FOCUS: Container delays ramp up, free days cut down after China port closure

The global markets for containerized freight have entered even deeper water in recent weeks, with closures at the key port of Ningbo-Zhoushan in China leading to worsening cargo delays, port congestion and a further cutback in free days.

This latest setback to containerized shipping has led to greater difficulty for anyone involved in buying, selling and arranging containerized cargoes of metal in the past week, sources told Fastmarkets on Wednesday August 25.

The most recent episode can be traced back to August 12, when the closure of the Meishan wharf at the pivotal Ningbo-Zhoushan Port in China, on reports of a Covid-19 infection, sent shockwaves through the global containerized shipping markets.

That was followed on August 15 by the closure of Alashankou port in the Bortala Mongol autonomous prefecture, affecting both copper and zinc deliveries, also due to reports of Covid-19 cases in the region.

Virus-related disruption was becoming a factor of which market participants were increasingly wary, following a similar outbreak and reaction at the key Yantian International Container Terminal (YICT) in southern China in early June.

The Shanghai Containerized Freight Index, which tracks the average spot rate of shipping containers from Shanghai on 13 key shipping routes, jumped once again to a new record of 4,340.18 points on August 20, up from 4,281.53 on August 13.

Vessels have once more started to call at the Meishan wharf of Ningbo-Zhoushan from August 24, but sources said that global container traffic was unlikely to be eased any time soon because of the continued undersupply of containers across the market.

Free days, vessel delays
Not only have freight rates risen, but further measures put in place by shipping lines were causing consternation among traders.

Sources said that shipping lines have continued to reduce the number of days allowed for importers to clear their cargoes without charging them fees.

“Shipping lines are being extremely ‘dirty.’ Free days on our containers have gone down to 10-12 days, and in some cases to as little as 8 days,” a major ferrous and non-ferrous scrap exporter source said, who has long-term agreements in place with shipping firms.

“You need a minimum of 14 days to clear cargo from a port such as Chittagong in Bangladesh, to handle customs clearance and the like,” he added.

Some shipping lines were offering free days back to him, he said, but for a fee.

“[The numbers of] free days have definitely been cut, and you cannot get 14 days anymore, pretty much anywhere. The shortage of containers is particularly bad in South America and on the US West Coast,” a South Asian trading source, specializing in steel and steel scrap, said.

“Shipping lines have been cutting free days for months now, and we are only getting 7-8 free days, so we need to pay extra to extend it to 12-14 free days,” a Taiwanese scrap trading source said, adding that things had got particularly bad regarding costs and congestion in recent weeks.

“[The volume of] freight is increasing again now, and vessels are always delayed. Almost all major ports are congested, even Kaohsiung,” he said.

Higher freight costs have lent some support to the prices for containerized import steel scrap across the Asian markets over the past few weeks.

Fastmarkets’ price assessment for steel scrap, shredded, containerized, import, cfr Bangladesh, was $540-550 per tonne on August 19, widening upward by $5 per tonne from $540-545 per tonne a week earlier, due to higher offers from key supplier markets such as the UK.

A similar pattern was seen on the import bulk scrap market, in which offers for US-origin deep-sea cargoes of HMS 1&2 (80:20) were heard at $540 per tonne cfr Bangladesh on August 19 because of freight costs rising to almost $100 per tonne for such shipments.

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