New IMF report seeks facility upgrade to reduce port congestion

A new report by the International Monetary Fund (IMF) has drawn attention to the severity of port congestion as a drawback to efficient supply chains, saying facility upgrades are necessary to reduce the challenge.

The report – ‘Supply Chains and Port Congestion Around the World’ – draws on experiences at ports across 183 countries and territories using datasets of both pre-COVID-19 and during the pandemics.

According to the report, shipping times jumped upwards as soon as the COVID-19 crisis hit and after a marked acceleration from the end of 2020. Delays, it states, surpassed 1.5 days or 25 per cent increase on average by last December.

It attributes the marked increase in waiting for time and delay of vessels experienced in the second half of last year to rising purchasing power.

However, it notes that ports with poor or inadequate facilities suffered port congestion even without a significant increase in traffic.

“Rising prices and reports of empty shelves in major economies have drawn attention to the functioning of supply chains that normally operate smoothly in the background. Among the issues, the long delays that port congestion may have caused in delivering goods to consumers and firms have been drawing increasing attention… Considering that global average travel times consistently hovered between 6 and 6.5 days from 2016 to 2019, the additional port delays by the end-2021 amounted to a roughly 25 per cent increase.

“The estimated additional days in transit for the average shipment in December 2021 can be interpreted as a global ad-valorem tariff of 0.9 to 3.1 per cent under some assumptions. The midpoint of this range is approximately equal, in absolute value, to the global applied tariff reduction achieved over the 14 years from 2003 to 2017” the report points out.

It adds that the congestion suffered last year appeared related to increased demand, but notes that many ports, especially from mid-2021, exhibit longer wait times despite handling less cargo than pre-pandemic.

“Infrastructure upgrading is therefore likely a necessary, but not sufficient condition for building resilience during a crisis where other factors (such as labour shortages) may also become binding,” it notes.

Nigeria’s ports are notorious for congestion for reasons ranging from abandoned containers, poor capacity to endemic official graft. Earlier in the year, reports said exporters were re-routing cargoes to Port Harcourt and Calabar ports as congestion hindered operations at the Lagos ports.

Last year, the Nigerian Ports Authority (NPA) said over 6,000 overtime cargoes, containing 1,800 vehicles and other items, at the Lagos ports were responsible for increased congestion.