2. LANDSIDE
DISRUPTION
Shortage of Truck Drivers
Shortage of Warehouse Capacity
Warehouses are full
Expanding landside turnaround of containers
by 25-30 days longer
3. PORT CONGESTION AT MAJOR PORTS GLOBALLY
Container yard is full with laden
import/export containers
Disruption in port labour supply
Affecting productivity of ship
side operations
Longer port stay
to work vessels
Berthing delays and snowball
effect on vessel scheduling and
bunching of vessels (E.g.
UK/Port Klang/Singapore)
Expanded ocean voyage
turnaround, thus reducing
available shipping capacity and
expanding container
turnaround on the ocean leg
4. PENT UP DEMAND
A huge spike in:
• Consumer Spending – Furniture &
Household Appliances
• Work From Home Goods
And Exercise Equipment
• Medical Supplies – PPE, Gloves
• E-commerce
Shift in air cargo to ocean shipping due to
huge spike in air freight charges as 90% of
passenger aircraft is grounded.
5. RESULTING EFFECT
Perfect storm resulting in a critical shortage of container equipment and vessel
shipping capacity, driving ocean freight rates to unprecedented levels driven by pent
up market demand amidst a disruption in capacity due to COVID-19 pandemic.
6. WHAT ARE SHIPPING
LINES DOINGTO COPE
WITHTHE SITUATION?
•Port terminals doing likewise in order to push for faster pick up of import
containers
•MNSC pushing government to intervene for longer free time and discounts
in DMDT charges
Cutting Free Time And Increasing Demurrage/Detention (DMDT)
Charges In Order To Push For Early Return Of Container Equipment
•Leasing rates have increased by more than double and leasing companies
are demanding longer lock-in periods of 8-12 years at very high leasing
rates
•New build container prices have also doubled with factories only able to
open for new order quotation in 2nd half of 2021
Shipping Lines Have Already Mopped Up All Available Inventory
From Leasing Companies – Both Old And New Boxes
•The global idle fleet which was at 12% in 2Q 2020 is now only 1%
•Charter rates have also more than doubled with certain size of ships even
having a two-fold increase in hire rates
Shipping Lines Have Also Chartered In All Available Tonnage In
Order To Cover For The Shortfall In Capacity Brought About By The
Disruption
Shipping lines will be burdened with these additional container fleet and costs
as well as vessel capacity when the world reverts back to normal
7. WHAT IMPORTERS &
EXPORTERS CAN DOTO HELP
EASETHE SITUATION?
•Faster clearance and return of import
containers to carrier
Review And Improve
Work Process To
Improve Landside
Container Turnaround
•Container stuffing only require 1-2 hours
•Hauliers can deliver timely
•Early pick up is unique to Malaysia exporters
only
•A lot of wastage and inefficiency with the
current system
Avoid Early Pick Ups
Empty Pick Up Of Boxes
Only When Goods Are
Ready for Stuffing
•Cargo is already protected by many layers of
packaging material
•The standard should be clean and cargo-
worthy only
Do Away With
Requests For Food
Grade Or Grade A
Containers
8. WHENWILLTHEWORLD REVERTTO NORMAL?
CONTAINER EQUIPMENT VESSEL SHORTAGE OCEAN FREIGHT RATES
▪ Forecasted to stabilise by the 2nd half
of 2021 as factory produced units
balance the supply with demand
▪ More difficult to predict as it
largely depends on port terminals
returning to normal
▪ New buildings take 3 years to
complete
▪ Will stabilise and reduce gradually but
unlikely to return to pre-pandemic
levels
▪ Carriers’ costs have increased
▪ Most Mainline Operators (MLOs)
have a reset of their business
model
▪ Ridiculously cheap ocean freight
rates may be history
