Congestion at major European ports worsens, further impacting global trade chains.

A recent report shows that congestion in major European ports is worsening, creating a ripple effect on the global supply chain that could impact Asian and US markets in the coming weeks and drive up global shipping costs.

According to a report released by the London maritime consultancy Drewry, from late March to mid-May, the waiting time for ships at Germany’s Bremen port soared 77%, Antwerp delayed by 37%, and Hamburg increased by 49%. Rotterdam and the UK’s Felixstowe also experienced varying degrees of queuing, further exacerbating transportation pressure at Europe's busiest ports.

In addition to global trade uncertainties, port congestion is affected by labor shortages and low Rhine River water levels, severely disrupting the ability to connect barges to inland regions. Meanwhile, US ports in Los Angeles and New York are experiencing extended waiting times for container ships, indicating that transportation bottlenecks have expanded to transoceanic routes.

While some ports show signs of easing, a full recovery is expected to take several weeks. A key factor impacting shipping is the current global policy uncertainty. Recently, US President Trump again threatened to impose a 50% tariff on the EU starting June 1, which could cause a new round of disturbance to transatlantic trade.

Despite a recent two-week ceasefire agreement on tariffs between the US and EU, shipping companies have yet to observe a significant rebound in transpacific shipping volumes. Frequent policy changes make it difficult for exporters and importers to reliably arrange orders, increasing demand volatility and subjecting shipping companies to both scheduling chaos and rising costs.

A Bloomberg Economics report points out that if the US imposes additional tariffs as scheduled, the volume of EU goods with reciprocal tariffs exported to the US could plummet to nearly zero, potentially reducing overall exports to the US by more than half. The countries most affected include major European exporters such as Germany, Belgium, Ireland, Italy, and the Netherlands.

In this context, MSC, one of the world's largest container shipping companies, announced that starting June, it will increase basic freight rates and peak season surcharges for exports from Asia. Analysts believe that shipping prices may continue to rise in the short term.

Additionally, instability on the Red Sea route has compounded the global shipping predicament. Since late 2023, attacks by Yemen's Houthi militants in the Red Sea have led many cargo ships to reroute around the southern tip of Africa, resulting in longer voyages and increased costs. Although some shipping companies hope to return to the Suez Canal route in the future, safety risks and port acceptance capacities remain major obstacles.

Port operators indicate that hastily resuming the use of the Suez route could lead to more severe vessel congestion at several major ports in the short term, thus a gradual approach will be adopted to restore normal shipping routes.

Overall, amidst geopolitical tensions, policy uncertainties, and port infrastructure bottlenecks, the global shipping system is undergoing a new wave of impact, with businesses and logistics chains likely facing ongoing challenges of high costs and high uncertainty.

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