Port congestion has been a long-standing problem for maritime logistics and continues to affect the shipping industry to this day. But, why does it happen, who does it impact and what can you do to protect your business from it? Read this blog to find out. And get to know how you can evade paying D&D fees during port congestions with Container xChange.
Port congestion takes place when a vessel arrives at a port in order to load or unload cargo, but is unable to berth, therefore it has to wait outside at the anchorage. Think of it like a traffic jam leaving you in what seems to be a never-ending waiting line.
This usually occurs when a port or terminal is overbooked and can’t accommodate all the vessels coming in. So, when the vessel arrives to complete its duty and the terminal is unavailable, it has to queue up and wait for a berth to be available = delays. Delays in the logistics chain = postponements in shipments reaching your clients at the final destination. And delays also mean container rollovers which lead to expensive D&D fees and other port charges.
A way to avoid the dreaded D&D fees in the case of a rollover during port congestion is by using SOC (shipper-owned container). When you use SOCs, you’re not obligated to pay demurrage and detention charges to carriers. This is because the shipper owns the container and is responsible for returning it to a designated location after the shipment. The good news for you is you can find SOCs on our platform easily.
Try our public search below to choose from 50,000+ boxes in 2,500+ locations worldwide. We’ve got 1,500+ vetted suppliers. All you have to do is choose “I want to use a container and then enter your pick-up and drop-off locations and hit the search button. You can then take your pick from a list of containers, suppliers, and current leasing rates. And get your SOC in just a few clicks. Try it below!
What is port congestion?
As mentioned above, port congestion means that ships arrive at the port and cannot load or unload, as the terminal is already full. So, they queue up and wait for their turn to get a spot at the port. This can cause a significant disruption in the logistics supply chain management and can often lead to delays.
In recent times, despite the pandemic restrictions being lifted, the impact that the COVID-19 lockdowns left behind is still looming within the industry. Despite blank sailings and port congestion having eased up in the post-pandemic era, the port congestion problem is still very much present. And this impacts the shipping industry in a multitude of ways, as we will see below.
But before we get there, how about leasing SOCs on our platform to help you save on D&D fees in case there’s a port congestion situation for your next shipment? Click here to get yourself that SOC at the best rates from vetted suppliers.
Impact of port congestion on the shipping industry
Widespread port congestion has a direct impact on supply chain management. Some carriers become frustrated and reroute, which means they may skip some important stops — blanked sailing. Global supply chains are collapsing due to several blockages, and a labor crisis in many industries is no help at all. Not to mention how it can throw planning straight out of the window. Some carriers work on a schedule, and due to port congestion, their schedules may be disrupted. This can cause delays in cargo delivery, costs, and shipping time.
Lack of proper planning also means forecasting becomes a problem. It’s not easy to include port congestion, labor strikes, or the weather while making forecasting predictions. The same goes for changes in seasonal and trade demands. Low accuracy of economic forecasts means that these forecasts are less helpful when container companies plan their container stock. This also leads to unnecessarily high head-haul volume. And unreliable forecasting can lead to, you guessed it, empty container repositioning — which we all know is an expensive affair.
We constantly study the market and identify the most liquid locations to reposition both empties as well as different types of containers. We also report on congestion at the global ports, workers’ strikes, new shipping routes, and overcapacity/shortage of containers. For a roundup of all this info, you can download your free copy of our global logistics report, Where Are All the Containers here.
Top 7 causes of port congestion
With so much being affected by port congestion. It’s important to know what are the factors that are driving this bottleneck. Let’s have a look below:
- Low infrastructure capacity – Port infrastructure simply can’t deal with the number of containers being received. This is due to a lack of resources, labor, space, and equipment.
- Increased consumer spending – Covid-19 has had long-lasting effects on the world. A harsh lockdown led to more online orders; this trend can still be seen. This means that more shipments need to be carried out which can cause a terminal backup.
- Unforeseen events – Certain things may be out of our control, such as weather implications, theft, and accidents. These unforeseen situations can contribute to delays and congestion.
- Lack of digitalization – Digitalization increases efficiency. If the maritime industry adapts to be more digitized, then communication about port capacity will be streamlined, informed, and handled more effectively.
- Shipping customs clearance – Some customs clearance procedures can be extremely strict, therefore not many requests are cleared. This leads to things like low productivity and delayed flow of goods.
- Lack of Labor- Towing, pilotage, and clearing the ships of the port. All these tasks require workers. And the port might not have enough workers to be able to keep up.
- Loading and Unloading Equipment- More and more ships have to find space at ports. That means the demand for loading and unloading equipment is rising. Something the ports might not always be capable of withstanding.
With so many causes of port congestion, delays are inevitable. Hence, to avoid D&D fees related to these delays lease SOCs on our platform at top rates today!
5 simple ways to avoid port congestion
The list of causes for port congestion is long! But there are ways to avoid them easily, take a look:
|Try different port locations
|Considering a different port location might mean a longer inland transit, but it’s better than leaving your cargo stuck at a congested port.
|Try different methods of freight, such as land, air, or railway, to avoid terminal backups. Huge truck flow causes congestion inside the terminal and on roads leading to the port. Hence, you can transport your container via rail or inland waterways instead.
|Your business can improve supply balance by negotiating with different ocean carriers who have connections with terminal operators in several ports.
|Circling back to digitalization, managing your inventory can be a lifesaver. Track supply and demand during inland transit for efficiency.
|Organize empty cargo containers
|Port managers should reconsider how to organize empty cargo containers that truckers are not allowed to bring back to terminals. This is to avoid them sitting on quays for weeks. This restriction will reduce the number of truckers that can take new loads.
Globalization has been a major contributor to the increase in World Logistics. Technology is developing. The global production is multiplying. All of this leads to more cargo, that needs to be distributed around the globe. This increase in demand has skyrocketed the level of goods being transported in all directions contributing to port congestion eventually.
So, since port congestion is unavoidable the best thing you can do is save money on D&D charges on container rollovers during congestions by using SOC containers. And we’re here to help you source your SOC.
How to avoid D&D charges associated with port congestion using SOCs on Container xChange
Using SOC containers helps you save a lot of money on demurrage and detention charges since these boxes are shipper owned and there are no time constraints for returning the box to carriers.
In the last few years, shipping lines have drastically reduced the number of free days and increased the tariff of demurrage and detention charges. These soaring D&D charges have become the most fiercely debated topic in the shipping industry. But in recent times there has been a reduction observed in D&D fees.
If you want to know the D&D fees charged by shipping lines and ports across the globe, download your free copy of our 4th edition of the annual Demurrage and Detention report.
Some of the highlights we found in the report this year are:
- Average D&D drops by 25% YoY, and even 14% lower than in 2020.
- Some ocean carriers (Maersk, MSC, HMM, Hapag-Lloyd) are already considering waiving D&D charges on days when marine terminals are closed.
- But still, 11 ports exhibit D&D fees that are still higher than in 2020. These include Antwerp, Jebel Ali, Ningbo, Port Kelang, Rotterdam, Shenzen, Singapore, Tianjin, Xiamen, Hong Kong, and Guangzhou.
Looking for SOCs for your next shipment? You’ll find 50,000+ SOC containers in 2,500+ locations worldwide on Container xChange. Rest assured you’ll deal with only 1,500+ vetted container suppliers on our platform.
As for prices, you can lease units at reasonable rates thanks to our complete market price transparency. With us, you can compare prices and terms and select the offer that suits you the best. You can get competitive rates with zero hidden fees that you won’t find in your usual sourcing channels.
So go on and find top deals on SOCs and simplify your container logistics operations by clicking the banner below.
Overview of the current port congestion situation worldwide
At present, the Panama Canal, which is one of the world’s busiest shipping routes has been struggling with an unprecedented drought for the last few months. And current vessels on this trade route or en route are 40% lighter in load. This disruption is causing major congestion at ports in the US.
With the shipping season coming in full swing, wholesale inventories dwindle in the U.S., and the ongoing restrictions at the Panama Canal could have implications for Christmas stocks and supply chains. With the imminent Christmas shopping season, the delay in inventory restocking due to shipping disruptions and congestion at the Panama Canal could result in missed sales opportunities for businesses in the US.
This coupled with the West Coast port strike in the US increased the vessel transit and dwell times at the West Coast ports – leading to port delays and congestion. But luckily these West Coast port negotiations in the US have finally come to an end. However, the dockworkers of Canadian ports have now begun their strike which will lead to delays and congestion in this region.
On the flip side, however, the port congestion scenario as of now looks better than the pandemic times and is on a decline. However, global port congestion is still set to continue into 2023 as there are still massive backlogs to be cleared. But fortunately, this year, the congestion is on a smaller scale than what it was in the previous years. And after more than two years of widespread port congestion, we are indeed beginning to see signs of improvement.
Save money on D&D fees related to port congestion by leasing SOCs on Container xChange
With lowered port congestion and a way to beat D&D charges from crippling your finances using SOCs, there’s a lot to be happy about, isn’t there?
The only thing left for you to do now is lease a SOC. We’ve already told you how you can go about doing so, but before we let you go, we want to let you in on some more benefits you can make use of on our platform.
When it comes to working with partners across the world and managing several invoices, we know it can get very troublesome. Hence, we created a great payment handling system known as the xChange wallet, which generates only one consolidated bill for you to pay (so you don’t have to deal with different invoices, companies, and country regulations) and securely manages all your transactions in one place.
We also have big names in the industry working with us, such as Seaco Global, Trident, SeaCube, and other trusted names with whom you can work directly while also building your business network.
So, are you ready to skip D&D charges if ports are backed up for your next shipment? Then lease a SOC on our platform at good deals and stay in control of your box with no added pressure to return the container on time by clicking the banner below.
Port congestion: Common FAQs
What is port congestion?
Port congestion means that ships arrive at the port and cannot load or unload, as the terminal is already full. So, they queue up and wait for their turn to get a spot at the port.
What is the main cause of port congestion?
Port congestion can be caused by low infrastructure capacity, increased consumer spending, unforeseen events, lack of digitalization, customs clearance, lack of labor, bad weather, loading and unloading equipment, and other factors.
Do ports cause pollution?
Air pollution is a significant concern at port facilities. Ports contain many diesel-powered pieces of machinery: straddle carriers, terminal tractors, and reach lifters. Diesel-powered engines result in elevated emissions of various pollutants. They also make a lot of noise = noise pollution.