Financial Times: Ports not prepared for container shipping
Before you load your cargo on a container ship run a detailed risk and cost analysis. Although container shipping may, at first blush, seem attractive to trading companies and shipowners alike, due to its own powerful magic of economies of scale, legal and financial risks involved may turn a promising maritime venture into a nightmare.
According to IHS Markit's Port Performance Data, in North America alone, the average time container ships spent waiting for berth increased to 33 hours in May 2021, compared with just 8 hours in 2019.
The Financial Times reports that lack of investment in ports, high demands fuelled by the pandemic, plus infrastructure restrictions have contributed to the biggest crisis the ports have faced since the start of container shipping. The pandemic has highlighted the need for greater co-ordination, information exchange, digitalisation throughout the supply chain and for new infrastructure. This, however, takes time. The slow-paced adaptation of ports to the requirements of new, larger ships necessarily results in the former being unable to respond quickly to changes in demand. In some places (e.g. reportedly, Hamburg) ports have obtained investment from shipowners in return for priority treatment of their vessels. Many ports, however, have not quite embraced the new trend and have failed to prepare their facilities for container ships, which are likely to continue to be exposed to chronic congestion (e.g. Bangladesh, the Philippines).
The container shipping crisis raises a number of significant legal risks such as time lost/demurrage and safety of ports. Since many ports require changes to their infrastructure, including deeper channels and bigger cranes, prior to opting for a container ship, consideration needs to be given to the physical safety of loading and discharging ports, specifically as to whether such ship will be able to reach, use and return from nominated ports and even so, how long it is all going to take.
