Maersk Warns South China Port Congestion 'More Significant Disruption' Than Suez Canal Closure

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by Tyler Durden
Wednesday, Jun 16, 2021 - 11:20 PM

We previewed last week to readers that port congestion wasn't just observed across US West Coast ports, such as Los Angeles/Long Beach, but also severe congestion was developing in southern China. At the time, we called it a "perfect storm" ahead of the peak shipping season. 

Now the world's largest container line, Maersk, calls the port congestion at Yantian International Container Terminal, a deepwater port in Shenzhen, Guangdong, in southern China, a much more significant disruption to its operations than the shutdown of the Suez Canal in March.

Ditlev Blicher, Maersk Asia Pacific Managing Director, was quoted by Seatrade Maritime, who said Yantian port is operating at a 40% capacity, and "We're expecting that to continue for the next month with significant delays for vessels to be able to berth."

A recent surge in COVID-19 infections in the port area and prevention and restriction measures put in place by local authorities is the primary reason for the lack of capacity at the port. 

AP Moller-Maersk's CEO of Ocean & Logistics, Vincent Clerc, stated: 

"I would say this for us is a much bigger disruption than the Ever Given getting stuck in the Suez Canal for some days because of the duration and the importance of Yantian as a gateway."

Before the outbreak, the average shipping times at Yantian averaged a waiting time of 0.5 days. Now it's 16 days.

"Right now, we have vessel delays of up to 16 days outside Yantian which is of course going to cause significant ripple effect across the network from a reliability perspective," Clerc explained.

This has caused a massive traffic jam of container ships in the region, resulting in an unprecedented supply chain impact and another shipping crisis as delays mount, threatening to drive up costs again.

South China Container Port Congestion 

Source: Refinitiv

Brian Glick, founder and CEO at supply chain integration platform, told CNBC that the latest congestion in Yantian is "absolutely massive" and will have an "unprecedented supply chain impact." 

Already, shipping delays in major Chinese ports drive shipping costs higher as waiting times at berth jumped.

Global Container Prices 

Source: Refinitiv

Guangdong accounts for about a quarter of China's total exports. It's home to Shenzhen port and Guangzhou port, some of the largest in the world. 

Combined with the congestion challenges on the US West Coast, the latest round of congestion in southern China is a significant warning for US businesses and consumers that another round of delays, shortages, and soaring shipping costs is ahead.