Despite continuing operational challenges in various parts of the world, UK ports are functioning relatively well currently, and although there is healthy demand, ‘there is ocean capacity around’, Maersk sales director tells Multimodal 2022

By Will Waters

UK ocean freight customers and operators look set to enjoy a more manageable peak season this year, following the highly volatile and congested market conditions in 2020 and 2021, despite continuing operational challenges in various parts of the world, according to container shipping giant Maersk.

Neil Ashby, the line’s sales director for the UK and Ireland, told delegates at this week’s Multimodal 2022 event in Birmingham that there were several significant global variables affecting the supply-demand equation, including constraints on capacity linked to port congestion, industrial unrest in the US and the UK, recurring Covid lockdowns, and Russia’s invasion of Ukraine. But on balance, he believes the challenges should be manageable this year for the UK market – although other regions may have greater problems.

Missing capacity

On the supply side, factors include the effective loss of 10-15% of the global container shipping fleet “because it is sat outside ports”. Congestion at US ports “is bad”, but in northern Europe it is “even worse”, heightened by sanctioned Russian cargo stuck in European container yards – elevating yard levels above 90%, significantly reducing their efficiency.

Although UK ports are currently operating without major problems, those limitations in northern Europe reduce the options for transhipment in case UK ports face future constraints, he cautions.

In the US, continuing port labour negotiations risk worsening an already congested situation. Meanwhile, “the risk of Covid lockdowns is ever present” – as recently seen in Shanghai, and now in Beijing.

Russia’s war against Ukraine has also significantly reduced Asia-Europe rail freight capacity, adding further pressure.

Industrial action by UK rail workers is also a threat. If this is just for the three days currently scheduled, “that is manageable, but if it becomes a regular thing, this could cause port volumes to back up, potentially causing the kind of problems faced 6 to 12 months ago”, Ashby says.

Demand variables
But on the demand side, inflationary pressure is causing consumers to spend less. Although some predicted the reopening of the Shanghai market this month would cause a surge in demand, “we have not really seen that yet”, Ashby notes. “We do see an increase, although it is a regular time for demand to creep up.”

Other factors include generally high inventory levels, meaning “people are not picking up cargo so fast”, which can lead to problems in the ports. “Some people are so terrified of supply issues, so they brought in stock in the first quarter of this year,” he notes. And there is also been a shift from goods to services.

Predicting this year’s peak season remains difficult amid all these variables, but pushed for a view, Ashby said: “I think we will have a peak season, but we think we will be able to cope with it because there is not a tidal wave. There is healthy demand, but there is ocean capacity around.”