Introduction

Average Waiting time
for vessels world over

4 to 5 days in Europe

5 to 7 days in Asia

7 to 9 days in some UK ports

28 to 45 days in the US‑West Coast

Sources: TradeWinds, S&P Globals

Imagine if airplanes were asked to hover and wait in the air for days because airports were too congested. Unthinkable, right?

Now imagine a ship, that carries 18,000 20-foot containers and has an engine-power of eleven Boeing 747-400 jumbo jets, is asked to wait for close to a week before being given a berth.

It’s not just the Suez Canal blockage earlier this year or the latest news on some 100-something cargo ships circling outside the US West Coast. Enormous vessels carrying goods worth millions have been getting stuck for days in floating traffic jams outside almost all major harbours ever since the pandemic began last year. From Singapore, Europe to South California — all seaports are congested worldwide.

Vessels in Asia have a waiting time of 5 to 7 days, while congestion and delays on the US West Coast have almost tripled year-on-year in 2021.

And shipping containers, the modest workhorse that once galvanised globalisation, is at the centre of this storm.

Here’s what happened

When the lockdowns began last year, you and I started filling our homes with office furniture and turned our living rooms into make-shift gyms. This set off a surge in orders from factories across the world.

To paint the macro picture, global online sales jumped 24% (the highest jump in history), while the retail sector saw a whopping 48% increase. Incidentally, 90% of this trade is carried by sea, transported in massive metal boxes stacked on top of one another by gigantic ships across oceans.

On top of that, the covid restrictions limited dockworkers and other supply chain personnel, adding to the congestion across all nodes in the global logistic chain (including inland waterways, road transport, depots and warehouses).

A double whammy!

For every container that cannot be unloaded at one port, there’s a container that cannot be loaded somewhere else.

Anchorage time in ports around the world has shot up drastically, with over 30 to 40 ships waiting at a time. Larger vessels are affected the most. Ships trading 6,000 boxes or more on a port call are seeing an average 20 % increase in getting berth time. That is, more than 83 hours (3.5 days) in waiting. Delays for even smaller ships are up between 7.8 % and 9.5 %, depending on the call size.

This has caused a classic demand-supply disbalance and made freight rates skyrocket, which ultimately will trickle down and be borne by the end-user of these goods—you and me.

Delays have led freight rates to skyrocket, and its effects are now trickling down to food prices, with the FAO Food Price Index rising for nine straight months. Container costs change (100 basis points since January 2020) per 40ft container.

Source: FAQ and Drewry WCI

Containers bound to the US and Europe from Asia are 400% more expensive.

Shipping lines’ schedule reliability has dropped to 10-year historic lows.

Source: HellenicShippingNews; S&P Globals

Containers bound to the US and Europe from Asia are 400% more expensive than they used to be a few months ago. At the same time, shipping lines’ schedule reliability has dropped to 10-year historic lows, causing even further delays at almost every seaport worldwide.

To say that the pandemic has completely thrown off the choreography of global container movements will be the least. However, the big question is, how does such disruption happen in this day and age of hyper-connectivity and operational efficacy?

Shipping lines’ schedule reliability has dropped to 10‑year historic lows

Because ships and shore don’t talk

About 2 million port calls are made each year are non-linear, coordinated manually.

That is not only a mammoth task, but these delays make up around 15% of the entire shipping’s fuel consumption.

Source: MarineTraffic

It’s 2021. You’d think the industrialisation 4.0 that everyone’s going gaga about would solve logistics and capacity management issues. After all, aviation has arrivals and departures nailed down to the nanoseconds. Why can’t maritime follow suit?

That’s because there are still a few unconnected dots on shipping’s digitalisation route map.

Pandemic or no pandemic, multiple studies show that container ships spend around 6% of their time at anchor, waiting for berthing. For a 15-to-30-day trans-pacific voyage, this translates to a minimum of 1 to 2 days at anchorage, which has currently increased to 3.5 days.

To give you a sense of what these delays mean for the economy: Ports on the US West Coast alone account for $1 BN (€834.79 MN) worth of cargo per day. The National Bureau of Economic Research estimates that delays cost ships 0.6% to 2% of the goods’ value every day. So, every 24 hours delay causes a loss of around $20 MN (€16.7 MN). This means the present 3.5-day delays roughly equal $70 MN down the drain. And that’s just the US West Coast.

Plus, it’s not just the seaports. A ship at the wrong port at the wrong time has a knock-off effect on the connecting hinterland logistics, too – trucks, trains, Ro-Ro services and other inland transportation – everyone has to bear the cost. So, the losses keep accumulating along the chain.

More time at anchorage also mean more fuel consumption, adding to the local emission and environmental impact. As MarineTraffic estimates, bad planning, early arrivals and the subsequent time spent waiting in ports mean that the industry is unnecessarily burning bunker totalling $18 billion annually. This results in the emission of 160 million tons of CO₂ – that’s the same amount of CO₂ the whole Netherlands produces in a year.

All this because the current systems deployed at most ports and vessels aren’t always compatible, leading to a lag in information relay or complete communication gap.

Wärtsilä Voyage identified and addressed this break in the ecosystem early on—Wärtsilä Navi-Port, a simple middleware hook-up, creates a real-time direct information-exchange line between the ship’s navigation systems and the port.

Once the ship and the shore are in sync, you get Just-In-Time (JIT) arrivals.

Next

02 - Bridging the communication gap