Busan struggles with congestion amid Chinese transshipment diversions

Busan struggles with congestion amid Chinese transshipment diversions

Transshipment volumes in South Korea’s Port of Busan have risen this year due to coronavirus-related diversions from Chinese ports. Photo credit: Shutterstock.com.

Congestion at South Korea’s Port of Busan due to increased transshipment volumes diverted from Chinese ports is causing havoc for some carriers struggling to maintain service reliability.

Ocean Network Express (ONE), the liner conglomerate formed by Japan’s Big Three shipping lines, said a raft of trans-Pacific and regional services are being hit by port congestion in Busan as port officials report surging transshipment volumes amid diversions related to the coronavirus disease 2019 (COVID-19) outbreak in China.

ONE this week said the affected strings include the Pacific North 1 service where next week’s call at Prince Rupert in Western Canada by the 8,110 TEU One Cosmos has been canceled to recover the service's overall schedule.

The 10,110 TEU Express Berlin, operating on ONE’s US East Coast 2 service, is two weeks late calling at New York, Boston, Wilmington, and Savannah partly due to congestion at Busan, ONE said in a customer advisory Wednesday. The ship, originally due to arrive in New York on February 25, is now scheduled to call March 10.

Congestion has also led to the cancellation of this week’s Hokkai Arirang shuttle service between Tomakomai and Busan by the 1,100 TEU Tacoma Trader, while ONE said there is a three-day delay in the arrival at Busan this week of the 8,189 TEU Conti Annapurna on the East Coast 1 service between Asia and North America.

ONE added that the 4,178 TEU Aglaia operating the carrier’s New Zealand-Japan string was also being delayed because of congestion at Busan and because the vessel can’t enter Australia and New Zealand until 14 days have elapsed since the vessel's departure from mainland China.

This comes as Busan, which became the world's fifth-busiest box port last year after handling 21.7 million TEU, has seen transshipment volumes rocket since the beginning of this year.

Half of 2019 volumes were transshipment

“Transshipment cargo increased about 6 percent in January to more than 1 million TEUs as global carriers chose to call at Busan port as an alternative to calling at Chinese ports or because of blank sailings,” Kim Gwang-Min, deputy manager of the marketing and international affairs department at the Busan Port Authority, told JOC.com. Busan handled an average of about 1.8 million TEU a month last year, of which about 50 to 55 percent was transshipment.

February's figures are still being analyzed, but they are expected to show a continued strong trend.

“Due to the extension of the Chinese New Year holiday in early February, the average occupancy rate of container yards surged to 75 percent on average, which is why congestion occurred,” Kim said. “The main reason for the high occupancy rate is that containers that were supposed to go to Chinese ports were diverted to Busan.” 

Ports in China were paralyzed during the Chinese New Year, which was extended until the middle of February as the government tried to contain the coronavirus outbreak. Truckers and dock workers were forced to stay home while carriers implemented blank sailings, which have cut more than 1 million TEU of capacity, as cargo evaporated after factories closed.

Kim said yard occupancy levels are returning to normal, with about 65 percent occupancy now, while operational efficiencies are also increasing, although port congestion is still an issue.

That comes as the coronavirus is having more of an impact in South Korea, where the number of infections has surged to about 5,500 reported cases on Wednesday, with 32 deaths. That compared with about 3,200 deaths and 92,300 cases globally.

Despite the increasing seriousness of the outbreak in South Korea, Kim doubted there would be the same level of blank sailings by carriers if the situation worsened. Busan is seen as the transshipment hub for north Asia with more than 50 percent of its volume consisting of transshipment traffic.

“Global carriers wouldn't skip Busan port that much,” he said. “Cargo should be shipped on schedule even with the COVID-19 situation.” 

Overall volume has declined

However, while transshipment volumes have climbed, Busan has seen an overall drop in volumes amid a faltering global economy.

“Breaking down total throughput, gateway cargo dropped about 8 percent in January,” Kim said.

“This year, in the short- to medium-term, Busan port's container volume is also expected to decline just like other global ports as global trade demand shrinks,” Kim said.

Kim said South Korea has imposed tougher health controls on vessels from China, especially as transit times between northern Chinese ports such as Tianjin, Qingdao, and Busan are less than a week’s sailing.

That comes as carriers and freight forwarders in South Korea are maintaining normal liner, depot, and port services even as office staff are either working from home or restricting the hours spent working at their desks amid the increasing toll from the coronavirus.

Lines and logistics firms including CMA CGM, Maersk, and Geodis said they are operating normally in Busan.

“As of today, terminals in South Korea are all operating at normal productivity and trucking and depot activities remain unaffected,” CMA CGM said in a customer advisory. “A few factories serving the local market have ceased operations, but there has been no impact on exports.” 

Said Maersk: “Our vessel network and warehouse operations are also operating as per normal.”

Geodis said in an advisory its operations in South Korea were proceeding as “usual,” and the company was following safety measures to safeguard its staff. Geodis on Tuesday said the majority of its offices in China are back in full operation, while its operations in Beijing, Tianjin, Shenzhen, and Wuhan are progressively being reinstated.

While it highlighted that Lufthansa Cargo would continue to suspend flights to China until April 24, and AirBridgeCargo reduced the number of weekly flights from China to Europe and the US from 10 to three from March 2, Geodis said it has space available on charter flights. Those flights will leave Frankfurt for Shanghai on March 8, with the return flight from Shanghai on March 10.

Contact special correspondent Keith Wallis at keithwallis@hotmail.com.