Amidst persistent supply chain congestion resulting from various global factors, there are indications of potential alleviation, as observed by a prominent shipping company. Yang Ming Marine Transport Corp., a major global shipping firm, suggests that the bottlenecks causing supply chain disruptions, particularly due to the conflict in Ukraine and lockdowns in China, might be gradually improving.
Chairman Cheng Cheng-mount highlighted recent improvements in port congestion, citing a notable reduction in the number of ships waiting outside the ports of Los Angeles and Long Beach. The waiting time for ships at Shanghai ports has also notably decreased to two or three days, compared to the previous 10 to 14 days experienced at U.S. ports.
Expressing optimism, Cheng remarked that these improvements could signify a positive shift in port congestion, especially in the U.S., expecting a smoother operational landscape in the second half of the year. Regarding China’s stringent COVID-19 lockdowns, Cheng views the global impact as a temporary issue likely limited to the second quarter, with expectations of a rebound in the nation’s economy in the latter part of the year, anticipating policy adjustments from Beijing.
However, the shipping industry continues to grapple with challenges. Despite the improvement in Shanghai’s shipping operations and the gradual reopening of factories, port congestion persists due to a shortage of trucks. Experts caution about potential congestion at U.S. and European ports once the backlog of cargo vessels starts moving again.
While congestion in Shanghai ports has increased in recent weeks, it remains lower than the peak experienced in the third quarter of the previous year. Northern Chinese port bottlenecks are prompting vessels to seek alternative routes, potentially leading to increased congestion in southern ports.
Projections from the International Monetary Fund indicate a slowdown in global trade growth this year compared to the previous year, attributing this trend to various factors, including the Ukraine conflict and delayed demand from COVID-19 impacts.
Cheng anticipates measures from the U.S. government aimed at expediting port flows to gradually alleviate congestion in the latter part of the year, potentially leading to reduced freight rates. He also foresees a transformation in globalization, suggesting that supply chains might shift towards shorter, more regional models amidst escalating transportation costs and geopolitical tensions between major trading nations.
Reflecting on Yang Ming’s performance, Cheng acknowledged the company’s substantial growth in sales, albeit concerns regarding on-time reliability. Despite a robust first quarter, Cheng expressed concerns about the potential challenges of the market absorbing the increased supply of newly built ships, which could outpace rising demand, affecting freight rates.
In anticipation of potential oversupply or declining rates, Cheng emphasized the company’s focus on strengthening its financial structure to navigate potential industry challenges effectively.
As the shipping industry navigates these dynamic conditions, Yang Ming remains committed to meeting customer demands while cautiously monitoring and preparing for potential market shifts and challenges ahead.
