Signs of Renewed Crisis in Shipping Industry: Global Port Congestion and Route Challenges

2024-06-06 20:50


Signs of Renewed Crisis in Shipping Industry: Global Port Congestion and Route Challenges


After a hiatus of three years, the global shipping industry appears to be at a tense crossroads once again. Recently, Spain's largest container port, Algeciras, has been plagued by overwhelming cargo volumes, leading to a mountain of stacked containers and strained terminal capacity.

TTI Algeciras CEO Alonso Luque admitted that this year's cargo handling requests far exceed the terminal's acceptance capabilities. Despite shipping companies' requests to handle an additional 100,000 TEUs (Twenty-foot Equivalent Units), the port can only accommodate 40,000 while managing regular customer berthing schedules.

On the other side of the Strait of Gibraltar, Morocco's Tanger Med Port Development Project's Container Terminal TC3 faces similar challenges, with the vice president of its management board, Carlos Lazo, noting difficulties in sustaining current high operational levels. Outside these two ports, vessels frequently anchor waiting for berthing opportunities, mirroring the immense pressure and tension gripping the global shipping industry.



Moreover, the Red Sea crisis, intensified Somali piracy, and Panama Canal droughts have compounded shipping challenges. Houthi armed group threats to shipping routes have forced companies to reroute, avoiding waters near Yemen, prolonging voyages and exacerbating demand surges at ports like Algeciras and Tanger.

Rising Somali piracy attacks and potential Iranian actions in the Strait of Hormuz further agitate the shipping sector. In the Americas, reduced daily transits at the Panama Canal due to droughts significantly impact global trade routes.

European ports handling car imports also experience severe congestion. In March, automotive transporter UECC's vessel had to wait over five days to berth at Italy's Livorno Port due to congestion.

Jan Rindbo, CEO of Norden, one of the world's largest dry bulk and tanker operators, labels these issues as the shipping industry's "true black swan event," akin only to the 2020-2021 supply chain crisis during the pandemic.

As the northern hemisphere's late summer and autumn approach, coupled with the pre-Christmas "peak season," shipping conditions may deteriorate further. Daniel Richards, Director at London-based maritime consultancy MSI, warns of potential shipping disruptions, particularly if Red Sea issues persist. Michael Aldwell, Head of Ocean Logistics at global logistics giant Kuehne+Nagel, echoes this, stating that unresolved Red Sea issues pose severe challenges for this year's peak season. Amid falling inflation, central bank rate cuts, and easing cost pressures, the resurgence of European consumer demand complicates the situation.