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Home›Ship Tracking›Global port congestion worsens, dashing hopes of easing supply chain issues, report says

Global port congestion worsens, dashing hopes of easing supply chain issues, report says

By Zaida B. Hopkins
May 3, 2022
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The vital lines of global trade are becoming increasingly expensive, with port congestion worsening and becoming widespread across the globe.

That’s according to a report released Tuesday by Michael Tran and Jack Evans of RBC Capital Markets, who use alternative data and geospatial intelligence to track 22 of the world’s largest and most influential ports. He points out that a fifth of the world’s container fleet is currently congested in various ports and that less than 40% of ships arrive on time. Meanwhile, freight prices are still high, while marine fuel prices and insurance costs are skyrocketing.

The report outlines a host of forces that could translate into even higher costs for consumers, already struggling with US inflation at its highest level in four decades.

According to Ben Emons, managing director of global macro strategy at Medley Global Advisors, who has been following the flow of commodities.

On the contrary, forces beyond the Federal Reserve’s control are building, just as policymakers set to deliver their first 50 basis point rate hike in nearly 22 years on Wednesday. And “there’s no way the rate hikes will bring container ships back from Shanghai to Los Angeles any faster,” Emons said by phone.

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“We still haven’t seen the full ripple effect of supply chain issues that are now going global due to the COVID situation in China and Russia’s war on Ukraine,” he said. Tran, head of digital intelligence strategy at RBC, to MarketWatch by phone. “There are very few levers you can pull when you look at the training effects. You almost have to let it run its course.

“The lifelines of global commerce are definitely getting more expensive and will definitely trickle down to the end user,” Tran said.

One implication of RBC’s findings is that financial markets could eventually come to believe that the Fed and global central banks are powerless to fight inflation, even as they raise rates. In such a scenario – which Emons describes as “outside the consensus, but within the realm of tail risk possibilities” – the first sign that markets would lose confidence in the Fed would be a deeply negative yield curve – with the rate at 2 years TMUBMUSD02Y ,
2.768%
trading at almost 4% and the 10-year rate TMUBMUSD10Y,
2.969%
around 3%, he says.

Stock prices would continue to fall and the U.S. dollar would become “super strong with a 25% aggregate gain over last year against other major currencies,” Emons said.

Keywords: ‘You don’t want to own bonds and stocks’ in this environment: Paul Tudor Jones

The dollar would benefit from its status as the world’s premier reserve currency in a scenario in which global central banks are unable to contain inflation, and a stronger greenback would eventually have a negative impact on commodity prices – driving down the prices of everything from metals to agricultural products, he said. In a nutshell, US markets would start behaving more like an emerging market like Turkey, which is grappling with a combined financial and economic crisis amid soaring inflation and a plummeting pound.

Last year’s supply chain issues, which Tran and Evans dubbed “supply chain 1.0 bottlenecks,” were largely a function of record consumer demand for goods. This year’s version 2.0 is exacerbated by China’s battle against COVID and Russia’s war against Ukraine. Inefficient operations at major ports also continue to take their toll, they said.

Congestion at the largest U.S. ports of Los Angeles and Long Beach is expected to improve, given a slowdown in the line of ships ferrying across the Pacific as China grapples with COVID. But that didn’t happen, Tran and Evans said.

Instead, the operational efficiency of the two ports has “eroded in recent months”. With a queue of 19 ships as of Monday, the current turnaround time is 6.9 days, compared to 3.4 days pre-COVID. “LA and Long Beach should do better using this opportunity to fully reset and remove bottlenecks, but it’s not: it’s what’s gone global,” Tran said.

Source: RBC Capital Markets, Freightos, Orbital Insight


Off the coast of China, 344 ships were waiting to dock at the Port of Shanghai, representing a 34% increase from last month, according to the RBC report. It currently takes 74 days longer to move goods from a Chinese warehouse to a US warehouse, a route that previously took 37 days.

Meanwhile, ships from China show up four days late, on average, at European ports – which, in turn, is producing a shortage of empty containers for ships heading from Europe to the coast. is from the United States. To avoid booking cancellations, ships and containers need to be available at the right time and in the right place, Tran and Evans said.

Source: RBC Capital Markets, Freightos, Orbital Insight


Due to Russia’s invasion of Ukraine, several major shipping companies have suspended shipping to the Baltic and Black Seas. According to the RBC report, overall throughput times for Europe’s three largest container ports – Rotterdam, Antwerp and Hamburg – are currently 8%, 30% and 21% higher than their normal five-year levels.

On Tuesday, US stocks struggled to head earlier in the day before finding ground. The S&P 500 was up around 0.8% in the afternoon, while Dow industrials DJIA,
+0.20%
and the Nasdaq Composite COMP,
+0.22%
were 0.5% and 0.3% higher, respectively. RBC equity analysts have mapped key levels to watch and see 3,850 as the next rung on the S&P 500 SPX scale.

Lily: Stocks could continue to slide until institutions join retail investors in capitulation, this firm says

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