What is Port Conjestion ? Why It leads to Price Increase?
Updated: Nov 24, 2021
First of all, lets understand what is port Congestion?
In simple terms, it is a situation when ships are lined-up to berth, an ports capacity is full. This has serious impacts on supply chain that we will discuss in our future posts. However, the most direct impact of this congestion results in increased transit time.
This overall situation puts a pressure on port management staff to be more efficient, expand infrastructure. Consequently, this increases operational costs and shipping companies retaliate by increasing prices.
What Causes Congestion on ports? Are there any particular Reasons?
Vaguely speaking, there are several drivers of this congestion and if we analyse each one in detail then this article may not be enough. The most visible one is the increase in population and increase in overall demand. Giant Carriers like Maersk, Hapag Lloyd have been increasing their vessels from a very long time to meet this demand. On the other hand, the port handling capacity is still limited. Nonetheless, news ways of increasing efficiency have been introduced but these too reduced congestion only up to a certain level.
Port Congestion is something beyond our control, Always book cargo and secure spaces in advance to avoid uncertain delays.
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