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Ports in California will receive approximately $250 million as part of the state’s allocation of funding from the American Rescue Plan, according to the California Association of Port Authorities (CAPA).

In a statement, CAPA said funding, announced by California Governor Gavin Newsom, will help the state’s ports recover from the dramatic losses in revenue during the worst moments of the COVID-19 pandemic.

Newsome said the money will be invested in California’s ports “that have lost tremendous amounts of revenue and need to be more competitive in terms of their positioning to the world around us”.

California Association of Port Authorities Vice President & Executive Director for the Port of Oakland Danny Wan pointed out the important role ports had played in the pandemic.

“Over the course of the past year, California ports have stepped up to meet the challenges caused by this historic public health and economic crisis because we understand that our continued operation is critical to the health and welfare of communities across our state.

“These funds will play a critical role to ensuring California’s ports can help our state rebound and put Californians back to work.”

Due to the pandemic, some of California’s ports have faced over 50% declines in revenue compared to last year, according to CAPA.

Despite major losses due to the pandemic, California seaports had not received state or federal relief up to this point, it claimed.

Lieutenant Governor Eleni Kounalakis, California’s Representative for International Affairs and Trade, said the state is home to “the most sophisticated network of ports” in the US. “

“They [the ports] are the lifeblood of our economy and will be an integral part of our state’s recovery from the impacts of COVID-19.”

Ports on the US West Coast have suffered severe congestion since the beginning of the pandemic, caused by the resumption of Chinese exports and a boom in consumer demand.

Consequently, the ports of Los Angeles, Long Beach and Oakland have routinely broken traffic volume records.

During a press briefing with the Port of Los Angeles on 13 May 2021, Danial Maffei, Chairman of the Federal Maritime Commission (FMC) called upon the US Government to spend more on digital infrastructure and improve the country’s supply chain capabilities.

The Saudi Ports Authority, Mawani, announced an initiative to support international shipping lines stranded at the south end of the Suez Canal on the Red Sea coast, extending the services of Jeddah Islamic Port for ship transfers and container offloading.

Contributing to the support of the global logistics sector and maritime trade, measures include an extended period of exemption from storage fees for transhipment containers – from 30 days to 60 days – for a duration of three months.

The initiative underscores Saudi Arabia’s commitment to mitigating the impact on global supply chains, in addition to affirming Saudi ports’ readiness to adapt to shifts in the international transport market and the associated challenges.

The support also reasserts the advanced capabilities of Jeddah Islamic Port and its capacity to accommodate the estimated number of containers on these vessels without affecting the port’s operations.

Located on the commercial maritime artery that connects the Far East, Europe and the Horn of Africa, Jeddah Islamic Port ranks first among the Red Sea ports, with a capacity of 130 million tonnes across 62 berths equipped with the latest technologies and to international specifications.

The giant containership Ever Given, which hit the headlines after getting stuck in the Suez Canal last month, has been seized by the canal authority.

Namely, the Suez Canal Authority (SCA) is seeking $ 916 million in damages for the costs incurred by the ship’s blockage of the waterway.

The ship will be held until the claim is paid, with its crew of 25 members unable to leave the vessel.

Taiwanese shipping company Evergreen, the charterer of the vessel, said that any payments that are being demanded will be addressed by Shoei Kisen, the owners, and the liability insurance provider UK P&I Club in London.

The P&I club has insured the company for third-party liabilities that might arise from an incident such as this – including damage caused to infrastructure or claims for obstruction. The vessel itself and its cargo will have been insured separately.

“Despite the magnitude of the claim which was largely unsupported, the owners and their insurers have been negotiating in good faith with the SCA. On 12 April, a carefully considered and generous offer was made to the SCA to settle their claim,” the UK Club said on Tuesday.

During the meeting between the shipowners and SCA no consensus was reached. The following day (13th April), SCA immediately filed an application to arrest the vessel and this has been granted by the court.

“We are disappointed by the SCA’s subsequent decision to arrest the vessel today. We are also disappointed at comments by the SCA that the ship will be held in Egypt until compensation is paid, and that her crew will be unable to leave the vessel during this time.”

The UK Club added that SCA did not provide a detailed justification for this ‘extraordinarily large claim.’

As informed, the claim includes a $300 million for a ‘salvage bonus’ and a $300 million claim for ‘loss of reputation’.

This doesn’t include the professional salvor’s claim for their salvage services which owners and their hull underwriters expect to receive separately.

The P&I aspects of the claim are relatively modest, with the exception of the claim for loss of reputation, which is disputed, the club explained.

Reacting to the ship’s arrest, Evergreen said that it was informed by the Japanese shipowners that Ever Given had been officially arrested by the Court in Egypt on April 13, 2021.

“In order to lift the arrest order as soon as possible, Evergreen is urging all concerned parties to facilitate a settlement agreement to be reached. Meanwhile, Evergreen is investigating the scope of such a court order and studying the possibility of the vessel and the cargo on board beingtreated separately,” the company said.

“Evergreen assures to do its utmost to complete the mission entrusted by its customers with all due dispatch and to keep all adverse impacts to minimal level.”

To remind, the 20,000 TEU containership, flagged in Panama, ran aground on March 23 blocking the waterway for hundreds of ships for six days.

The ship was finally refloated and towed to the Great Bitter Lakes region for its technical examination on March 29. Ever Given remains at anchor in the Great Bitter Lakes.

The grounding resulted in no pollution and no reported injuries.

The Suez Canal resumed commercial operations shortly after and was able to clear the backlog in the following few days.

Meanwhile, as the ship undergoes technical survey, local investigators boarded the boxship to talk with the crew on the potential causes of the grounding.

Previous reports indicate that gusting winds and poor visibility caused by a dust storm were the likely causes of the grounding. The owner refuted claims assigning grounding to a blackout due to a loss of power.

Furthermore, the flag state, Panama, has also launched an inquiry into the incident.

The UK Club said that owners have cooperated fully with the SCA throughout their investigation into the cause of the grounding, which is now complete.

As disclosed, the vessel’s Voyage Data Recorder (VDR) data and all other requested information have been provided to the investigators.

“When the grounding occurred, the vessel was fully operational with no defects in her machinery and/or equipment and she was fully manned by a competent and professional master and crew. Navigation was being conducted under the supervision of two SCA pilots, in accordance with the Suez Canal Rules of Navigation,” the insurer insists.

Furthermore, ABS, the vessel’s classification society, completed their surveys on 4 April 2021 and issued a certificate of fitness to allow the vessel to move from Great Bitter Lake to Port Said.

Ever Given is expected to undergo re-inspection in the port before completing her voyage to Rotterdam.

“The UK Club is working with all parties involved. Our priority is the fair and swift resolution of this claim to ensure the release of the vessel and cargo and, more importantly, her crew of 25 who remain on board,” the P&I club pointed out.

The owners plan to continue to negotiate with the SCA.

A lack of infrastructure and continued opposition on environmental grounds mean the Arctic is unlikely to see commercial shipping in the near future, according to carriers and operators, despite the congestion caused by the grounding of the Ever Given in the Suez Canal.

Global trade was thrown into chaos after the mega-ship blocked the waterway on 24 March 2021 and forced more than 300 vessels to sit at anchor, while many others diverted around the Cape of Good Hope.

However, the world’s major carriers have said they will not use the Arctic region to transport goods and regional stakeholders are not preparing for a rush of containerised traffic.

Speaking to PTI, Russian port and terminal operator Global Ports said it believes the region can one day be used for commercial shipping but would need substantial research.

“We are closely monitoring the growing interest to the Northern Sea Route (NSR). The route has a long-term potential for further development and evaluation of its commercial success requires an in-depth analysis.

“In the case of a successful launch of regular transit cargo traffic along the NSR, we may see the revision of some of the logistics chains.

“But at an early stage likely there will be no dramatic impact, as the volumes declared for the NSR cannot be compared with the current figures for Suez.

However, the company also said a successful commercial launch will not happen any time soon because of the infrastructure development that will need to be done first.

“The launch of regular transit cargo traffic along the NSR is a complex project which requires infrastructure development of various types,” the company explained.

The necessary infrastructure includes “seaports and terminals, transport and logistics hubs, information, telecommunication, year-round navigation and rescue systems, energy complex and others as well as ice-breakers` fleet”.

What are the benefits of the NSR?

The NSR can cut the time of Asia-Europe transportation by as much as 40% and offers the chance to bypass traditional waterways, such as the Suez and Panama canals.

The suspension of the Suez Canal, through which 12% of global trade passes, increased supply chain uncertainty at a time when logistics processes were already strained due to the COVID-19 pandemic.

Currently, a voyage between South Korea and Europe via the Suez Canal will take approximately 34 days and travelling around the Cape of Good Hope 46 days. The same journey via the NSR could take as little as 23 days.

Consequently, the NSR has seen an increase in shipping volume in recent years as the melting ice has opened new potential waterways. Between 2013 and 2019, traffic grew by 25%, according to the Arctic Shipping Status Report.

A huge majority of the NSR is in Russia’s sovereign territory and the government has looked to attract shippers with numerous infrastructure plans and initiatives.

However, the commercial benefits and Suez-induced chaos have so far not convinced the world’s major carriers to use the NSR to ship goods.

Not a viable alternative

Speaking to PTI, A.P. Moller-Maersk (Maersk) said the world is “increasingly seeing the severe consequences of CO2 levels in the atmosphere” and pointed to ice melting in the Arctic as an example.

Maersk is so far the only major carrier to have used the NSR for commercial shipping; in 2018 it conducted a trial voyage “to gain operational experience in a new area and to test vessel systems on ice class container vessels”.

It confirmed to PTI that after the trial it found that the NSR is “not a commercially viable alternative” to its current routes and that it has no current plans to pursue it, despite the obstruction of the Suez Canal.

“The blockage of the Suez Canal would have ripple effects on global supply chains. The focus of our work is finding alternatives that help customers get their goods as soon as possible and rebuild a stable network to support them.”

In a press briefing on 8 April 2021, Hapag-Lloyd CEO Rolf Habben Jansen unequivocally said the carrier had no intention of changing its policy of not using the NSR and reaffirmed its commitment to cutting emissions.

Additionally, Mediterranean Shipping Company (MSC) released a statement confirming its policy to not use the NSR, citing navigation challenges and the risk of oil spillages.

MSC CEO Soren Toft described it as “obvious decision”, saying that the carrier “will not seek to cut through the melting ice of the Arctic to find a new route for commercial shipping” and urged the whole of the maritime industry to do likewise.

“The Northern Sea Route is neither a quick fix for the current market challenges, nor a viable ling term strategy,” Toft said.

Bud Darr, Executive Vice President, Maritime Policy and Government Affairs, MSC, compared the idea of using the NSR to the “ignorant ambition of an 18^th century explorer” which would pose a risk to human life and the environment.

Numerous major manufacturers are also committed to not having their goods shipped via the Arctic. In 2020 Ralph Lauren, Puma and Nike were among those who signed a commitment with the Ocean Conservancy to not use the NSR.

The grounding of the 20,000 TEU container vessel the Ever Green in the Suez Canal has emphasised how important container shipping is to global trade.

At the time of writing, more than 200 vessels are waiting to pass through the waterway as the Suez Canal Authority works to move the Ever Given. This has raised fears of congestion at the ports of destination in Europe and beyond at a time when the global supply chain is already strained.

But why is the Suez Canal so important and what does it play in the movement of goods globally?

Volume

Between 10-12% of global trade passes through the Suez Canal, with an estimated 19,000 ships moving through every year. When measured daily, an average of 51.5 move through, according to the SCA, at an approximate value of $3 billion.

Experts have suggested that the current delay is costing $400 million an hour and as a result a growing number of shippers are turning away from the waterway altogether, choosing instead to travel around the Cape of Good Hope or blank (cancel) sailings.

Geography

The Suez Canal is a 120-mile-long manmade passage located in Egypt and is one of global shipping’s most vital transoceanic maritime corridors and is a passageway between Europe, Asia and Africa. It connects the Mediterranean to the Indian Ocean via the Port of Said and also major consumer markets with the biggest manufacturing hubs in the world.

It is not only a trade corridor between Asia and Europe but it is also a possible path to growth for aspiring trade hubs in the Sub-Continent and East Africa.

Djibouti on the Red Sea has received substantial foreign infrastructure investment and opened the largest free trade zone in Africa in 2018 as a direct result of its proximity to the Suez Canal. The Port of Djibouti houses China’s sole foreign naval base, such is the region’s maritime importance.

Size and mega-ship capacity

In 2015 the Egyptian government opened a major expansion of the Suez Canal and by building a 22- mile channel parallel to the main waterway, at a cost of approximately $8.2 billion.

The expansion allowed for two-way traffic along most of the route and for larger vessels to transit. This made the waterway more vital as it is one of the few passageways in the world large enough to accommodate the world’s largest container ships and is one of the reasons why the Suez Canal is so important.

The latest fleets of which can now carry in excess of 23,000 TEU; the Ever Given was one of those vessels and the grounding this week has raised suggestions that the Suez Canal might have to be expanded or deepened again. However, Kris Kosmala, Strategic Advisor, Bunker Metric, told PTI that any widening will make the canal shallower and more dangerous, with any real expansion likely to incur major maintenance costs.

Tight schedules and an ever-increasing demand for containerised trade could be a contributing factor behind the grounding of an Ultra Large Container Ship in the Suez Canal, as more vessels begin to avoid the waterway all together.

Speaking to PTI, Kris Kosmala, Strategic Advisor, Bunker Metric, suggested vessels having to keep to precise port calls was a possible cause for the grounding of the Ever Given and other recent maritime accidents.

Kosmala said the industry as a whole should “look at the issue of right schedules and on-time demands” which might be forcing captains to sail too fast or through poor weather, citing recent incidents where vessels have lost containers.

In an online update, Lars Jensen, CEO, Sea Intelligence, said a growing number of container ships are avoiding the Suez Canal altogether and choosing to sail around the Cape of Good Hope.

Under normal circumstances this would add approximately ten days to a container ship’s journey but at the time of writing more than 200 vessels are waiting for the passage to be cleared.

Evergreen Line confirmed that as of 25 March 2021 the Suez Canal was still blocked and that 48 hours of “proactive efforts” had failed to clear and relaunch the Ever Given.

However, the carrier insisted no marine pollution has materialised and there had been no black out or loss of power prior to its grounding.

“Evergreen Line will continue to coordinate with the shipowner and Suez Canal Authority to deal with the situation with the utmost urgency, ensuring the resumption of the voyage as soon as possible and to mitigate the effects of the incident,” the company said.

Carriers turn to the Cape of Good Hope

Hapag-Lloyd told PTI that it expects the effect on its operations to be “modest” because it believes the Suez Canal will be open soon. This is despite there being no apparent progress in clearing the waterway, as of 25 March 2021.

A.P. Moller-Maersk (Maersk) said nine of its vessels have been delayed, along with two of its partner vessels. The carrier said, “Efforts are being made to move all north bound vessels out of the canal to facilitate a clear passage and continuous convoys when the Evergreen vessel has successfully been released.

“The Suez Canal Authority will also send 13 smaller vessels to Great Bitter Lake (Ismailia) to minimise number of vessels waiting at Port Said/Suez for anchorage.”

Earlier speculation observed this could cause a new port congestion crisis in Europe and some experts have questioned to what extent ports will be able to cope with the possible surge in demand similar to that seen on the US West Coast.

Approximately 10% of global trade and 19,000 ships pass through the Suez Canal every year. In the past decade more than 200 container ships have grounded while passing through.

David Smith, Head of Hull and Marine Liabilities at McGill and Partners, said the situation was of “global significance” and could have ripple effects across the maritime supply chain.

“The ships stuck in the queue behind the grounded ‘Ever Given’ could arrive at their destination well behind schedule, with no obvious ‘ETA’ in sight,” Smith said.

“The disruption will come with a hefty price tag, a figure of $100 million has been mentioned by some in the industry.

“However, the final bill – which will be made up of compensation for delays, loss of revenue for the Canal Authority, potential damage to cargo and the cost of refloating the ship, is likely to be even more expensive.

“For some time now the salvage industry has been warning that container ships are simply getting too big for situations like this to be resolved efficiently and economically. This incident may force shipbuilders, owners and cargo operators to sit up and listen.”

According to port research initiative Port Economics, 5.437m teu were handled by Piraeus port during 2020, while 5.415m teu were transported through Spain’s Valencia.

When it comes to Europe, the top three places were held by the traditional leaders, Rotterdam with 14.349m teu, Antwerp with 12.023m boxes and Hamburg with 8.52m teu. The top 15 ports in Europe handled 76.8m teu in 2020, down 2.8% when compared to 2019.

Though the coronavirus appeared in China in December 2019, its impact on European ports began to become visible in March 2020. As Port Economics points out, almost all of the top 15 ports recorded strong recovery in the second half of 2020, hence reducing total losses for 2020.

This was particularly so in the case for Le Havre which was down 29% for the first half of 2020, but 14% for the full year, Barcelona, Valencia, Hamburg and Genoa as the vast majority of Europe’s top 15 ports closed with losses last year.

The two ports that record vertical growth in the European port system, Piraeus and Gdansk in Poland, recorded losses. After many years of continuous growth, they lost 3.8% and 7% respectively. Large differences can be observed with some ports, such as Valencia, Algeciras and Bremerhaven recording a very modest decline, while others recorded double-digit percentage declines like, Le Havre, Barcelona, Marsaxlokk and Genoa.

Le Havre was initially heavily influenced by the French national strike in December 2019 and January 2020. The sharp drop in Barcelona in the first half of 2020 is largely due to the “collapse” of transit. Antwerp is one of the two ports in Europe that managed to show positive growth (up 1.4%), while Italy’s Gioia Tauro recorded a double-digit percentage increase, handling 27% more containers than in 2019.

 

The Port of Los Angeles has completed a $1 million upgrade to its fruit handling terminal as part of efforts to expand its position as a gateway hub for goods from Chile.

In a statement, the Port it has installed a new fabric membrane roof to the terminal, among other upgrades, to increase its capacity.

As the main stop for Chilean fruit to the West Coast of the US, the SSA Marine terminal serves as an important processing hub for imported grapes, stone fruit, kiwi and avocados from Chile. Between 70,000-90,000 metric tons of perishables go through the facility every winter season.

“Being equipped to handle shipments efficiently for our customers is an important priority at our Port,” said Marcel van Dijk, a Port of Los Angeles cargo marketing manager who oversees cold storage shipments.

“U.S. consumers expect fresh produce on grocery shelves year-round and we are committed to having the best possible infrastructure and facilities in place to assure that perishables get to market quickly and expediently.”

Between December and early April, the building is the main staging area for the pallets of Chilean produce off-loaded by specialized refrigerated vessels at the terminal.

The Port’s vast network of refrigerated trucking services and cold storage facilities then safeguard the perishable commodities in transit to grocers, produce markets and distribution centers—to as far north as the Canadian Border and Texas to the east.

The building upgrades involved the demolition of the existing building cover, fabrication and installation of a new fabric membrane roof, replacement of select drywall, and the addition of new exterior lights, door frames and fire doors.

Rubb Building Systems completed the upgrades, which were overseen by the Port’s Engineering Division.

As the vessel congestion issues continue to plague the West Coast of the US, much discussion has been ongoing about the cause and solution to the issue.

Ports on the West Coast are seeing record traffic levels and the Port of Long Beach recently recorded its busiest February on record as its TEU volume increased by 43.3% year-on-year (YoY).

In addition, while February is traditionally the slowest month of the year – as Asian factories close for Chinese New Year – this year many remained open in order to fulfil a surge in demand.

The cause of this surge on the Trans-Pacific shipping route can be attributed to E-commerce and a spike in Chinese productivity.

All of this has resulted in congestion and delays on the West Coast as the number of vessels waiting at anchor has almost tripled YoY for the first few months of 2021.

A visible solution

On the side of the ports, it has been suggested by Shipping Consultancy Drewry that improvements in traffic visibility would go some way to alleviating the current crisis and preventing it from reoccurring.

It all comes down to the issue of data visibility between ports. Some ports have indeed made efforts to improve visibility, such as the Port of Los Angeles with its ‘The Signal’ tool.

However, Drewry’s latest webinar titled ‘Port Congestion – Outlook and Remedies’, Eleanor Hadland, Senior Analyst, Ports and Terminals, emphasised that the crisis will not be solved without regional and supply chain-wide solutions.

Data visibility is something that ports elsewhere are also working on.

The Port of Rotterdam, for example, recently partnered with PD Ports to implement a Port Community System (PCS) at Teeside. As part of its digital development, there is a path towards enhanced data exchange between the two ports.

With enhanced data exchange, the Ports will have greater oversight of vessel arrival and departure times which ultimately leads to greater operational efficiency for all PCS users.

Calls for vaccines

With record-breaking imports expected to continue in the first half of 2021 in the US, the National Retail Federation (NRF) has urged the US Government to place vaccinations against COVID-19 as a priority in efforts to rescue the economy from the pandemic.

The NRF has previously speculated that 2021 could see record container throughput at US ports and believes an accelerated vaccination programme will help the supply chain cope with demand.

NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said, “NRF is forecasting what could turn out to be record retail sales growth in 2021, and retailers are importing huge amounts of merchandise to meet the demand.

“The supply chain slowdown we usually see after the holiday season never really happened this winter, and imports are already starting to grow again.

“Consumers haven’t let the pandemic stop them from shopping, and retailers are making sure their customers can find what they want and find it safely.”