industrial action or strikes
  • war
  • pandemics like the COVID-19
  • lack of port handling equipment
  • slow productivity
  • lack of yard space
  • restricted port access
  • location of port
  • vessel bunching
  • hinterland connections
  • trade wars

Port congestion is quite common in container terminals around the world and many are attributing it to the increase of container ships which has grown 1452.68 % in the last 50 years. To avoid a long port stay, terminals were pressed to use more gantry cranes and labour to complete the loading and discharging operations quicker.

However, the increase in containers coming off a ship also requires the container yard (CY) to be able to clear the containers with the same speed. If the CY is unable to handle this influx due to slow productivity or insufficient chassis, then the movement of containers out of the yard will be slow which means that the container yard will reach capacity quickly. 

Added to this, when truckers come to pick up import containers when the container yard is full to capacity, there could be multiple movements/shuffles within the terminal to get to the containers, the truckers want. 

Congestion can also happen due to pandemics like the COVID-19 that we are seeing currently. In February 2020, the average wait time for container vessels at Zhoushan in China (the 3rd largest container port in the world) touched more than 60 hours which is unusual for that port. Many ports around the world affected by COVID-19 have trimmed down their workforce to avoid transmission of the virus. This means less people available to handle the same number of ships and containers which lowers the productivity levels drastically, in some cases by more than 60-70%.

Port congestion can also be caused by industrial action or labour disputes causing massive queues of vessels waiting to berth.

Some ports like Manila have other reasons for port congestion, like an overrun of empty containers eating up valuable yard space in the port. Due to trade imbalance in the Philippines, Manila had a lot of full import containers coming in, but not enough export cargo going out and therefore empty containers were piling up in the ports and terminals.

Port congestion can also result in reduced tonnage capacity on certain trades forcing shipping lines to declare blank sailings. Shipping lines or ship operators cannot afford to keep the ships waiting at anchorage for days on end due to port congestion. Ship charters costs thousands of dollars per day to the ship operator and a ship and containers only generate money when they are active and moving. They would rather choose to skip a congested port.

Cargo rollover is also one of the consequences of port congestion because some of the lines might resort to cut and run (decision to cut short the operation of a ship due to delays) in order to maintain schedule integrity and the ships cannot stay any longer at an unproductive port. Cargo rollover can also happen due to poor forecasting between Carriers and BCOs.

While port congestion can happen due to a variety of reasons with far reaching consequences, all of this has only one common factor and that is “additional cost”.

So what is the true cost of port congestion?

Whatever the causes for port congestion, someone somewhere is paying the cost as a consequence of it.

Prime example of this unforeseen and additional costs is a truck waiting in a queue due to port congestion may be holding up someone else’s business, someone who needs the truck. So the trucker and the customer both are losing.

Port congestion also restricts the number of trips a trucker can do in a day as the turnaround time for the truck suffers greatly and impacts on the trucking company or worse, the drivers, some of whom could be independent operators contracted to a trucking company.

The impact of port congestion is far reaching and affects all industries resulting in slowdown in business, lack of inventory in stores, customers having to airfreight certain essential goods to alleviate shortages, especially of the consumer goods. Seasonal goods may not arrive in time or may not be exported in time.

Exporters, importers, shipping lines, hauliers, forwarders, terminal operators globally are all affected by port congestion and have to contend with additional costs when ships and cargo do not move efficiently through the terminals.

Based on the various factors above, it is very tricky and difficult to pinpoint the real cost of port congestion. All we know is that port congestion is bad for global trade.