The UK’s largest container terminal, Felixstowe, is facing criticism from shippers and freight forwarders after announcing it would no longer accept empty containers due to congestion or would reduce the number of empty containers being returned to the port by rail and road.
Robert Keen, director-general of the British International Freight Association (BIFA), said the operational performance at Felixstowe had been “very challenging for some time”, but the issues had escalated at the end of last week “to a level that could be disastrous for our members’ businesses, which have already been hard hit by the impact of the pandemic.
“The latest initiative would appear to be an attempt to overcome the huge congestion that has developed at the port, which has led to significant haulage problems for our members whereby many containers can neither be collected nor returned,” he added.
Forwarders have been told they can no longer return empty containers to the port until 23 September. Empties are being delivered to inland container parks, which BIFA said would increase haulage costs for its members and lead to higher quay rent and demurrage issues and expenses, “which are difficult to pass on to our members’ customers”.
Keen said forwarders were reporting that the port’s operator had been unresponsive to the issues they had raised, noting: “Our members say that the port authority is merely paying lip service to any inquiries they make, which is unacceptable for a port authority which owns the UK’s busiest container port.
Felixstowe has faced several challenges in recent times and struggled to recover from the failed installation of a new terminal operating system (TOS) in 2018.
Keen suggested that the current issues link back to those problems, noting: “The debacle in 2018, when the port undertook a disastrous migration to a new in-house terminal operating system appears to be at the root of the current VBS (vehicle booking system) problems, which is exacerbating the congestion problems caused by other issues – including a huge increase in container moves ahead of the Golden Week in China, reduced container moves per hour at the quayside, and serious staffing issues.”
He said BIFA members had suffered from two years of poor service from the port, claiming it was now time that its operator “considers BIFA members as direct customers of the port, and shows some willingness to discuss compensation for the damage caused and the increased costs that have been incurred by those members. At the very least, the port authority should extend free-time for quay rent and demurrage.”
Spike in import volumes
Sources close to the port, however, say that the current issues are not related to the TOS.
In a statement published late last week on its website, Felixstowe – which is owned by Hong Kong-based Hutchison – said it was “experiencing a high demand for both road and rail capacity”, adding: “The situation has been caused by a sharp spike in import container volumes, along with a high proportion of late vessel arrivals. The weekly import volume for the last two weeks has been over 30% higher than average levels.”
This was exacerbated by unusually high levels of empty containers at the port and the impact of the ongoing Covid-19 crisis on resource availability, it added.
In order to bring performance levels back, Felixstowe would increase vehicle book system slots to 4,300 per day and open on Sunday for haulage collection. But it said it would “temporarily slow down and reduce the number of empty containers being returned to the port by rail and road”, to ensure it did not run out of storage space.
Other measures would include the recruitment and training of 100 equipment drivers, which had not been possible during the lockdown.
The congestion issues come at a difficult time for ports, which are trying to recover from the impact of the pandemic. After losing large amounts of volumes, and revenues during the peak of the crisis, they are now facing a sudden resurgence of demand during the peak season. But at the same time, terminals are faced with container lines leaving empties on the dock as they rush to meet schedules.
Staffing has also become more difficult as training had to be reduced during the pandemic, as close-quarters one-to-one training could not be done safely. There are also concerns that freight forwarders are making resource planning even more difficult by bulk booking vehicle booking slots they don’t need then releasing them at the last minute, meaning that other forwarders or shippers do not have time to take up the slot.
High landside demand
Maersk, one of the port’s major customers, said it was experiencing “high landside demand” due to a surge in imports, coupled with several external issues, that were disrupting normal service. “In order to ease congestion in Felixstowe we will temporarily cease acceptance of empty container restitution at the Port of Felixstowe,” it said in a note to customers. “During this period, we will allow inland restitution of empty containers without penalty.”
All of this is affecting freight forwarders, however, who are unable to discharge empties and are struggling to find export windows.
“We do not expect the situation to get much better in the coming weeks as congestion at the port will likely force carriers to continue to cut and run, leaving some UK imports to be discharged in mainland Europe for us to arrange to get relayed back to the UK for delivery to our clients, as well as exports left stranded on the quay,” said Tony Cole, head of supply chain services at freight forwarder Davies Turner.
“One carrier has already told us to switch any export bookings to either London Gateway or Southampton.”