Thursday, March 25, 2021

Ummmm, About That Just-in-Time Inventory: "Blocked Suez Forces Ships to Look at Long Trip Around Africa"

We'll find out if the German automakers are okay with the Belt-and-Road railroad tracks that end in Poland. It's twelve days by rail to Gdansk with current throughput, though that can probably be sped up with the right financial lubrication. That should be faster than the route around the Cape.

From gCaptain:

A massive container ship blocking the Suez Canal showed no signs of budging for a third day, forcing container carriers and other vessels to weigh costly and time-consuming voyages around Africa that threaten to destabilize the already fragile underpinnings of global trade.

Two liquefied natural gas tankers loaded in the U.S. and bound for Asian markets appear to have changed course in the mid-Atlantic and are now heading around Africa to avoid gridlock in the Suez waterway. A.P. Moller-Maersk A/S and Hapag-Lloyd AG are considering sending ships along the same route, moves that would follow a Synergy Marine-managed ship that is being sent around the Cape of Good Hope. Torm A/S, a Danish owner of tankers, said its customers have asked about the cost of options to divert.

The possibility of alternate routes is the starkest example yet of how the canal blockage is starting to ripple across maritime transportation for everything from finished goods to energy and commodities. Even before the 400-meter long Ever Given got blocked on Tuesday, the pandemic sowed havoc in supply chains with shortages and delays.

“Regarding the possible alternatives, we are looking at all of them, including the Cape of Good Hope but also many others, for example air solutions for critical and time-sensitive cargo,” Maersk said in a statement. “No concrete decision has been taken yet. It will depend on how long the Suez Canal remains impassable.”

The logjam threatens to unleash more shipping turmoil that could mean higher costs for container carriers, the importers they cater to and maybe consumers eventually. A particular worry for the broader economic impact of the Suez incident are the supply lifelines for European companies ranging from car manufacturers to retailers that rely on a steady flow of Asian imports.

“Even if the situation is resolved within the next 48 hours, port congestion and further delays to an already constrained supply chain is inevitable,” said Daniel Harlid, a Moody’s analyst. That’s bad because European manufacturers including automakers don’t stockpile parts, he said, adding that freight rates “will also most likely increase or at least stop decreasing from their currently very high levels,” he said.

The German container line Hapag-Lloyd said it’s monitoring the situation “and closely follows the implications on its services. We are presently looking into possible vessel diversions around Cape of Good Hope.”

For the container lines that haul about 80% of global merchandise trade, a prolonged bottleneck between Europe and Asia risks throwing off ship schedules set months in advance so importers can plan their purchases, manage inventories and keep store shelves stocked or production lines running....


I think the FT's southern Africa correspondent was kidding a couple days ago: 

South Africa's Plan To Re-Route Ship Traffic Around The Cape

If the container ships do take the long-way-round it is going to tie up an already tight market in containers as thousands will be at sea rather than in port loading and unloading.

Also via gCaptain:

Suez Canal Closure Deepens Global Container Crunch