European Ports in Historic Congestion! 2% of the World's Shipping Capacity is 'Trapped' in the North Sea

With 2% of global capacity stuck in the North Sea, the number of container ships in the Red Sea is also about 20% lower than normal, with strikes and a surge in imports leading to a repeat of port congestion during the coronavirus lockdown.

Worse for the European economy?

Last month, the port of Rotterdam, the largest port in Europe, was in emergency, and the situation of a large backlog of empty containers made many people in the European shipping industry deeply anxious. The latest report released this week by the Institute of World Economics in Kiel (IfW) in Germany has further revealed how serious the historic congestion of North Sea ports is.

More than 2% of global capacity was at a standstill in the North Sea last month, a "very rare" situation for ports there, with no end in sight for container congestion, and port congestion elsewhere, the report showed. The vessels have been unable to load and unload cargo due to unusually prolonged congestion, a disturbing reminder that supply chains remain severely clogged even as lockdowns are a distant memory. This may have implications for future trade shipments.

"Overall, global trade showed a slightly positive trend in June, but congestion, high freight costs and resulting export bottlenecks hindered trade," said Vincent Stamer, head of research at the IfW Institute for World Economic Research in Kiel, Germany. , especially trade with Europe."

Vincent Stamer also pointed out that congestion in shipping used to be very rare in the North Sea. For Germany and the EU, this will mainly affect overseas trade, especially with Asia. For example, those shipped from Asia for consumer electronics, furniture or textiles.

Worse for the European economy?

Logistics companies have been struggling for months with container shipping plans as the Russian-Ukrainian conflict and the coronavirus lockdown have thrown global shipping markets into chaos. Congestion was further exacerbated when imports of coal and liquefied natural gas surged in European countries, indicating the inability of port infrastructure to handle the surge.

Empty containers, crucial for Asian exporters, are stranded in Europe's biggest export hub last month as a growing backlog of undelivered cargo at the port of Rotterdam forced shipping lines to prioritise shipping full containers. middle.

Further complicating matters, the Kiel Institute for World Economic Research said the number of container ships on the Red Sea route, the most important trade route between Europe and Asia, was also lower than expected under normal circumstances. about 20%. The last time there was such a large gap was back to the beginning of the outbreak two years ago.

According to Vincent Stamer, “A decisive factor may be that the negative impact of the epidemic remains due to the 40-day voyage from China to Europe. Congestion of container ships in the North Sea and the increasing importance of rail transport due to the new Belt and Road Initiative, All may reduce the volume of shipping on the Red Sea route.”

And it's far from a good thing for the troubled European economy right now. According to the latest trade data from the Kiel Institute for World Economic Research, the global trade index increased by 0.4% in June from the previous month, but Europe was the weakest performance, with the EU as a whole exporting a decline (-0.5%) and a smaller increase in imports (+ 0.8%). In contrast, both the United States and China showed strong growth in imports and exports.
Dirk Jandura, president of Germany's Federal Trade and Wholesalers Association (BGA), said earlier this week that "while German foreign trade continues to hold up in the crisis, the outlook is no longer optimistic."