Shipping delays have caused some North American ports to consider imposing dwell fees. Could that happen in Europe too?
The COVID-19 pandemic has disrupted supply chains and changed consumer spending patterns globally. That has created difficulties for ports that rely on a steady stream of incoming and outgoing shipping containers traveling by ocean, rail and highways. One persistent problem is the increase in container dwell time.
Container dwell time refers to the time that containers spend in port. For imports, this is the span between a container being offloaded from a ship and leaving the port via truck or train. For exports, this is the span between a container arriving at the port and being loaded onto a ship.
Berthing delays are a significant cause of increased dwell times. Such delays occur when a ship arrives at anchorage but must wait to berth at the dock and begin cargo operations. In North America, this has led to an overflow of containers waiting for export that cannot be loaded onto their assigned ships because the ships cannot berth. Southeast Asian ports like Hong Kong and Singapore, in contrast, have seen decreasing export container dwell times. The situation is more mixed in Northern Europe, where the Port of Rotterdam reports export dwell times shorter than in North America but longer than in Asia.
The ports attribute much of the congestion to unreliable schedules. They blame the late arrival of loaded mega-ships for the delay. Shipping companies blame congested ports for their inability to offload on time. This is a no-win situation: terminals can’t improve their utilization if ships continue to deviate from schedule, and ships can’t keep to schedule if the ports have no space for them to berth.
At a November 2021 press conference, Hans Nagtegaal, director of containers at the Port of Rotterdam, remarked that: “It doesn’t help that the total capacity of the global fleet is 25 percent down because of waiting time of vessels outside ports. Schedule reliability is at an all-time low, and we see this continuing.”
Are container dwell fees the answer?
In late October 2021, the Port of Long Beach and the Port of Los Angeles announced a temporary policy to charge container dwell fees to ocean carriers whose import containers linger at the terminals. The plan was to charge $100 per day per container that stayed at the terminal longer than nine days (if scheduled to move by truck) or six days (if scheduled to move by train).
This policy was a response to the import surge during the COVID-19 pandemic. That surge resulted in a backlog of containers offloaded at the terminal but not yet forwarded to their next destination.
The announcement prompted shipping carriers, terminals, trucks and cargo owners to work together to move containers more quickly. In just three weeks, the ports reported a 26% decline in aging cargo on the docks. By mid-January, the ports reported that the amount of aging cargo had declined by 45% since October.
Given these numbers, the ports have not yet imposed the container dwell fees. As of late January 2022, they are still on hold. Ultimately, the ports hope to reduce dwell times to pre-pandemic numbers. According to the Port of Long Beach, pre-pandemic dwell times were less than four days on average for local deliveries and less than two days for containers moving by train.
What does this mean for Europe?
So far, container dwell fees have not been proposed for any European ports. But that doesn’t mean there are no delays. In January 2022, shipping giant Maersk reported average wait times for vessel berthing of 1-2 days in Rotterdam and 2-4 days in Antwerp. That situation is much better than in the US, where reported wait times are 0-28 days in Los Angeles and 38-45 days in Long Beach.
Maritime data analysis firm Sea-Intelligence does not expect quick improvements in 2022. Their CEO, Alan Murphy, notes: “For Europe, we see a situation that has been steadily getting worse since the start of October, with no signs of any improvement – or even leveling out. This also implies that we might well expect to see a continued upwards push on freight rates on this trade, as the congestion is likely to have a negative impact on reliability, and hence in turn on available capacity.”
Emile Hoogsteden, commercial vice president for the Port of Rotterdam, agrees. He told Reuters: “We don’t see any major changes in the current situation until at least the end of 2022.” He and other experts attribute this partly to a shift in consumer spending patterns during the pandemic. Hoogsteden: “As long as everybody keeps spending and ordering online, e-commerce, then we don’t see any changes.”
However, there is reason for hope. Global trade is expected to rebound as the pandemic subsides, and ports are working with shipping carriers to reduce dwell time. Strategies such as improved data sharing and long-term infrastructure investments are helping to build a brighter future.