Freight News, Sea

Insurer warns of Suez knock-on

[ April 12, 2021   //   ]

Insurers TT Club is warning that the Suez Canal will have knock-on effects on liner shipping for many weeks to come. It says that while the Canal is now functioning normally again, a reported 300 ships have been delayed awaiting transit, many others were re-routed via the longer passage around South Africa’s Cape of Good Hope.

Managing director, loss prevention, Mike Yarwood, commented: “While the immediate impact may be a lack of cargo arriving when expected, presenting market supply challenges, it is when the cargo does start to turn-up that further potential risks emerge.”

The arrival of large volumes of laden containers, coupled with the requirements for hinterland distribution, will create disruption at ports and terminals, straining throughput and yard capacities, and creating accumulation of cargo.

The situation will also aggravate the existing imbalance of container equipment especially on the East to West routes as laden containers are tied up and consequently empty availability to reposition to shipment areas worsens.

He stressed: “The risk of theft at ports and freight depots in this scenario is heightened and a greater focus on security is required. Whether it simply be at an overspill holding or storage area, or temporary warehousing, wherever and whenever cargo is not moving, it is more likely to be stolen.” 

Driver shortages are already expected to soar through 2021, which will exacerbate the difficulties.

Yarwood concluded that events of the last twelve months including the pandemic, the Brexit transition and Suez Canal raised questions of recent moves to reduce the number of suppliers and introducing ‘just in time’ principles to lessen inventory costs.