Supply chains remain fragile, with Suez Canal blockage exacerbating issues

Global misallocations of containers, slower ship processing times because of Covid-19 restrictions, increased demands for imports of consumer goods from Asia to Western Europe and the US, and a six-day blockage of the Suez Canal, have all been factors in ongoing disruptions to global trade.

Reiner Heiken, CEO of US headquartered Hellmann Worldwide Logistics, told Reuters that “the blockage of the Suez Canal will increase the negative impact on global supply chains in the coming weeks, as the availability of empty equipment, particularly in Asia and Europe, will be affected,”

The logistical problems that had already led to shipping delays and queues outside US and European ports had been well-documented even before the Suez event. Some transporters of goods have turned to rail, but with 90% of world trade transported by sea, that has only scratched the surface of the problem.

The initial result of the Suez blockage was, of course, that ships stopped arriving. This gave port officials in Europe’s major ports the opportunity to reduce, at least a bit, the queues of ships waiting to unload. However, now that the ships which were stuck in the Canal are beginning to arrive en masse, the problem has returned, redoubled.

Barbara Janssens at the Port of Antwerp said that “the impact on global supply chains is expected to last for several months. There is simply not enough spare capacity across the worldwide container ship fleet to help counter the worst effects of the Suez incident”.

Leon Willems at the port of Rotterdam told Reuters that it expected its container traffic to be about 10% higher than normal every day for the coming weeks.

Maersk has urged US East Coast ports to take the opportunity of the pause in arrivals caused by the Suez Canal accident “to clear cargo from terminals which will allow them to operate more efficiently”.

The East Coast ports are more exposed to the Suez Canal knock on effects than the West Coast ports, but on that side of the US the problem had already become more significant.

A surge in demand for retail goods and slower ship processing times because of Covid-19-related restrictions and absenteeism had caused container ships at West Coast terminals to face significantly longer waiting times in recent months.

Eugene Seroka, executive director of the Port of Los Angeles, said they were making progress in reducing the backlog and that there were hopes that it could be cleared by the end of May or early in June. Mario Cordero, executive director of Long Beach port, also expected their backlog to be reduced by summer.