Container Rollovers Are On The Rise Due To Crisis

One in three containers missed a scheduled sailing and was rolled in December, according to data analytics firm Ocean Insights. Container rollovers are just one of the many challenges the international shipping community is grappling with today. But they have the potential to wreck trading schedules and cripple businesses. Which makes it all the more important for importers and exporters to be aware of and prepared for this threat.

In this blog, we take a deep dive into the cargo rollover crisis, tackling the following topics:

• What is a container rollover?
• What are its reasons and fallout?
• What is the current crisis all about?
• What is its impact?
• How can you prevent your cargo from getting rolled?
• What should you do if your cargo is rolled? 

What is a container rollover?

A container rollover, or cargo rollover, is when your container fails to get loaded onto its scheduled vessel and is accommodated on a subsequent ship. There are numerous reasons why containers get rolled, including but not limited to:

1. Overbooking of cargo by the carrier
2. Vessel skipping the port of loading
3. Mechanical problems with vessel
4. Container exceeding the weight limit for a carrier
5. Incorrect documentation
6. Customs dispute
7. Shipments requiring transshipment (moving the cargo from one vessel to another in transit to its final destination) or those intended for lesser-known destinations have a greater likelihood of getting rolled     

Rolled cargo has consequences for all parties involved – the importer, exporter, carrier and ports. It leads to:

• Delayed shipments and unhappy customers
• Additional expense. If the carrier is responsible for the rollover, it covers the cost of rescheduling. But if the shipper is responsible, then he pays for the rescheduling
• Steep demurrage and port storage charges arising out of the container being stuck in a port
• Port congestion, delays and scheduling problems    

What is the current crisis all about?

For the past six months, global container rollover rates have not only stayed high, they have been rising steadily. In December, the average rollover rate at major transshipment ports surveyed by Ocean Insights was 37% while it touched 50% at some ports. This is up from an average of 35% in November, 28.5% in October and 26.9% in September. To calculate the rollover rate, Ocean Insights takes the percentage of cargo arriving at a port for transshipment and leaving on a different ship than originally scheduled. 

“Of the 20 global ports for which Ocean Insights collates data, 75% saw an increase in levels of rollover cargo in December compared to the previous month,” Ocean Insights COO Josh Brazil was quoted as saying.

The crisis is particularly bad in Asia, home to some of the world’s leading transshipment ports such as Singapore and Port Klang in Malaysia. In Colombo, Sri Lanka, 50% of cargo was delayed in December while Gioia Tauro in Italy recorded a 62% rollover rate that month. 

Why the spike in container rollover rates?

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There is more than one reason for it:

• The primary reason is a huge jump in imports to the US and Europe in the second half of 2020 after the lifting of Covid-19 restrictions. High cargo volumes are normal during the August-November peak season preceding the Christmas-New Year holidays. But carriers are dealing with unprecedented volumes this time around and don’t expect any let-up till deep into 2021.
• Because most of the cargo headed West is being exported from Asia, particularly China, there is a massive container shortage in this region.
• Shipping lines are operating at maximum capacity and can’t add any more vessels. Hapag-Lloyd CEO Rolf Habben Jansen said the company’s fleet is “fully deployed and stretched beyond capacity”. 
• All of this means ports across the world are congested, overwhelmed and unable to function at full efficiency. A labour shortage, which hasn’t eased due to the Covid-19 pandemic, has added to problems.   

Read our blog on ongoing disruptions to the global supply chain here.   

Impact of the rollover crisis

From delays to stranded cargo, the impact of rising container rollover rates is being felt in many ways.  

• Delays: Only 44.6% of ships arrived on time in December, down from 50.1% in November, says SeaIntelligence Consulting’s schedule reliability data. December was the fifth consecutive month that global schedule reliability recorded its lowest level since SeaIntelligence started keeping records in 2011. In terms of trade routes, on-time vessel arrivals in November stood at 28.6% for Asia-North America West Coast, 26.4% for Asia-North America East Coast, 43.1% for Asia-North Europe and 46.1% for Asia-Mediterranean.   
• Reefers frozen at ports: A mandatory Covid-19 test on frozen fish imports into China has led to refrigerated containers stacking up in Dalian port, reportedly taking as long as 20 days to clear customs. As a result, reefers carrying seafood are now being diverted to Shanghai and Qingdao in China and even Busan in South Korea, leading to congestion there as well. What’s worse, ports in China are running out of the power required to keep these reefers running and cold, endangering their cargo. While some shipping lines have stopped accepting bookings to Dalian till the situation improves, others are levying a surcharge.
• Vessel sliding: With shipping lines maxed out, many (such as Maersk) are resorting to “sliding” – delaying sailings that had already been advertised – ahead of the Chinese New Year holidays starting February 12. The lunar festival is one of the busiest events in the shipping calendar.                 

What to do to prevent your container from getting rolled

• Book in advance
• Make sure your shipping documents are in order
• Strictly comply with the rules (don’t mis-declare your goods or their weight, for example)
• Have a flexible sailing schedule, especially if you’re shipping during the peak season
• Work with an experienced and verified freight forwarder
• Split your Bill of Lading (B/L) if you have more than one container. In the event one container is rolled on the basis of a chosen B/L, the other container/containers might still make the sailing
• Avoid transshipment routes as much as possible

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What to do if you cargo gets rolled

• Find out why it happened. If it’s because of a carrier-related issue (overbooking, missed port, etc), there’s nothing you can do about it. But if the problem can be resolved (missing paperwork, for example), fix it quickly.
• Inform your partners in the supply chain that the shipment will be delayed and make emergency plans.
• Have a contingency plan ready if the shipment is urgent, such as shipping it by air.            

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