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Europe’s ports set for wave of activity as Suez backlog is cleared

Workers at the Greek port of Piraeus had a quiet time when the vast container ship Ever Given blocked the Suez Canal, choking off the flow of vessels plying between Europe and Asia. That is about to change.

“Our work has been slow these past days due to the blockage,” said Dimitris Chrysochoidis, a truck driver on the pier at Piraeus, one of the first large ports for northbound ships leaving the canal. “We expect that ships will come all at the same time — and then we will be running like crazy.”

The shipping industry let out a momentary sigh of relief on Monday when the Ever Given, a container vessel almost as long as the Empire State Building is tall, was freed from the vital trade artery after being stuck for six days.

But Europe’s ports are bracing themselves for a wave of incoming ships as they attempt to minimise the disruption to supply chains caused by the blockage.

Shipping operators are frantically negotiating with port authorities to secure berthing slots for vessels arriving late to anchorages after the Suez delay, competing with other ships already scheduled to arrive for space to offload their goods.

“What is happening now is a messy situation,” said Simon Sundboell, chief executive of eeSea, which tracks container vessel schedules. “Now the ketchup bottle has been opened, the negotiations start.”

The Suez snarl-up could not have come at a worse time. Ports have been battling since the end of last year to cope with a surge in the volume of ships due to the booming ecommerce sector against a backdrop of container shortages in China, workers sick with Covid-19 and extra border restrictions.

Before the Ever Given blockage, executives thought they had seen off the worst of the backlogs. But after almost a week of disruption on a trade route through which 12 per cent of seaborne goods travel, a swift return to normality for finely tuned shipping networks looks unlikely.

Ports are scrambling to prepare for the rush of incoming vessels.

European anchorages expect a surge from late next week, while those in Asia and on the US east coast predict the bump will come in the second half of April. The Ever Given itself is expected to reach Rotterdam within a fortnight.

In Rotterdam, home to Europe’s largest port, a special contingency group has been set up between port authorities, industrial groups and transport companies to maximise space inland for the expected uptick in containers.

“It all depends how fast these ships can sail through the Suez Canal,” said the Port of Rotterdam Authority, adding that their speed of travel and rotation around ports would also be crucial factors for determining congestion.

About 360 vessels have passed through the Suez Canal since Monday evening when traffic resumed. The majority have heading south and far above the usual flow of 50 a day. But more than 200 are still anchored at either end with more arriving each day, according to Leth Agencies, a transit agent.

Ports have put up a calm front. “We have a proven crisis management strategy for such cases,” said Tassos Vamvakidis, commercial manager of Piraeus Container Terminal, owned by China’s Cosco.

Bar chart of Net tonnage by ship type, Feb 2020 (m) showing Roughly half the tonnage that passes through the Suez Canal is on container ships

But container terminal operators and port authorities have been forced to make adjustments to adapt. Valenciaport, which manages Spain’s busiest terminal, will operate for three extra hours a day from next week to handle the 24,000 20ft containers that were held up. It would typically deal with 4,000 containers a day that had passed through Suez.

“We’re lucky it only lasted six days,” the body told the Financial Times. It estimates it will take 10 days to two weeks to absorb the backlog. “It if had lasted longer, it would have been a severe problem.”

Meanwhile, PSA, a container handler, is not allowing containers bound for export to the Middle East and Asia to arrive at terminals in Antwerp, Europe’s second-largest port, more than seven days before departure.

But even with shipping companies and ports at full throttle, some predict long-lasting disruption. “This will probably take weeks, maybe even months to stabilise,” said Antwerp Port Authority.

Shipping liners will be desperate to restore reliability to their services — and make the most of the bumper freight rates.

Simon Heaney, senior manager of container research at consultancy Drewry, suggested they could dump cargo in one port for forwarding to other destinations to speed up their return to Asia. “They might truncate services going through the Mediterranean because they need to get them back to Asia.”

Maersk, the world’s largest shipping company, cautioned that “the blockage of the Suez Canal would have ripple effects on global supply chains for weeks to come” as vessels bunch up at ports, containers fail to arrive when and where needed and other scheduled sailings are spun off-course.

As a result, it has suspended short-term bookings on almost all exports out of Asia and a large number of other routes.

Bjorn Hojgaard, head of one of the world’s largest ship managers, the Hong Kong-based Anglo-Eastern Univan Group, said the cost of maintaining one ship per day was about $6,000-8,000, while the loss of charter income a day was in the range of $15,000-25,000, making any further waits undesirable.

Europe’s northern ports have a few days’ extra grace to clear the decks before traffic arrives. Further south, Vamvakidis pointed to Piraeus’ size and state of the art equipment, plus experienced staff, as reasons to be confident about its ability to cope.

But he added: “[The Suez blockage] reminded me that, in this business, there are so many variables that one cannot control.”

Additional reporting by Ian Mount in Madrid, Primrose Riordan in Hong Kong, Domitille Alain in Paris and Aime Williams in Washington

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