Staff shortages, increased demand and pandemic-related delays have led to major challenges at the UK’s largest container port, including a build-up of unshipped boxes that means forwarders are having to store containers off site

The UK’s largest container terminal, Felixstowe, is facing criticism from shippers and freight forwarders after announcing it would no longer accept empty containers due to congestion, or would reduce the number of empty containers being returned to the port by rail and road.

Robert Keen, director-general of the British International Freight Association (BIFA), said the operational performance at Felixstowe had been “very challenging for some time”, but the issues had escalated at the end of last week “to a level that could be disastrous for our members’ businesses, which have already been hard hit by the impact of the pandemic.

“The latest initiative would appear to be an attempt to overcome the huge congestion that has developed at the port, which has led to significant haulage problems for our members whereby many containers can neither be collected, nor returned,” he added.

Forwarders have been told they can no longer return empty containers to the port until 23 September. Empties are being delivered to inland container parks, which BIFA said would increase haulage costs for its members and lead to higher quay rent and demurrage issues and expenses, “which are difficult to pass on to our members’ customers”.

Keen said forwarders were reporting that the port’s operator had been unresponsive to the issues they had raised, noting: “Our members say that the port authority is merely paying lip service to any enquiries they make, which is unacceptable for a port authority which owns the UK’s busiest container port.

Longer-term challenges

Felixstowe has faced several challenges in recent times, and struggled to recover from the failed installation of a new terminal operating system (TOS) in 2018.

Keen suggested that the current issues link back to those problems, noting: “The debacle in 2018, when the port undertook a disastrous migration to a new in-house terminal operating system appears to be at the root of the current VBS (vehicle booking system) problems, which is exacerbating the congestion problems caused by other issues – including a huge increase in container moves ahead of the Golden Week in China, reduced container moves per hour at the quayside, and serious staffing issues.”

He said BIFA members had suffered from two years of poor service from the port, claiming it was now time that its operator “considers BIFA members as direct customers of the port, and shows some willingness to discuss compensation for the damage caused and the increased costs that have been incurred by those members. At the very least, the port authority should extend free-time for quay rent and demurrage.”

Spike in import volumes

Sources close to the port, however, say that the current issues are not related to the TOS.

In a statement published late last week on its website, Felixstowe – which is owned by Hong Kong-based Hutchison – said it was “experiencing a high demand for both road and rail capacity”, adding: “The situation has been caused by a sharp spike in import container volumes, along with a high proportion of late vessel arrivals. The weekly import volume for the last two weeks has been over 30% higher than average levels.”

This was exacerbated by unusually high levels of empty containers at the port and the impact of the ongoing Covid-19 crisis on resource availability, it added.

In order to bring performance levels back, Felixstowe would increase vehicle book system slots to 4,300 per day and open on Sunday for haulage collection. But it said it would “temporarily slow down and reduce the number of empty containers being returned to the port by rail and road”, to ensure it did not run out of storage space.

Other measures would include the recruitment and training of 100 equipment drivers, which had not been possible during the lockdown.

The congestion issues come at a difficult time for ports, which are trying to recover from the impact of the pandemic. After losing large amounts of volumes, and revenues during the peak of the crisis, they are now facing a sudden resurgence of demand during the peak season. But at the same time, terminals are faced with container lines leaving empties on the dock as they rush to meet schedules.

Staffing has also become more difficult as training had to be reduced during the pandemic, as close-quarters one-to-one training could not be done safely. There are also concerns that freight forwarders are making resource planning even more difficult by bulk booking vehicle booking slots they don’t need then releasing them at the last minute, meaning that other forwarders or shippers do not have time to take up the slot.

High landside demand

Maersk, one of the port’s major customers, said it was experiencing “high landside demand” due to a surge in imports, couple with several external issues, that were causing disruption to normal service. “In order to ease congestion in Felixstowe we will temporarily cease acceptance of empty container restitution at the Port of Felixstowe,” it said in a note to customers. “During this period, we will allow inland restitution of empty containers without penalty.”

All of this is affecting freight forwarders, however, who are unable to discharge empties and are struggling to find export windows.

“We do not expect the situation to get much better in the coming weeks as congestion at the port will likely force carriers to continue to cut and run, leaving some UK imports to be discharged in mainland Europe for us to  arrange to get relayed back to the UK for delivery to our clients, as well as exports left stranded on the quay,” said Tony Cole, head of supply chain services at freight forwarder Davies Turner.

“One carrier has already told us to switch any export bookings to either London Gateway or Southampton.”

Average prices from Shanghai to Genoa surged 26% this week to $2,790 per 40ft box, with Drewry’s composite index of eight major east-west trades up 6.1% to twice its level in 2019

Average spot ocean freight rates have continued to rise this week on all of the main East-West trades, according to analysis by Drewry.

In its latest World Container Index freight rate assessments on eight major East-West trades, the ‘composite index’ of the eight trades combined is 6.1% this week and twice the level – up 104.9% – when compared with same period of 2019.

According to Drewry, average spot freight rates from Shanghai to Genoa surged 26% or $572 to touch $2,790 per 40ft box. Also, Shanghai to Rotterdam rates increased by 7% – an increase of $153 to $2,287 per feu.

Rates on Shanghai to Los Angeles nudged up by 2% to stand at $3,922 per 40ft container. Similarly, rates from Shanghai to New York strengthened 3% – a change of $127 and reached at $4,716 per feu. Spot rates from Rotterdam to Shanghai climbed 4% or $55 to touch $1,294 per 40ft container.

The average composite index of the WCI, assessed by Drewry for year-to-date, is $1,802 per 40ft container, which is $371 higher than the five-year average of $1,431 per 40ft container.

Drewry expects rates to remain steady in the coming week.

UK forwarders and shippers who route cargo through the port of Felixstowe will be unable to return empty containers to the port until at least 23 September.

The UK’s largest container port continues to grapple with crippling congestion.

Maersk told customers today it would “temporarily cease acceptance of empty container restitution at the port of Felixstowe”.

But it added: “We will allow inland restitution of empty containers without penalty.”

CMA CGM has also placed a ban on empties going to Felixstowe and has requested they be returned to London Gateway for the time being.

Although neither carrier has put a date on when they would begin to accept empties again at Felixstowe, the British International Freight Association (BIFA) said it would not be before next Wednesday.

Director general Robert Keen said: “The operational performance at Felixstowe has been very challenging for some time, but over the last 24 hours the issues have escalated to a level that could be disastrous for our members’ businesses, which have already been hard hit by Covid-19.

“The latest port ‘initiative’ would appear to be an attempt to overcome the huge congestion that has developed, which has led to significant haulage problems for our members, as many containers can neither be collected nor returned.

“Empty containers will have to be restituted to inland container parks, which will lead to an escalation in haulage costs for members using merchant haulage; as well as quay rent and demurrage issues and expenses, which are difficult to pass on to our members’ customers,” he added.

Carriers and forwarders alike have attributed the problems at Felixstowe to a range of causes, including port staff shortages, haulage driver shortages, a pre-Golden Week holiday import surge and delayed vessels from Asia not meeting their berthing slots due to weather and typhoons in Asia. All this, in combination with other factors, has led to the port’s vehicle booking system (VBS) becoming unworkable.

Mr Keen called for the port’s management to respond to forwarders’ concerns: “Our members say that the port authority is merely paying lip service to any enquiries they make, which is unacceptable for a port authority which owns the UK’s busiest container port.

“The debacle in 2018, when the port undertook a disastrous migration to a new in-house terminal operating system, appears to be at the root of the current VBS problems, exacerbating the congestion problems.

“BIFA members have suffered two years of poor service from the port, and it is high time it considered BIFA members as direct customers and show some willingness to discuss compensation for the damage caused to, and increased costs incurred by, those members.

“At the very least, the port authority should extend free-time for quay rent and demurrage,” he said.

Some vessels scheduled to call at the port have begun to make diversions to other UK gateways. The 18,000 teu Eleonora Maersk, deployed on the 2M’s Asia-North Europe AE7/Condor service and due to arrive at Felixstowe on Sunday, will call at London Gateway instead.

The UK’s biggest container port at Felixstowe (POF) is buckling under the strain of a “sharp spike in import volumes”, triggering hauliers and forwarders to criticise the management’s “contemptuous attitude” towards them.

“It is a complete s**t show and, if we as hauliers treated our customers with the same distain as the POF treats hauliers, we would be out of business by the end of the month,” said haulier David Perfect.

Hauliers like Thurrock-based D Perfect & Sons have reported increasing difficulty in securing bookings on the ports vehicle booking system (VBS) over the past month, with one forwarder sending The Loadstar a screenshot of the sparse availability at Trinity terminal yesterday.

“The ‘UK’s premier port’ is a sign that should be taken down immediately,” said one.

“The shambles that is Felixstowe port is costing everyone time and money. Forwarders, warehouse operators, hauliers and, ultimately, the importers and exporters – but probably not themselves.”

The disastrous migration in June 2018 to a new in-house terminal operating system appears to be at the root of the current VBS problems, as the system is “still not functioning to full strength”, according to an insider.

Mr Perfect told The Loadstar he struggled to find the words to describe the port’s attitude towards his sector.

“The VBS help desk does the opposite job to what it should do. We’re turning away at least 10 jobs a day at Felixstowe. A few years back, 90% of our business was at Felixstowe, nowadays it is just 10%,” he said.

“The Felixstowe Port Users Association has absolutely no leverage with the port, it is just paying lip service, and the lines themselves don’t want to know, they just want their boats emptied,” he added.

“Everywhere is busy at the moment, due to peak season, but at least at Gateway and Southampton they will talk to you.”

And the situation is likely to get much worse in the coming weeks as congestion on the Felixstowe quay forces carriers to “cut and run”, leaving some imports to be discharged at Rotterdam for eventual relay back to the UK, and exports left stranded on the quay.

Felixstowe told forwarders that from yesterday to 7pm on Tuesday, it will not accept export empty containers at the port via rail. Rail providers can only take full containers on the train services from the port; empties must be left inland or diverted to other ports.

Rail is said to account for 35% of the port’s throughput, 30% are empties.

One forwarder, who blamed the problems on high volumes and shortage of labour, noted that the plan would cause major disruption and additional costs.

Two Felixstowe-calling carriers have reported this morning they had already stopped receiving empties at the terminal and were diverting some exports to London Gateway and Southampton.

“We may well have to skip the Felixstowe call with one or more of our strings in the coming weeks,” one warned, while the other  said the situation at Felixstowe was “currently under review”.

There are reports that forwarders & hauliers are been told by carriers that, after devanning in Essex, they must return his empty containers to Liverpool instead of Felixstowe.

Although there has been no official response or acknowledgement from the port to the widespread complaints, The Loadstar understands from a source that the difficulties “have been caused by a sharp spike in import volumes”, which the port has attempted to mitigate by “releasing additional bookings to help meet demand”.

Port volumes fell by a fifth during the second quarter of this year as the pandemic took its toll on economic activity. Passenger and unitised cargoes saw the steepest downturns

The volume of freight tonnage moving through the UK’s ports fell by nearly a fifth in the second quarter of 2020, as the full impact of the pandemic took its toll, according to figures from the Department of Transport.

Total volumes fell by 18% to 96.1m tonnes, but the effect on unitised freight carried by containers, trucks and trailers fell by 44% to 3.2m units.

The figures followed a first-quarter fall in volumes of 6% compared with the previous year and confirmed the impact of the coronavirus backdrop on trade flows.

“The dramatic fall in unitised traffic during this period is not surprising, as containers and freight carried by trucks are a good barometer of the performance of the overall economy,” said British Ports Association policy analyst Phoebe Warneford-Thomson.

“This fall represents a decline in finished goods bound for the high street as well as raw materials for manufacturing sites, both of which largely suspended operations during the lockdown.”

The 3.2m unitised cargoes highlighted the fact that ports had continued to supply the country with essential goods throughout the period, Ms Warneford-Thomson said.

Some cargoes, such as timber products, had performed well, as had items such as toilet rolls, where there was an abundance of demand for both finished products and raw paper pulp supplies, she added.

“In the months since June, which we do not yet have official figures for, ports have maintained resilience, as they have throughout 2020. While trade flows may not be at 100% levels, we are seeing some return to normality.”

Even passenger numbers passing through UK ports were beginning to improve, albeit from a low base. In April, passenger arrivals were down 97% on April 2019, but by July this had improved to being down only 67%.

“While this remains a vast decline from usual numbers, maritime was the first to see recovery and the sector is seeing a gradual increase in arrivals, especially compared to aviation, where arrival numbers remained at -90% in July 2020,” Ms Warneford-Thomson said.

Despite signs of improvement, however, the ports sector now had to prepare for the uncertainties of Brexit, the BPA said.

The association, which represents more than 100 UK ports, had indicated that ports may be increasingly busy in the run-up to the end of the transition period on January 1.

This was based on a growth in throughput ahead of the original March 2019 date for exiting the European Union, when volumes rose 6% as UK manufacturers stockpiled inventory ahead of expected trade disruptions.

It was thought a similar process might occur this year, but this is less certain now, owing to the effect of the coronavirus backdrop and the recession in the UK economy.

“No doubt, ports will once again play a vital role in preparing British industry for Brexit and they may see a similar increase in tonnage in fourth quarter of 2020 ahead of border changes from January,” the BPA said.

“We are therefore asking the government to provide stability and certainty in these turbulent times.”

Lekima, China’s ninth typhoon of 2019, has damaged more than 36,000 homes and 900,000 acres of crops. Total economic losses are estimated at $2.55 billion.

BEIJING — The death toll from typhoon Lekima in eastern China rose to 44 people on Monday morning, according to official data, as the storm continued up the coast, racking up billions of dollars in economic losses and widely disrupting travel.

Twelve more people were recorded dead from the storm, seven from Zhejiang province and five from Shandong, and 16 people were missing, according to data from provincial emergency bureaus and state media.

The state broadcaster CCTV had put the death toll at 32 on Sunday.

Typhoon Lekima made landfall early Saturday in Zhejiang province, with winds gusting up to 115 mph. The center of the storm has since traveled north through Shandong and off the coast.

Many of the earlier deaths occurred when a natural dam collapsed in Zhejiang after a deluge of 6¼ inches of rain within three hours.

The Shandong Emergency Management Bureau said more than 180,000 people were evacuated in the province, adding to an earlier evacuation of about 1 million people in Zhejiang and Jiangsu provinces, as well as the financial hub of Shanghai.

The latest update from Shandong brings the total estimated economic toll of the storm to 18 billion yuan, or about $2.55 billion, in China, including damage to 900,000 acres of crops and more than 36,000 homes. Shandong alone estimated the total economic impact on agriculture at 939 million yuan, or about $133 million.

Lekima is China’s ninth typhoon this year. China’s state broadcaster said Sunday that more than 3,200 flights had been canceled but that some suspensions on high-speed railway lines had been lifted.

The typhoon was expected to weaken as it headed northwest off the coast of Shandong into the ocean east of Beijing

The world’s busiest cargo airport, Hong Kong International Airport (HKIA), has seen mass flight cancellations today due to anti-government protesters occupying parts of the airport, with all passenger flights cancelled until tomorrow morning, leading to disruptions of some cargo activities. However, freighter flights are understood to be still operating.

The airport confirmed that “Airport operations at Hong Kong International Airport have been seriously disrupted, all flights have been cancelled.”

Hong Kong-based airline Cathy Pacific said it had been informed by the Hong Kong International Airport Authority that all departing flights are cancelled today, Monday 12 August, effective immediately, with the cancellation period extending until the morning of Tuesday 13 August

With misdeclared hazardous cargoes sparking many dangerous fires on boxships around the world, Germany’s top liner has taken severe action – imposing a fine of $15,000 per wrong container.

Hapag-Lloyd suffered a high profile fire on of its ships, Yantian Express, earlier this year, that raged for weeks and caused millions of dollars of damage.

The new fines system comes into play from September 15.

“To ensure the safety of our crew, ships and other cargo onboard, Hapag-Lloyd holds the Shipper liable and responsible for all costs and consequences related to violations, fines, damages, incidents, claims and corrective measures resulting from cases of undeclared or misdeclared cargoes,” the German carrier stated in a note to clients.

Hong Kong’s Orient Overseas Container Line (OOCL), now a unit of China-based Cosco, also detailed plans yesterday to crack down on misdeclared dangerous and hazardous cargo.

OOCL said in a notice to customers that “we are aware that there had been an increasing number of marine incidents being reported in 2019, many of which were suspected of potentially carrying un-declared and/or misdeclared hazardous cargo”, adding that “to ensure safety compliance on shore and at sea is met, OOCL will strengthen its Dangerous Cargo acceptance and container inspection policy by imposing additional verification before loading through selective or random inspections on dangerous goods and potential dangerous goods cargo.”

OOCL said any inconsistencies between the declared cargo in the documents and what was physically inside the container would result in a Hazardous Cargo Misdeclaration Fee, without indicating how severe the fine would be.

Depending on the type of deficiencies found in such a shipment, the container could be put out of service and the cargo might be put on hold where penalties may be imposed, and charges associated with the misdeclaration would be on the shipper’s account.

According to the Cargo Incident Notification System (CINS), nearly 25% of all serious incidents onboard containerships are attributable to misdeclared cargo.

While the exact breakdown of cargo contents varies by container, it’s well known that at any given time, between 5-10% of an average container ship’s cargo is declared as hazardous goods and approximately 12% of global container trade comprises dangerous goods. However, it’s nearly impossible to know how much dangerous cargo is undeclared, or misdeclared.

Commenting on the news from Hapag-Lloyd, a container shipping consultant based in Singapore, applauded the initiative and urged other liners to follow suit. “The booking party is not always the payer, so they will need to ensure that the penalties are imposed or else it can become a toothless tiger. $15,000 will not cover the cost of accidents, but it might cover the cost of inspections and enforcement. All shippers should embrace this, as 99.9% suffer today due to errant actions of the 0.1%. The other carriers will need – and should – follow suit, as those errant shippers who consciously fail to declare will direct this scourge elsewhere. The is no priority higher than crew, ship and cargo safety,”

Lead columnist Andrew Craig-Bennett has repeatedly urged for a different solution to solve the scourge of fires caused by dangerous goods. Craig-Bennett has called on all liners to stop charging higher prices to carry dangerous goods.

“The incentive for shippers to lie disappears as soon as this is done. Yes, the shippers of harmless cargo will be subsiding the shippers of dangerous goods. But their own cargo will be more likely to arrive,” Craig-Bennett wrote in an earlier opinion piece.

The market is now awaiting responses from a host of other lines to see if there will be collective stance from the world’s top carriers in issuing fines on misdeclared cargoes.

CMA CGM has advised its customers that it will void its North Europe to Asia FAL 1 loop, scheduled to depart from Dunkirk on 21 August, and its FAL 3 loop, sailing from Rotterdam on 11 September.

The French carrier blamed “fluctuations between supply and demand” on the North Europe to Asia trade as the reason for cancelling the sailings.

However, European shippers are increasingly concerned that they will see a repeat of the capacity crunch chaos of previous years on vessels for Asia in September and October.

Notwithstanding the latest announcement from CMA CGM, the alliance carriers have already announced that they are blanking a number of headhaul voyages in August and September equivalent to over 150,000 teu of capacity.

The action is in response to what so far appears to be a poor peak season, and to stabilise container spot rates which had been on the slide for several weeks.

Each cancelled headhaul sailing from Asia to Europe means a withdrawn backhaul vessel from North Europe and this has, in the past, thrown the supply chain into chaos.

Shippers will also be wary of the carriers trying to take the opportunity to hike backhaul rates by only agreeing to prioritise shipment of export containers after the agreement to a premium.