Port Congestion in Shipping: Causes, Impacts, and Solutions for Shippers

We live in a globalized economy, which means that international trade has become rampant as different countries move their goods to other nations. While this is proof of global growth, it also causes a few issues in the logistics industry. One of those is port congestion.

Port congestion is a growing concern for businesses, leading to delays, increased costs, and disrupted supply chains. Understanding the causes, impacts, and solutions to port congestion can be a good starting point for navigating international trade and minimizing risk.

What is Port Congestion?

Port congestion occurs when a port's cargo volume exceeds its capacity to handle shipments efficiently. This causes a bottleneck at the port, which eventually results in delays and operational efficiencies. To help reduce demand, ports will also raise shipping fees.

Port congestion has been and remains a pressing issue faced by international shipping businesses and supply chain professionals.

What Causes Port Congestion?

Port congestion is caused by a lot of factors, both external and internal.

High Container Volumes

The most evident cause of port congestion is high container volumes, especially during peak seasons. Off-peak seasons can also have unexpected demand surges, which overwhelm ports.

Port congestion has become more pressing since the growth of e-commerce, global trade, and just-in-time manufacturing practices. These have increased the instances of international shipping, accelerating the influx of containers in seaports.

Labor Shortages

Ports rely heavily on their workforce to handle shipments, which means that any shortage can result in congestion. More often than not, ports have to deal with insufficient workers, from crane operators and dockworkers to trucking personnel. They also experience labor challenges, such as strikes.

Port operations are significantly slowed down because there isn’t enough workforce to handle the container volume.

Infrastructure Limitations

Another critical aspect of port operations is infrastructure. To successfully process a shipment, port operations need specialized machinery, such as berthing technology, cranes and forklifts, storage solutions, etc.

Without these, ports struggle to accommodate shipments and manage increased container volumes. Aging port facilities, limited berthing space, inadequate equipment, and the like contribute to congestion at port facilities. Older ports, with age-old designs, also struggle to keep up with today’s shipping demand and accommodate larger vessels.

Weather and External Disruptions

International shipping, which is performed by air or sea, relies heavily on good weather conditions. However, natural occurrences and adverse weather can significantly impact operations.

For example, typhoons and hurricanes aren’t good times to send a vessel on a voyage, resulting in halted operations that can last for days. Ultimately, this delay can cause a ripple effect on global shipping schedules.

Ports are also affected by geopolitical events like war and global conflicts. Port infrastructure can be damaged, or management may decide to cease operations for the safety of employees.

Customs and Regulatory Delays

An essential part of the shipping process is customs clearance. This can take up a significant chunk of shipping times, during which the commodities must remain in the port until the process is completed. Lengthy customs clearance processes can cause port delays. In some areas, there is also the issue of insufficient customs resources.

Ports also need to comply with trade regulations. When these change or become increasingly complex, a shipment can be held at a port for quite some time until these are resolved.

What Are the Effects of Port Congestion on Shipping?

Port congestion is a problem for many shippers, businesses, and supply chains. It impacts operations, timelines, and even budgetary principles.

Delayed Shipments

Port congestion causes cargo to be stuck in the port for an indefinite amount of time. This eventually leads to late deliveries, which can significantly disrupt a business’ production schedule or retail availability.

These can be drastic for a business’s reputation, straining customer relationships and breaking trust.

Increased Costs

To minimize congestion, ports often raise shipping fees to manage the demand. Not only that, but they may also charge demurrage fees, which are charges against containers that exceed the allotted free time at the port. Storage fees are another expense.

Port congestion can cause unnecessary expenses for a business, affecting their shipping budgets.

Supply Chain Inefficiencies

Businesses rely on carefully planned supply chains to keep operations running smoothly. However, port congestion can disrupt that and cause inefficiencies that affect other areas of business.

For example, delays in shipping can cause idling inventory, decreased productivity, and missed connections.

Environmental and Operational Challenges

Congested ports have longer vessel wait times, which in turn increases their fuel consumption and emissions. This can have a drastic effect not only on a business’s operational budget but also carries with it some environmental concerns.

How to Avoid Port Congestion

Port congestion has been a problem in the ocean freight industry. Experts say eliminating it entirely is a big challenge, if not an impossibility. However, shippers can take proactive steps to minimize its impact on their international trade operations.

Plan Shipments in Advance

Port congestion is not always sudden. There are known periods when congestion tends to happen, such as during peak shipping seasons. A business must proactively schedule its shipments to avoid these periods and have flexible timelines to mitigate delays.

Optimize Shipping Modes

Businesses can consider diversifying their transportation modes to bypass congested ports. Instead of FCL shipping, which increases container volumes in ports, better options include LCL shipping or air freight for more urgent shipments.

Use Smaller or Alternative Ports

Port congestion usually happens in major transport hubs. Where possible, businesses can opt to take their shipments to smaller or less congested ports. Because there is less demand, these facilities can often provide faster turnaround times.

Work with Experienced Freight Forwarders

Freight forwarders with extensive experience working with businesses and carriers can provide valuable insights to help navigate congestion challenges. They can also suggest alternative routes and offer end-to-end solutions.

Take Advantage of Real-Time Cargo Tracking

Being aware of a shipment's location in the transport process can help identify bottlenecks in real time and anticipate delays.

With cargo-tracking software, businesses can make more informed decisions about rerouting or adjusting delivery timelines depending on where their cargo is in the shipping process.

Prepare for Customs Clearance

Customs clearance is one cause of port congestion, especially if the process is lengthy or complex. To help speed up the customs clearance process, businesses must be fully prepared with accurate and complete documentation.

Adopting Strategic Shipping Practices to Avoid Port Congestion

Port congestion has become an unavoidable challenge in the modern-day’s interconnected trade environment. However, shippers can minimize its impact by adopting strategic practices and working with experienced freight forwarders to reduce delays, control costs, and achieve a resilient supply chain.