Army Institute of Business Administration (AIBA), Savar.

Assignment
on
Container Congestion in different ports
Course Title: International Supply Chain Management
Course Code: SCM 5204

SUBMITTED TO:

Asst. Prof Md. Wahidul Habib

MBA, PhD
Adjunct Faculty

SUBMITTED BY:

Istiaq Ahmed

ID: 12141003

Department of SCM

Program: MBA for BBA graduates, Batch: MBA-01

Army Institute of Business Administration (AIBA)

Date of Submission: November 15, 2021

Port Congestion and its causes:

Port Congestion is a situation wherein a vessel arriving at a port for the purpose of cargo or other operations
is unable to berth and has to wait outside at anchorage for a berth to become available. Port congestion is a
major challenge faced by many ports globally and can occur due to various reasons like-

 port or terminal is booked to more than its capacity

 delays caused by bad weather which results in
vessels lining up outside
 industrial action or strikes
 war
 pandemics like the COVID-19
 lack of port handling equipment
 slow productivity
 lack of yard space
 restricted port access
 location of port
 vessel bunching
 hinterland connections
 trade wars

Container Congestion in perspective of Bangladesh:

The Ports of Bangladesh face severe congestion every year between the months of April and October.
This year, the ongoing Covid-19 situation in Bangladesh has begun to impact the maritime industry,
particularly port yards, causing major cargo congestion. It was seen in the past few weeks that hundreds
of export laden trucks and covered vans carrying cargos from the different parts of the country were
standing in a long queue in front of the inland container depots (ICDs), although the Chittagong Port
Authority (CPA) had claimed that the Chittagong Port was free of container congestion and that exports
and imports were proceeding normally and the country's Ministry of Transportation, on the other hand,
made statement that the transportation of export products from the ports was not a major issue because
there were sufficient ships and empty containers lying at the ports. Amid the situation, the CPA in the last
month had asked the ICDs of the country to shift ICD-bound goods and empty containers from the port
yards. By allowing the storing of all cargoes at the private depots and undertaking other measures, such as
raising the number of berths by the government, priority berthing for Colombo-going vessels, the CPA
has now able to improve the cargo congestion situation at the port yards and such improvement has also
eased the backlog situation at the private depots. But this development is considered to be temporary.

The substantial disruption of shipping schedules of vessels at many transshipment ports, as a result of the
pandemic, is one of the key causes of the current problem. Furthermore, vessels stuck in the Suez Canal
have also caused a backlog at transshipment ports. Import containers heading for Bangladesh are congested
at transshipment ports, i.e. Singapore, Colombo, and Port Klang. On the other hand, the containers that took
goods for export in many foreign ports are taking more time to return as the import in the country has
decreased due to the pandemic. Besides, the containers that are lying idle in the ports of Bangladesh are
mostly from other companies that are not owned by the frontline MLOs, such as Hapag-Lloyd, Hyundai
Merchant Marine, CMA CGM, Mediterranean Shipping Company (MSC) and Maersk Line, who mostly
ship cargos from Bangladesh. Because of this halt in the container bookings, the shipment of cargos to the
mother vessels in transshipment ports has become uncertain. Furthermore, the paucity of feeder vessels is
also noticeable and the freighters are failing to book spaces in the mother vessels due to severe space
scarcity in mother vessels at transshipment ports.
The crisis of container congestion at ports creates an imbalance in shipping activities. The supply chains
disrupt. Shippers and consignees count demurrages for the prolonged stay of trucks and covered vans in
front of the ports or deports and they eventually have to bear the additional expenses for the shipments. The
merchants, shipping lines, forwarders, terminal operators, hauliers have to incur unforeseen additional
costs, whatever the reasons of congestion are. It is extremely difficult to determine the true costs as incurred
by them due to the congestion. Moreover, delayed shipments in numerous consignments are causing
exporters to be concerned about timely delivery and order cancellations.
The delay in shipping and hike in costs are causing Bangladesh to lag behind its competitors. The country's
economy will see a negative impact if this continues. In these circumstances, the government should
undertake effective long-term measures to solve this regular annual problem. Taking the pandemic into
consideration, the port authorities, who have a larger role to play in addressing these challenges, need to
ensure better services to the shippers and take all kind of safety measures so that the port staff, workers,
and other stakeholders such as importers, exporters, shipping agents, clearing and forwarding agents, freight
forwarders, berth operators, ship-handling operators, and customs officials could work together to come
out from the crisis. It is evident that, although the government has not shut down the port activities for a
single day in the midst of the lockdown, the lockdown can no longer be given to save the shipping industry.
The assistance of all stakeholders is needed to increase the handling capacity as per our growing demand
and to hold the supply chain. Shippers must come forward to help us and find a way out with regard to the
issues involving scarcity of containers. A legislative change may be made with regard to the cargo
congestion and, overall, to encourage the shipping competition among the exporters, the importers and the
shipping companies who will play their respective roles without undue influence. In this respect, the United
States' Ocean Shipping Reform Act of 2021 which aims to address the carriers' service failures and unfair
pricing at the container markets may be a reference point for Bangladesh.
We also consider that inadequate infrastructure at the ports is also contributing to cargo congestion. In order
to deal with the problems that the port authorities are currently facing and to save the country's shipping
sector in the long run, the ports of the country should compulsorily be modernized by upgrading the
infrastructures, installing digitization and making investment in new technologies. The construction work
of the 'Bay Terminal', the project of the government which will expectedly enhance the container handling
capacity of Chattogram Port up to 5 million TEUs to the existing yearly capacity (which is around 3.1
million TEUs container), must be finished as quickly as feasible.

China port congestion falls sharply; trans-Pacific shipping rates retreat:

Trans-Pacific spot container rates have plateaued and, in some cases, pulled back, spurring speculation that
container investors’ Bull Run has peaked and relief is on the way for U.S. importers. The case for calling
the top: Chinese container port congestion has dramatically declined over recent weeks, Chinese factories
are being plagued by power outages that constrain export capacity, and U.S. consumer sentiment is
faltering. The counterargument: U.S. port congestion remains historically high, rates were only temporarily
reduced by China’s Golden Week holiday, data on declining rates is ambiguous because different indexes
give different numbers, and there is a huge inventory restocking mountain to climb even after consumer
sales slow.
Congestion down in China, soaring in US: The big change on the congestion front is in China. As of
Sept. 24, there were 153 container ships at anchor off the ports of Shanghai and Ningbo, according to data
from Denmark-based eeSea. On Monday, eeSea data showed 81 container ships at anchor off the two ports,
a decline of 47% in just two-and-a-half weeks.
As noted by Alpha liner, a number of the vessels still at anchor are not waiting to load; container ships
heading into dry-dock anchor off Shanghai and Ningbo. Recent Progress and Actions on Port Congestion
of USA: Retailers have spent the past few months moving a record number of goods into the country with
the help of longshore workers, truck drivers, railroad and warehouse workers. The Ports of Los Angeles
and Long Beach—which handle 40 percent of the country’s containerized imports—have moved 17 percent
more containers between January and mid-October than they did in 2018, which held the previous record.
Simply put, the transportation supply chain is going to move more goods this year than ever before, which
has helped store shelves essentially recover to or even exceed their pre-pandemic states.
Driving Down “Dwell Times”: One of the key challenges to restoring velocity and fluidity to the Ports of
Los Angeles and Long Beach has been the shrinking amount of space on the ports themselves. While the
ports have handled 17 percent more imported containers so far this year compared to the previous record,
the amount of space available to store containers is fixed – it has not expanded 17 percent nor has the
amount of land in the Southern California warehouse system. This has led to containers piling up at the
ports, which slows the entire system.

On perspective of United State:

Retailers have spent the past few months moving a

record number of goods into the country with the help
of longshore workers, truck drivers, railroad and
warehouse workers. The Ports of Los Angeles and
Long Beach—which handle 40 percent of the country’s
containerized imports—have moved 17 percent more
containers between January and mid-October than they
did in 2018, which held the previous record. Simply
put, the transportation supply chain is going to move
more goods this year than ever before, which has helped store shelves essentially recover to or even
exceed their pre-pandemic states. This historic throughput has led to challenges for importers and exporters
including retailers as they work through their busiest season ever and farmers trying to get products to
foreign markets. Which is why we’ve being on the case. Last month, the Ports of Los Angeles and Long
Beach and International Longshore and Warehouse Union (ILWU) workers joined together to commit to
shift towards 24/7 operations, aimed at boosting both throughput and efficiency at our nation’s ports. Some
of the countries’ largest companies joined in as well, committing to move more containers during off-peak
hours. Both major railroads responsible for moving goods out of the ports, BNSF and Union Pacific,
announced discounts to customers on each container moved by rail during the weekend and Union Pacific
also decided to operate its station near the ports 24/7. Port Envoy Porcari has also been leading thrice weekly
meetings with terminal operators, shipping lines, and other key stakeholders to identify operational
problems and immediate solutions at the two ports.