What causes Port Congestion and how to avoid it?
A seaport is a maritime facility that provides shelter to ships and vessels. A port is a place where container ships can stop to load and unload cargo. It is a part of a harbor, where different terminals are specified for container ships to dock and load their cargo and passengers.
A shipping port is a very essential part of the global economy. They are responsible for 70% of the global merchandise trade. Ports are used majorly for the following functions: some ports are designed to cater to ferries and cruise ships for passengers, whereas some specialize only in container traffic or general cargo. Some ports play an important role for their nation’s military, i.e. by serving the navy.
Seaports are the point of convergence between inland and coastal transportation. They have various functions, namely:
- Ensure safety for seagoing vessels and leaving the seaport
- They also provide necessary equipment and facilities for vessels to anchor, load, and unload cargo and passengers.
- They also provide shelter, repair, maintenance of necessary services to vessels and crafts.
- To provide cargo transportation, loading and unloading services, warehousing, and preservation service in the seaport.
There are a lot of various types of port facilities for different tasks. They are seaport, cargo port, smart port, inland port, and many more.
Port Congestion is a situation where a ship arriving at a port for the purpose of loading or unloading cargo or other operations is not able to berth and has to wait outside at anchorage for a berth to wait for being accessible. Of the majority of ports that operate all day long, around 70% of them face port congestion every day. It is a common sight that is witnessed in the top 10 busiest ports in the world too.
The maritime transportation industry is facing major challenges related to port congestion. This has affected the supply chain at a very major level. Port congestion has become a common problem with many container depots and terminals around the world and it has been attributed to the increase in container ships that have grown over 1452.68 % in the last half-decade.
The result of this acute congestion of shipping vessels is catastrophic. It has resulted in chronic gridlock in many seaports. Many shifts are left stranded offshore for weeks to come, waiting to be unloaded or reloaded. The containers are thus buried in massive piles in terminal yards and trucks have to wait in line for hours and hours to pick up one container.
This has impacted customers in a very negative way. They have been experiencing shipping delays that have lasted for weeks and even months. These congestions have created a kind of bottleneck for the supply chain, turning it into a barrier for imports and exports. This has a very negative impact on the economy and world trade.
The costs for this issue are very major. There is loss of customers, perishable goods being spoilt, delay in shipment deliveries and also inflate demurrage costs and inventory costs.
The major causes for port congestion are discussed below
1. Severe weather conditions
Shipping services will always be dependent on the weather. Sometimes the weather conditions get so difficult that it makes transportation next to impossible. The shipping industry involves the transfer of goods by sea, and many times the storms are so prolonged that cause massive delays and directly impact the ports and the customers ultimately.
2. Shortage of truck trailers
Earlier the shipping companies used to have their trailer chassis. But now, major ocean carriers have pulled out from the business. This is because of the huge maintenance costs, and the high demands are increasing the costs even more.
3. Volume and anticipation of cargo
The shippers in the industry have to ship excess stock in their inventories due to chances of natural disasters, or government shutdowns. As a result, the shipment that is to arrive has more contents than what the original shipment should have. In times like the Covid-19 pandemic, there was a huge mess in container ports as the stock that was to be transported was drastically increased.
4. Demurrage charges
Demurrage charges are the charges paid for the use of space after the ship has been standing in the terminal for a specific period of time that was allotted. These charges initially came into place to encourage faster cargo movement in the ports. Mostly, in a port that is congested, a shipper has to bear demurrage charges when the ship is ready to pick up the cargo but the truck is not allowed to enter the terminal. Even though it had come into existence as an incentive to keep the cargo moving continuously, but it has now become a source of revenue for the shipping lines.
Even though there are many physical limitations to this port congestion concern, here is a list of some tactics that can be followed by companies to ensure a smooth flow of goods from one location to another timely.
1. Free-flow container delivery
Normally, truck drivers only collect the containers that are assigned to them. The driver should be given certain container placed in front of his containers instead of moving them which is time-consuming and cause congestion.
2. Effective communication
You need to stay constantly in touch with your carriers. This way you can alert your carriers about the containers so that they can plan on the arrival of your containers. Your carriers will then have a grasp of the port congestion situation and allow them to prepare for any potential delays.
3. Sway containers in multiple shipping vessels
Instead of shipping all your cargo in one single vessel, it is recommended to stagger your containers across multiple vessels. This is a much more viable option as it is less risky because if one container ship gets stuck in a port due to congestion, your whole shipment will not be delayed. After all, it will be distributed across multiple container ships.
4. Expansion of ports
A higher demand needs to be met with an expanded infrastructure. With the whole world economy dependent on the shipping industry for the transportation of cargo, it has become the need of the hour to expand seaports. This results in less congestion as more ships will be cleared on a daily basis.
Globalization, which led to containerization, has today made shipping containers a key element of the export-import industry. All industries are dependent on their goods to be transported via shipping vessels. Situations like port congestion put a break towards the growth of the industry as a whole. In order to improve these circumstances, not just the container industry, but all the stakeholders in the supply chain should take an active interest to work towards the betterment of this situation.