Global Warming Effects Presenting a ‘Major Challenge’ to Carrier Schedules in Asia

Photo: By Aun Photographer / Shutterstock

By Sam Whelan in Singapore (The Loadstar) – Typhoons and other adverse weather events are playing havoc with carrier schedules, presenting a “major challenge” to the industry as it aims to recover from the record low levels of schedule reliability.

According to Jeremy Nixon, chief executive of Ocean Network Express (ONE), global warming has triggered more adverse and variable weather across key shipping lanes: a “remarkable increase” since 2016 when there were just nine major typhoons in Asia, compared with 13 in 2017 and 17 last year.

“Unfortunately, typhoons go straight through the middle of our key shipping lanes,” he told the TOC Asia Container Supply Chain conference in Singapore today.

“And they track at a relatively slow pace, so they create disruption to vessels within Asia; but critically, it’s also impacting the ports, particularly those in China, Korea and Japan.”

So much so, Mr Nixon noted, that the port of Shanghai was closed for eight days last August, compared with just one in the same month of 2017. There were 28 days of terminal closures between April-August 2018, he added.

“This is major disruption and, previously when there were low terminal utilisation levels, you could catch up relatively quickly in terms of operations. But because now the terminals are working at a much higher occupancy, particularly in mainland China, the ability to recover is slow, and that has an additional impact.”

Elsewhere, recent heavy weather in North America has had a big impact on rail operations, according to Mr Nixon, while Europe has suffered from flooding and strong weather systems in the Bay of Biscay and in the Atlantic.

Sea-Intelligence Consulting chief executive Alan Murphy said carrier schedule reliability had fallen to record low levels in 2018 – the worst since the analyst began recording reliability data seven years ago.

“Service levels have been very bad, especially on the transpacific trade where two out of three vessels arriving are more than a day late,” Mr Murphy said.

Comparing reliability between the three major carrier alliances, he said in the past THE Alliance had struggled, but now “we’re seeing it close that gap because unfortunately the other alliances are going down, rather than THE Alliance going up..”

ONE is part of THE Alliance, alongside Hapag-Lloyd and Yang Ming. Mr Nixon said the group planned to rejig schedules to help mitigate the impact of increased adverse weather and high port utilisation levels in Asia.

“What we’re doing now as THE Alliance, as we bring our new product to market in April/May, is to make some changes to the network to build in more buffer time,” he explained.

This includes reducing the number of port calls in China on a single loop, since vessels calling at both Shanghai and Ningbo end up queuing for a berth twice when operations at the two major ports are disrupted by typhoons.

To achieve this reduction, Mr Nixon said THE Alliance would split its Ningbo and Shanghai calls, with some loops calling at fewer ports and others having additional vessels in rotation for “more buffer and recovery”.

He added: “But to get back to the days of 90% schedule reliability for the whole industry is really a major challenge, in light of where we are with the terminal occupancy and with the weather these days.”

The Loadstar is fast becoming known at the highest levels of logistics and supply chain management as one of the best sources of influential analysis and commentary.

Check them out at TheLoadstar.co.uk, or find them on Facebook and Twitter.

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