Reasons of container terminal congestion of Shanghai Port and suggested solutions

By Xu Jianhua

Reasons of container terminal congestion of Shanghai Port and suggested solutions

By Xu Jianhua

Since 1st, April, the newly established OCEAN Alliance and THE Alliance has launched new liner schedule. the alteration from the old to the new liner schedule and their transition made some terminals operate in an overload condition，and some other ports had nothing to do, some of the equipment has not been fully used, resulting in some chaos. At the same time, Shanghai Port was also closed due to dense fog.

In addition, it is said that the freight rates will rise after May 1st, many shippers stepped up delivering goods to avoid increase in freight costs, and export volume exceeded expectation, which has caused this world’s largest container port to continuously have congestions.

Although the 2M alliance formed by Maersk Line and Mediterranean Shipping has not changed itself, this two companies also suffered the bitterness of congestion. For example, ships have delayed 2 or 3 days to set off from Shanghai ,Ningbo or other ports, this will directly hinder the normal operation of ports along the route according to the schedule, then terminal congestion will come andproduction activities will be affected.

The congestion dilemma of Shanghai Port rapidly spread to other ports in China.Qingdao port and Ningbo Port bore the front and were faced subsequently with congestion and insuff i cient yard. The blame fi nger was pointed at the alliance and merge of container shipping companies. The schedule of the new liner alliance influenced by the bad weather disturbed operation of container shipping, which made the congestion situation of container terminal in China spread to upstream and downstream of along the coast. A customer notice issued by Maersk Line said that in addition to the biggest global container port, Shanghai Port, the terminals of Qingdao Port and Shanghai Port are also congested and are insuff i cient in yard shortage.

Maersk believed that the primary reason to trigger the congestion of Chinese Ports is large-scale change of alliance network restructuring which begun in March. However, there are also reasons such as unstable weather on the north hemisphere in spring which lead to delay, and the impact of low terminal operation eff i ciency and performance.

The chain reaction of port congestion that began in Shanghai Port has spread to European and relevant areas in Africa. By comparison, the US West coast ports that have suffered heavy congestion all along are not affected obviously. It ref l ected that once the congestion happens, it will spread to the ports along the routes rapidly because there are relatively more ports of call along the Asia-Europe route, but the situation is more orderly due to relatively fewer ports of call on the Trans Pacif i c route. It is not a coincidence that the most congested ports happen to be some best earning ports. For example, the profit of Qingdao Port increased by 12% in the first quarter, 10% for Shanghai Port and 9% for Ningbo Port. Abnormal high utilization rate of berth through capacity was brought at the price of abnormal long waiting time of ships, which will inevitably bring high prof i t to operators. However, on the other hand, the market will make some interventions under certain circumstances, for example, some carriers will transfer port of call on some routes to neighboring ports.

In recent years, Shanghai Port is actively transferring some routes of internal trade, Yangtze River, and offshore to neighboring ports. For example, Shanghai Port transferred all goods of feeder vessels coming from Yangtze River route to Taicang Port for transition because of increasing congestion in the port area of Wai Gaoqiao. However, the design throughout volume of Taicang Port is 4400,000TEU and its utilization rate has been as high as 93%,so construction of phrase VI terminal is being accelerated and will be commenced within the year. This project will construct four container berths of 50000 tons, its design annual throughput is 2000,000 TEU. The capacity of Taicang Port will be increased to 6400,000 TEU after construction. The long-term goal of Taicang Port is to be a world-class port wich through capacity reaching 20000,000TEU.

Due to limited expansion space, Shanghai Port must transfer routes of internal trade, Yangtze River transit shipment, coastal transit shipment and offshore transit shipment to neighboring ports step by step ,such as Suzhou, Taicang and Ningbo Ports to avoid excessive capacity utilization of terminal.