Congestion cripples Myanmar's Yangon port

Congestion cripples Myanmar's Yangon port

Myanmar Industrial Port

Container ships calling at Myanmar’s Port of Yangon in May were forced to wait in port up to three times longer than normal due to critical levels of congestion.

Ship call data seen by JOC.com for Myanmar Industrial Port show the vast majority of ships needed to stay in port for a minimum of 11 days, compared with three days to five days during normal periods. MOL’s Mathu Bhum, which arrived at the port on April 30, was unable to depart until May 16, and three other ships operated by Continental, MCC and RCL were also forced to spend a total of 16 days at the port during the first two weeks of May.

The data show major delays for ships in obtaining berths as well as during cargo loading and unloading.

Myanmar has set up a high-level working committee to investigate solutions to deal with the continuing congestion problem, including the possible introduction of 24-hour container loading and unloading operations.

The committee will make recommendations to Yangon’s Chief Minister U Phyo Min Thein by the middle of this month on the proposed extension of operating hours as well as strategies to clear the large backlog of empty and unclaimed containers that are hindering operations. The government may request reports from shipping companies on their freight logistics activities at the port to use as a basis for further operational improvements.

Round-the-clock Customs clearance has already been introduced as container lines continue to implement congestion surcharges for Yangon-bound cargo.

In its latest advisory note to customers, the Maersk Group-owned intra-Asia specialist MCC said vessels are facing waiting time and delays of 10 days to 11 days.

“Depots and terminals continue operating at the limit with a massive jam of containers around Yangon, consequently reducing yard productivity. In addition, draft restrictions have been implemented impacting intake capacity of all carriers operating in Yangon,” said the note.

MCC on Thursday revised upwards its congestion surcharge on all imports to Myanmar Industrial Port and Myanmar International Terminals Thilawa. The surcharge now stands at $100 per 20-foot-equivalent unit and 40-foot-equivalent unit for dry, high cube and reefer cargo.

The congestion is due to a combination of ongoing growth in trade volumes, poor port infrastructure and equipment, inefficient cargo handling processes and the limited draft of the port, which means larger vessels cannot call there.                                  

More than 90 percent of Myanmar’s trade comes through the port of Yangon. Economic growth and the opening up of the country have resulted in a doubling of the number of vessels calling at the port over the past 10 years and a fourfold increase in container throughput.

Congestion has been more acute recently due to a spike in imports since the end of the New Year holiday that has lead to cargo surges and an imbalance in imports and exports. That imbalance is creating problems with handling and clearance processes. Imports have risen by 36 percent since the holidays, while exports have fallen slightly, according to figures from the Ministry of Commerce.

“Imports are coming in, but exports are not going out fast enough, so that the empty containers stack up. This makes it difficult to locate individual containers, because our computer systems can’t keep up,” said U Aye Lwin, joint-general secretary of the Union of Myanmar Federation of Chambers of Commerce and Industry.

Three main projects are underway to address Myanmar’s future port infrastructure requirements. However, just one of these is in Yangon, where environmental restrictions will always cap its capability as a major container throughput hub.

Japan’s Toyo Construction and JFE Engineering Corporation are constructing a new container terminal at Thilawa. The 13.8 billion Japanese yen ($125.5 million) project is scheduled for completion in the autumn of 2018. The terminal will have an annual capacity of 187,000 TEUs. It will be able to receive two ships of up to 20,000 deadweight tonnage at the same time, compared with the existing capacity of being able to receive one 20,000 dwt vessel at a time.

A second Chinese-invested project is underway at the Kyaukpyu special economic zone in Rakhine state, adjacent to Bangladesh. This involves construction of a new deep-sea port with an annual capacity of 7 million TEUs, a 1,000 hectare (2,471 acres) industrial area and local railway network.

A deep-sea port is also planned for Dawei, 600 kilometers (373 miles) south of Yangon. Located on Southeast Asia’s Southern Economic Corridor, the port will be at the center of a new logistics route from Indochina to the Andaman Sea and Indian Ocean.

Contact Turloch Mooney at turloch.mooney@ihs.com and follow him on Twitter: @TurlochMooney.

A version of this story originally appeared on IHS Fairplay, a sister product of JOC.com within IHS.