Port bottlenecks that have increased supply-chain congestion because of the war in Ukraine and lockdowns in China may be showing signs of easing, according to one of the world\u2019s biggest shipping companies.<\/p>\n
Currently, the number of ships waiting outside of the ports in Los Angeles and Long Beach have been reduced to less than 40, from more than 100 earlier this year, according to Cheng Cheng-mount, chairman of Taiwan-based Yang Ming Marine Transport Corp. The waiting time for ships at Shanghai ports is two or three days, compared with 10 to 14 days at the U.S. ports.<\/p>\n
\u201cI think this is a good sign that the port congestion has been easing\u201d in the U.S., Cheng said in an interview on Tuesday. \u201cWe foresee in the second half, everything will become smooth. All the difficulties will be easier.\u201d<\/p>\n
As for China\u2019s strict lockdowns in Shanghai and other cities to battle Covid-19 outbreaks, he sees the global impact as a \u201cshort-term phenomenon\u201d that should be limited to second-quarter operations. He expects Beijing to adjust its Covid policy, and the nation\u2019s economy to rebound in the second half of the year.<\/p>\n
Cheng\u2019s view comes as supply chains have faced years of turmoil brought on by trade wars and the pandemic. Russia\u2019s invasion of Ukraine and China\u2019s lockdowns threaten to escalate the disruptions, with many in the industry expecting the impact to ripple globally throughout the year.<\/p>\n
Global supply chain crisis flares up again where it all began<\/strong><\/p>\n While shipping operations are improving in Shanghai and factories are gradually restarting, containers are still piling up in ports because of a shortage of trucks. Once bunched-up cargo vessels start sailing again, logistics experts warn of a flood of containers clogging U.S. and European ports.<\/p>\n Congestion in Shanghai ports has increased about 30% to 40% as of April 25 since the beginning of March, though it\u2019s still lower than the peak during the third quarter last year, S&P Global Market Intelligence said in an emailed report Thursday. With bottlenecks in northern Chinese ports, vessels are seeking alternatives, which will likely increase congestion in southern ports, the report said.<\/p>\n Global trade growth is projected to slow to 5% this year from an estimated 10.1% in 2021, according to an International Monetary Fund report.<\/p>\n \u201cI agree that the trade is going to slow down, and this is due to the war in Ukraine, and also delayed demand from Covid,\u201d Cheng said, adding that the global recovery is expected to \u201ctake a break\u201d before resuming its growth momentum. \u201cWe are rather optimistic.\u201d<\/p>\n Cheng expects measures by the U.S. government to speed flows at ports -- such as rules to immediately move empty containers -- will gradually kick in and ease the congestion in the second half. Once the logjams improve, he said, it will lead to lower freight rates.<\/p>\n Cheng, who was a former Citigroup Inc. chief economist, sees globalization evolving as trading patterns shift. Supply chains will become more regional and shorter amid rising transportation costs. With tensions between the U.S. and China continuing, supply chains will be split into two systems that each operate \u201cinside a bubble\u201d and navigate away from sanctions.<\/p>\n Yang Ming is the world\u2019s ninth biggest container carrier in terms of fleet capacity, according to Alphaliner\u2019s data. Surging demand amid the pandemic and supply chain crunch helped boost earnings of many shipping companies including Yang Ming to a record last year, and the strong growth momentum continued into the first quarter as freight rates soared.<\/p>\n The company\u2019s sales for the first three months surged 71% from a year earlier, to a record NT$106.7 billion ($3.6 billion). Yang Ming, however, has been rated low in on-time reliability, coming in 13th among 14 major carriers in a February ranking, according to data by Sea-Intelligence.<\/p>\n \u201cOur capacity is fully booked,\u201d Cheng said, \u201cMy biggest concern now is how to satisfy clients\u2019 demands.\u201d<\/p>\n A major uncertainty for next year is whether the market can digest the supply of new ships built over the past few years amid an industry upcycle. Growth in supply in 2023 is expected to double from this year, outpacing rising demand, Cheng said, citing a forecast from Alphaliner.<\/p>","protected":false},"excerpt":{"rendered":" Port bottlenecks that have increased supply-chain congestion because of the war in Ukraine and lockdowns in China may be showing signs of easing, according to one of the world\u2019s biggest shipping companies. Currently, the number of ships waiting outside of … Continue reading