Egypt released the Ever Given from its anchorage in the Suez Canal on Wednesday after agreeing a compensation deal.
The ship was the object of a protracted legal battle between its owners, Japanese company Shoei Kisen Kaisha, and the Suez Canal Authority (SCA) ever since its seizure on April 13.
The ship, which was carrying nearly 20,000 containers, had been impounded by the SCA after it was unstuck from the banks of the canal, where it had spent six days blocking a crucial international shipping route.
Details of the final deal between the SCA and the ship’s owners have not been made public. However, people close to the negotiations told The Wall Street Journal that the preliminary compensation deal, struck in late June, called for $200 million and a tugboat.
Dustin Eno, a spokesman the UK Club, which insures the Ever Given, declined to provide details of the deal.
According to the WSJ, the ship’s departure from the port of Ismailia – the nearest city to where the ship got stuck – will be broadcast live on Egyptian TV. The passage would be marked with a ceremony, Reuters reported.
As of 11.45 a.m. local time, the ship was headed out of the Bitter Lake, an artificial body of water off the canal where it has been held since its seizure.
The ship’s next port of call is Port Said, at the canal’s northern mouth, where it is to be inspected for its seaworthiness.
After that it cane get into the Mediterranean and try to reach its original intended destination, the port of Rotterdam in the Netherlands. It will also remove its containers at the UK’s port of Felixstowe, the paper reported.
For its second trek through the canal, it will be accompanied by two tugboats and will have two experienced pilots on board, Reuters reported.
That’s because industry experts and company executives say the shipping crisis will continue through 2022.
It’s good news for ocean shipping magnates. Ocean rates are currently “spiking,” according to Eytan Buchman, the chief marketing officer at global freight booking platform Freightos.com.
The price to send a shipping container from East Asia to the west coast of North America is nearly 1.8 times higher than it was at this time in 2019. To send one to the east coast, it’s 2.1 times more expensive.
A quick and zesty explainer on our shipping calamity
Cargo ships move around 80% of global trade by volume. But a variety of factors is complicating the process in which containers full of factory-fresh goods – usually in Asia – are loaded onto ships, traverse the ocean, and are unloaded in, say, the ports of Los Angeles or Newark.
What’s causing our shipping crisis include sweeping trends and more quotidian factors. A decades-long movement in the ship-building industry to make massive ships is clashing with the fact that many of our ports can’t accommodate these behemoths. Since early last year, when consumers worldwide were trapped at home, demand for durable goods skyrocketed – we started buying more stuff because we couldn’t go out to eat or travel.
And shipping containers are also a hot commodity right now. As Chris Stauber, vice president of product at transportation visibility platform FourKites, explained to me, the makers of shipping containers decreased their output in 2019, a slow year for trade, and early 2020, when the coronavirus squeezed industrial production. Now we need more containers than ever, and manufacturers are struggling to catch up with demand.
Labor trends are also making the shipping crisis even more challenging. At the port of Yantian, one of the largest in the world, a coronavirus outbreak stymied work for weeks. Supply Chain Dive reported on Thursday that 67 vessels were waiting to dock there earlier this week. Now resuming normal operations, the port has a massive backlog of 160,000 containers to process.
Thanks to these delays, which cause even more delays down the line, ocean vessels are waiting days at ports around the world just to get unloaded. For example, wait times at Yantian surged from 0.5 days to 16 days this month.
Please stop buying stuff
Of course, one cannot snap their fingers and see smaller ships or much-improved ports within a year (or even several years). New containers or widespread vaccination could ease our shipping crisis a bit quicker, but the timeframe would still be a problem for your Christmas shopping.
Instead, experts point to another factor that untangle the shipping chaos: Less demand.
Retailers’ inventories, which are the goods a business has in its warehouses to restock the shelves, do not match how much consumers are buying right now – even though inventories are back up to pre-pandemic levels. Companies have the same amount of goods in their stockrooms as before the pandemic, but even that isn’t enough to keep up with how much stuff people are buying.
Per the latest monthly US Census Bureau data, all retailers (excluding motor vehicle and part dealers) are seeing an inventory-to-sales ratio of 1.04. In previous years, retailers had a wider margin between their inventories and how much consumers were buying; in April 2017-2019, the ratio hovered around 1.22.
Throughout the next few months, retailers typically stock back up on what they need for the holiday shopping season. In 2019, as Michigan State’s Jason Miller, an associate professor of supply chain management, wrote in an analysis shared in American Shipper, retailers increased inventories by $35.12 billion from April to October. This year, Miller wrote that retailers need to add $65.11 billion to be ready for this year’s peak season – nearly twice as much!
It’s this stock-up that makes experts say that the shipping crisis won’t clean up this year.
As Paul Bingham, director of transportation consulting at IHS Markit told American Shipper, “We’re too far into the year without having recovered (inventories) to get out of this in 2021. We have to look to 2022 for any hope. So many portions of the supply chain are so far behind that it’s not going to happen in the next six months.”
What about next year?
There are plenty of caveats, but the folks who run Big Shipping believe the insanity will slow down by next year.
Forecasters believe folks will buy less stuff as the world re-opens and vaccination rates climb, instead spending their money on services like travel and dining out. This will give importers and exporters a chance to catch up on orders.
Lunar New Year, which typically occurs in January or February, should also provide a respite. During that holiday, many factories in Asia shutter as workers travel home to celebrate. Trade volumes fell by one third during the 2020 Lunar New Year in February.
Triton International claims 28% of all leased shipping containers, making them the No. 1 player in the container leasing space. Triton CEO Brian Sondey told investors on an April earnings call that a slowdown in trade volumes is needed to untangle the shipping crisis. He expects that to hit after the Christmas inventory build-up in 2021.
“What we hear is that most customers don’t think these bottlenecks are going to evaporate quickly, but they also don’t think they’re necessarily permanent,” Sodney said.
He added, “I think our general view is it likely continues until trade slows and that – who knows exactly when that’s going to be, but I think probably the betting is sometime end of this year, early next year when maybe the trade world starts to get back towards normal.”
In other words: Once we stop buying so much stuff, we should see the shipping crisis abate. But to prevent another catastrophe, government leaders will have to take the hint and start building better ports.
When do you think the shipping crisis will end? How has the crisis affected your business or in-store experiences? Email firstname.lastname@example.org.
It’s up to the port to help get consumers the items they ordered and keep global trade running smoothly.
I went behind the scenes in the controlled chaos of the Port of New York and New Jersey. Here’s what I saw.
It all starts with a customer. A consumer business on one side of the world buys a product that’s built on the other.
One way to transport those products is via ocean shipping. Goods are put into a container that’s then loaded onto an ocean-faring ship and sent across the globe.
Cargo volumes in 2020 actually started off worse than 2019 by a small variance but then rapidly worsened in the early months of the pandemic. In August, however, volumes jumped and the port quickly outpaced its 2019 volume from August through December.
A total of five months in 2020 saw what is normally eight months’ worth of volume.
A ship’s capacity is measured in 20-foot-equivalent units, or TEUs. One 20-foot container equals one TEU while a larger 40-foot container would be two TEUs.
The Port of New York and New Jersey handled 7.5 million TEUs in 2020.
Containerized shipping was actually created at the Port of New York and New Jersey in 1956. Before that, goods were offloaded onto trucks and driven long distances across the US.
Now, one ship can visit multiple ports, picking up and dropping off containers as it goes.
Consolidation in the ocean shipping industry has resulted in fewer companies. Common names at this port are Maersk, CMA CGM, and Ocean Network Express.
Sharing agreements allow shipping companies to use space on each other’s boats. An Evergreen container on a CMA CGM ship isn’t uncommon, for example.
Containers are cheap enough to buy at a cost of around $3,500 apiece. Tens of millions of these containers could be found across the world from the decks of container ships to the backs of trucks and to ports like this one.
They’re almost constantly in motion and identified by tracking numbers. Containers will often travel empty on container ships and companies will determine whether it’s worth it to ship the containers empty or just buy another one.
Just like an airport, this port has its own privately-owned terminals where containers are loaded and unloaded from ships. The north side of the Elizabeth Channel, for example, is home to Port Newark Container Terminal while the south side is home to Maher Terminals.
Massive cranes greet the ships and immediately begin offloading and loading containers in a real-world game of Tetris.
Handling the containers are port workers known as longshoremen. The union positions are highly sought after thanks to good pay and benefits.
The typical progression for a longshoreman is starting as a baggage handler for cruise lines and then becoming an automobile driver for the car ships. From there, each longshoreman can choose their own specialty and hone their craft.
The Port of New York and New Jersey doesn’t just handle containers, however, and other major imports and exports include automobiles…
And edible oils. .
Even scrap metal is a valuable commodity.
Cruise ship terminals are also under the port’s purview but traffic in that sector has been almost entirely quiet for most of 2020 due to the pandemic.
Trucks are weighed when they enter the port and credentials, known as transportation worker identification credentials, are checked. They’ll then meet with a longshoreman to arrange a spot to pick up their load.
The terminal’s computer system then relays a message to another longshoreman, who then retrieves the container. Each truck is different and one can drop off one load and immediately pick up another one.
But not all pull the double duty. Some trucks are just picking up while others are just dropping off.
The process looks like a lot of waiting around but trucks should be in and out of the port in under two hours.
Around 80% of truck drivers are owner-operators, giving them more freedom than a fleet driver for an established company.
The trucks and rail lines that serve the port can bring goods as far as Tennessee, the Midwest, and Canada. Chicago, for example, is just a two-day rail trip from here.
Around 18% of cargo moves out of the port by rail. Some trains leave the port after being given a mile’s worth of the 20 and 40-foot containers.
Larger and larger ships have been arriving at this port since the pandemic began.
One such ship is the CMA CGM Marco Polo, a container vessel with a maximum capacity of 16,022 TEUs. It’s the largest ship to visit the East Coast that can now access the Port of New York and New Jersey because of recent port improvements.
Standing in the way between the port and larger ships, historically, has been the Bayonne Bridge, which connects Bayonne, New Jersey and Staten Island, New York. While ships have grown in size, the bridge has remained the same for nearly 90 years.
That was until the Port Authority of New York and New Jersey spent $1.7 billion to raise the bridge’s roadway to allow larger ships to pass underneath. The new clearance of the bridge is now 215 feet and ships as large as 18,000 TEUs can pass underneath.
The port has been seeing a steady stream of larger and larger ships ever since. The CMA CGM Brazil broke the port’s record in September, only to have the CMA CGM Marco Polo break it again in May.
The CMA CGM Marco Polo is considered a “New Panamax” ship since it’s greater than 12,500 TEUs. Standard “Panamax” ships were once the largest ships that the Panama Canal could accommodate until larger locks were added in the 2010s.
Containers are stacked up on top of each other 200 feet high, with even more below deck.
During offloading, a constant flow of these intermediary trucks approach the ship to receive containers.
Containers are plucked from the ship by a crane that’s operated by a longshoreman sitting 200 feet off of the ground.
The longshoreman has an overhead view to make collecting the containers easier.
The massive containers are quickly whisked through the air by the crane as if weightless.
The longshoreman then lowers the crane, aligning the container with the truck below.
Once it’s dropped onto the truck, the container is secured and the truck drives off. It’s less than 30 seconds from the time the container is secured until the time the truck is on its way.
The process continues until all of the containers are offloaded.
The ship then receives a new load of containers to transport to the other side of the world. Foreign-flagged ships can’t move goods between two US ports under the Jones Act.
Exports from the US include cotton, forest products, agricultural supplies, and foodstuffs, to name a few.
Around 4,700 containers are being dropped and loaded, just under one-third of the CMA CGM Marco Polo’s total capacity.
From the bridge of the Marco Polo, it’s containers for as far as the eye can see. The Port of New York and New Jersey never shut down operations during the pandemic.
Larger ships coming to the port also requires larger cranes.
The APM Terminals-operated cranes services the Marco Polo are a staggering 209 feet tall.
A maximum of seven cranes was assigned to the Marco Polo at its peak to help expedite the unloading process.
Not every container is searched by US Customs and Border Protection when they enter the country. The agency instead uses complex algorithms to detect anomalies that prompt searches.
Inspectors, for example, can look at the weight of a container and see if it matches up with the cargo listed on a manifest. If it doesn’t, that prompts a search.
Human smuggling isn’t a major issue on the East Coast compared to the West Coast, which has closer proximity to Asia, but ships do have to be on the lookout for stowaways.
Now that the Port of New York and New Jersey has proven it can handle larger ships, it’s only a matter of time before the record set by the Marco Polo will be shattered.
And New York Harbor will continue to receive some of the largest ships in the world.
A new record was just set at the Port of New York and New Jersey.
The CMA CGM Marco Polo arrived in New York Harbor on Thursday morning after completing a three-week journey from China through the Suez Canal. It’s the largest container vessel to ever visit, or call, the East Coast of the US and was the largest in the world when it was built in 2013.
A total of 16,022 20-foot-equivalent containers, also known as TEUs, can fit on the ship that’s roughly the size of the Empire State Building. That many containers could cover 61 miles if put in a straight line, almost the width of New Jersey.
Inside the containers are a variety of consumer goods including home goods, furniture, and construction materials, bound for US customers. Over 10,000 shipping companies and customers are represented by the containers on the ship.
While it’s in the port, 5,000 TEUs will be offloaded onto a constant stream of trucks and then transported either by road or rail to their final destinations. Over 140 million people are served by the Port of New York and New Jersey and even destinations as far as Chicago are a short two-day train ride away.
Once the offloading process is complete, new containers will be put on the ship to be delivered at other ports of call as the Marco Polo continues its around-the-world journey. Popular exports from the US include cotton, forest products, agricultural supplies, and foodstuffs.
Before arriving in the US, the ship made stops in Vietnam, Singapore, Malaysia, Sri Lanka, and Canada as part of CMA CGM’s Columbus JAX service. The Port of Savannah in Georgia will be the last port of call before the long trip back to Asia.
A record-setting pandemic
The Port of New York and New Jersey just celebrated a similar milestone in September when the CMA CGM Brazil broke the record now being broken by the Marco Polo.
Larger mega-ships have only recently been able to access the East Coast’s largest port since 2019. Standing in the way between the port and the massive freighters has been the Bayonne Bridge, connecting Bayonne, New Jersey with Staten Island, New York.
The Port Authority of New York and New Jersey spent $1.7 billion to raise the roadway of the bridge and allow larger ships to pass underneath. Engineers also dredged the bottom of the Kill van Kull, using explosives to break up the bedrock below, to increase the depth of the port’s waterways to 50 feet.
And the Bayonne Bridge project was completed not a moment too soon. A backlog of consumer goods like furniture has been building up during the pandemic, and larger ships are required to meet the newfound demand.
The Marco Polo is just one ship that’s helping chip away at that backlog so consumers can receive the long-awaited goods they’ve ordered during the e-commerce boom of the pandemic.
And while the Marco Polo’s arrival is a monumental occasion for the port, the ever-growing demand for mega-ships will likely mean an even larger ship may break the record once again in a few month’s time.
It doesn’t help that half of the ships are considered “mega-container ships,” or ships that can hold 10,000 “Twenty-foot Equivalent Units” (TEUs).
The size of these boats – which are two to three times the size of ships from over a decade ago – are also a contributing factor to this backlog as they use more resources and manpower to unload, according to Louttit.
Another contributing factor to this delay is, unsurprisingly, the COVID-19 pandemic.
“As more Americans get vaccinated, businesses reopen and the economy strengthens, consumers continue to purchase goods at a dizzying pace,” Gene Seroka, the executive director of the Port of Los Angeles, said in a news release.
This has caused the number of imports to increase, adding more ships to the congested waters.
This congestion may be unique to California waters, but consumers around the US could soon begin seeing the consequences of this backlog.
This problem is more than just a temporary depletion of imported goods and a blocked view of the Pacific Ocean.
There’s also a massive shortage of shipping containers, which has already been contributing to the global supply chain and shipping delay issues.