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.”

Concerns are rising over the coronavirus outbreak in China and the potential disruption to global supply chains.

The number of reported cases in China surged 60% overnight to more than 4,500, with the death toll rising to 106 people.

Yesterday, Beijing announced that the lunar new year holiday would be extended by three days, until 2 February, in an effort to contain the virus, following its outbreak in Wuhan, capital of the central Hubei province and a major manufacturing and transport hub.

However, there are reports some local governments, including Shanghai, have extended the holiday until 9 February for all but essential companies.

The extended holiday and accompanying travel ban in Wuhan and other affected cities will prevent factories reopening, according to the Nikkei Asian Review. This will include the major Foxconn facility in Shanxi Province and auto manufacturers in Wuhan, such as Honda.

Wuhan is home to some 500 factories and the city’s 11 million population is under lockdown. All passenger and cargo flights out of the city have reportedly been cancelled, with only inbound flights of medical supplies permitted, while operations are suspended at Wuhan’s Yangtze river port, which handled close to 1.5m teu last year.

On Friday, the Maritime and Port Authority of Singapore (MPA) implemented temperature screening at all sea checkpoints, including ferry and cruise terminals, PSA’s container terminals and Jurong Port.

The International Transport Workers’ Federation (ITF) has issued safety guidelines to seafarers to protect themselves from the virus, which include wearing facemasks and avoiding contact with live animals.

Six crew on board the CMA CGM Ural have been reported ill with pneumonia-like conditions, according to Maritime Bulletin, although it is not yet known whether they are infected with coronavirus. The ship is reportedly en-route to Suez from China.

Law firm Hill Dickinson warned the shipping industry should be prepared for similar issues that arose in previous severe disease outbreaks, adding: “The risks involve infection of crew members, quarantine measures, closure of ports and, depending on the circumstance, may affect charter party obligations.”

One source told The Loadstar the crisis and extended national holiday in China could prolong the slack season for container lines.

In Hong Kong, where there are eight reported cases of coronavirus, Cathay Pacific Cargo issued a statement today that operations remained normal at Hong Kong International Airport and that its freighter schedule was unaffected.

Meanwhile, Michael Osterholm, director of the centre for infectious disease research at the University of Minnesota, issued a stark warning of potential disruption to global supply chains, particularly pharmaceutical products.

“Many of the critical products we use every day, such as medicines and medical devices, are actually manufactured in China’s areas being shut down,” he said on CNBC. “These are just-in-time delivery systems, and we already have shortages in this country from Chinese-made drugs.

“There are many diverse industries in the area near Wuhan. Every company that has any manufacturing capacity in China right now better be looking very carefully at their supply chains.

“I think this is something not yet appreciated. I can say with certainty it’s going to have an impact on the supply of very critical products around the world within days to weeks.”

As I am sure we all agree we do not know what is going to happen on 31st October 2019… will we leave? will we remain? Deal or no Deal? but we do have to prepare as best possible no matter what happens!

The below may give you some guidance of what you need to do….

Are you importing from Europe?

If we DO leave, and it’s without a single market deal on the 31st October then you must do the following to prepare.

  • Ensure you have an EORI number. If you haven’t, apply for one here.
  • Then, register for TSP. (Transitional Simplified Procedure). If you haven’t done so already, this will allow you to continue importing goods from Europe without being held up at borders/ports. Apply Here.

That’s it for now.

Why TSP? TSP is going to be the only realistic way to import from Europe because no trucker/haulage firm is going to want their trucks held up at port waiting for your goods to clear customs.

How does it work? You as the importer can declare the TSP declaration yourself but, it has to be done correctly and would require a customs trained staff member to the same level as operating your own customs clearances. Therefore we guess it would be more efficient for Freight Forwarders/Customs agents to perform this task as usual.

After leaving, or during transit, a TSP declaration can be submitted. The truck/lorry will cross the border as usual just like it does today. It will deliver, to you just like it does today. There will be no checks or additional stops that we have been made aware of.

Before the 4th of the following month, a FULL customs clearance must be processed to complete the process. We would do this for you too. Costs for the TSP submission and an EU clearance have not yet been made clear but we will, of course, update you.

At this point, on the 4th of the month, you will need to pay any Import Duty that’s payable. However, VAT will not. This will be payable by you directly to HMRC within your normal business VAT return. If the products you import are Duty-Free, then you’ll have nothing to pay – just a paper exercise for declaring your import VAT and Sales VAT as usual.

Not Importing from Europe but Non EU Countries?

In a no-deal Brexit, you will benefit from the cash flow exercise as mentioned above, from having all your import VAT switched from immediate payment to your business VAT return. Only Duty will be payable upfront during arrival.

If you’d like to know more about TSP Procedures Click Here

If you’d like to know more about the Irish Border Click Here

China Cosco Shipping 14,300 teu containership, CSCL Jupiter, has been damaged after a collision with another vessel in Vietnam, according to local media which quoted the company.

There were no reports of injuries to the crew, cargo damage nor pollution at the scene.

The incident occurred in the evening hours of 22 August when the 366 metre-long, Hong Kong-registered vessel was preparing to sail out of Cai Mep International Terminal, near Ho Chi Minh City.

Details have yet to emerge on how the collision happened.

CSCL Jupiter’s sailing schedule is expected to be delayed by about a week as the vessel is reported to have suffered damage to its hull and will undergo repairs at Cai Mep.

The containership’s next destination is thought to be Port Klang in Malaysia.

The CSCL Jupiter had already been involved in an incident in August 2017 when it ran aground on the approach to the port of Antwerp, blocking access to the port.

Taiwanese carrier plans to order five to six 23,000 teu vessels and charter in another four to five units of the same size. Shipbuilding sources say the company is still in talks with yards to firm up the contracts

EVERGREEN Marine has announced an $1.8bn plan to expand its fleet with up to 11 new supersized containerships.

The Taipei-listed carrier said in exchange filings that it was seeking five to six 23,000 teu newbuildings via direct ordering at yards for a maximum of $960m and another four to five units of the same type through chartering for $800m in total.

These are the largest boxships in the market and typically can only be deployed on the Asia-Europe trade lanes.

Evergreen said the fleet renewal scheme had gained board approval although the shipbuilding and chartering contracts had yet to be signed.

One senior executive from a major shipyard under the wings of China State Shipbuilding Corp said the Taiwanese shipping line was still in talks with the builders.

Japanese builder Imabari and its shipowning arm Shoei Kisen Kaisha, where Evergreen previously ordered 11 20,000 teu ships, were said to be among the contenders, while China’s Jiangnan Shipyard was also said to be competitive in the bidding.

“The Japanese have the advantage of cheap financing and faster delivery,” the Chinese yard executive said, adding “but we are more competitive in building prices and more flexible in customised designs”.

Lloyd’s List earlier reported that some Chinese leasing houses had expressed an interest in funding the newbuildings.

Evergreen said the newbuilding programme would be used to increase its fleet capacity and meet future market demand, while at the same time replace old tonnage and improve efficiency.

The company, ranking seventh on Alphaliner’s Top 100 liner shipping carrier league table, currently has an orderbook of 61 ships or 361,467 teu, accounting for 27.9% of its existing fleet capacity. The latest orders, if fully placed, will raise that ratio to 47.4%.

Jason Chiang, director of Ocean Shipping Consultants, earlier said Evergreen had the opportunity now to tap a softer shipbuilding market and get better ship prices compared with those previously offered to its larger rivals.

“Mid-sized container shipping lines face the risk of having to fold if they do not invest in new, larger boxships that can compete in the market.”