Expert insights: choosing the right corridor for your cargo

Baltimore’s Big Impact 24 Day Delay And More

What’s inside?

    By Niels Helles Borgen, independent advisor and experienced port & supply chain professional

    Windward’s recent edition of Port Insights contains some powerful data and trends that can help you optimize your planning and strategic decision-making. You’ll get even more out of it if you better understand:

    • Reasons for ocean freight container delays 
    • Factors to consider when choosing the right corridor for cargo flows
    • Plus an important transshipment consideration 

    Step 1: Understanding delay factors that impact transit times

    As a stakeholder involved in the international trade and movement of goods between countries and continents, it is relevant to understand the array of factors that impact the predictability of the transit time of a container from A to B.

    Some stakeholders think of weather as a key factor in delays, but weather, except in extreme conditions, is becoming less of a main challenge in global supply chains. Single operational components have become more weather-resilient.

    Here are three common factors for supply chain disruption:

    Volumes and trade patterns

    The COVID-19 pandemic drastically changed global trade patterns – company sourcing strategies have evolved from one supplier to multiple suppliers, and a mix of sourcing origins for the same products is being sought to reduce dependence and risks.

    This has truly challenged the global supply chain and port capacities have suddenly become needed in new locations. Such development takes time and new infrastructure investments in landside logistics and ports have become critical.

    Landside congestion

    As flows have shifted, we have experienced severe congestion in certain ports that are otherwise considered efficient. Lacking landside infrastructure, such as warehousing and trucking, or rail capacities, can cause bottlenecks of cargo overflows at ocean terminals.

    Port disruptions

    We have seen large ports shut down for long periods – not for strikes, or weather – but for the protection of national security related to the pandemic.

    For example, in June 2021, the port of Yantian shut down its operations, due to the COVID policy in China, for nearly the entire month. This created a huge backlog that had ripple effects that took five months to normalize. The Port Insights graph from Windward, below, shows the monthly transit times each month in comparison to the average of the past 24 months. This graph clearly illustrates the severity of the congestion in June 2021, as average transit times were 218% higher than the average of the past two years.

    Yantian watermark

    Shipping lines have been shifting capacities to suit the new trade patterns and these shifts have also added to the schedule irregularities. 

    The result of fluctuating port disruptions is that the transit time metrics for a given period standalone are difficult to convert into operational decisions… but over time, I believe this will change, particularly as ocean freight visibility becomes more widely adopted.

    Step 2: Factors for Choosing the Right Cargo Corridor

    In choosing the trade lane and corridor through which to route your cargo, many elements should be considered. Here are four key considerations:

    • The proximity of origin to useful gateway ports
    • Availability of cost-efficient landside transport capacities
    • Availability of cost-efficient ocean transport capacity
    • Import gateway most likely to deliver a stable predictable flow and landside transit to the destination

    The key data points to observe in choosing a trade lane and corridor for your cargo in my experience are capacity and the reliability over time of relevant gateways for your organization. Cargo owners should not feel the need to take drastic measures, such as redesigning their supply chain every time a port is congested for a short period of time. 

    This type of approach is simply not viable financially. However, keeping a close eye on chains of events that have the potential of becoming long-term trends, can be very beneficial and will unlock proactive behaviors. 

    Let’s go a little deeper…

    Important transshipment considerations 

    While all cargo owners have opinions about the gateway ports and terminals they wish to use, most cargo owners have no (or little) opinion about the transshipment ports through which the shipping lines route their cargo. 

    Major transshipment hubs – such as Singapore, Gioia Tauro, and Algeciras – are completely focused on efficient vessel handling and connecting cargo between vessels. This implies that vessels are brought alongside to quickly connect the most cargo possible to the next vessel. As such, except in cases of local unrest or strikes, congestion usually occurs elsewhere. For these types of ports, I would argue that transit time deviations have little to no relation to landside congestion. 

    But congestion at these ports could increase the chances of a missed transshipment in cases where the mother vessel is forced to wait additional time outside of the port, or of a delayed transshipment, in cases where the feeder vessel cannot berth.

    Equally important for transshipment hubs is the vessel turnaround times. Cargo owners that know this information can make strategic decisions on which ports to use (and which not to use) to facilitate faster transportation of their transshipped cargo. 

    The graph below, from Windward’s January edition of Port Insights, shows the turnaround times for each of the top eight ports in Europe, including the average times for two vessel types – feeders and ultra-large cargo vessels (ULCV), often the two types of vessels involved in a transshipment. It also shows the change from the previous month. Clearly, not all ports provide the same level of efficiency overall, or for specific vessel types.

    Turnaround times watermark

    For gateways, however, the core objective of the port and terminal is to connect cargo between the vessel and landside. For these ports, a significant deviation in transit time is a good indication of whether the infrastructure on the landside behind the quay wall is experiencing congestion.

    Agility enabled by port insights

    In today’s supply chain reality for long-distance ocean transits, the routing decision is often made when goods are ordered at factories at origin – many times 30 or more days before shipment from origin – and in some cases up to 90 days before arrival at destination. 

    With better visibility into ocean freight and enhanced insights on port performance, cargo owners will become more agnostic to the gateway selection, as for many inland locations, multiple gateways can be chosen. As new, more sustainable inland transport options become available,  such availability is likely to become more important than 24 hours of transit time.

    And as transshipment hubs become more reliable, it is likely that cargo owners will become interested in transshipments, as this will provide flexibility to make late in-transit changes to gateway choices, effectively pushing destination gateway decision time much closer to arrival.

    There is so much data around ocean freight shipment, but hopefully the factors listed in this blog post, and potentially an ocean freight visibility solution, will help you uncomplicate the overall process. 

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