UK Port Layoffs Another Signal of Slow Peak Season
Falling container demand worldwide may result in layoffs at a major U.K. port.
The Port of Liverpool said Friday morning it was set to begin redundancy consultations with staff at its container division, with up to 125 out of 850 employees potentially being laid off. The anticipated job cuts come as the port estimates a 12 percent drop in U.K. container volumes in the first half of 2023, following a 7 percent decline in 2022.
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Layoffs would come a year after the port weathered a series of strikes by workers represented by Unite the Union.
The gateway is scheduled to start issuing formal consultation notices to the employees and the union.
In the U.K., 45-day redundancy consultations mean employers give advance notice about the changes they’re planning and why employees are at risk of being laid off.
“This is a decision we have been wrestling with for many months and it’s the last thing anyone at the port wants to face,” said Ian Cressey, port director, Liverpool Containers Division, in a statement. “We deeply regret the impact this will have on our people, but the sustained and significant deterioration in the global container market has forced our hand.”
Peel Ports, the port’s operator, called the decision “extremely regrettable but unavoidable.”
The port has said it will accept voluntary redundancies and will offer career transition advice and support, if required.
Further illustrating the collapsing container demand, Drewry’s Global Container Port Throughput Index fell 1.4 percent on an annual basis in July 2023, and 2.1 percent month over month.
“These are challenges being faced by every other port operator in the market and we’ve done everything possible to safeguard jobs despite markedly declining global container volumes over the past two years,” Cressey said.
Drewry’s Nowcasting Model, which uses vessel capacity and terminal duration data to make short-term predictions of port throughput, indicated that the index will have fallen further last month, dropping 4.1 percent month over month in August 2023.
European ports like Liverpool, as well as North American ports, are seeing a larger impact from the weak demand than their global counterparts. Europe’s ports in July saw container port throughput decline 3.1 percent year over year, while North America saw a 12.6 percent decline. The McCown Report, which analyzes inbound container shipping data from the top 10 U.S. ports, said inbound volume dropped 12.9 percent in both July and August.
U.S. ports are broadly seeing weak demand. Cargo volumes at the Port of Long Beach fell 15.4 percent year over year to 682,312 20-foot equivalent container units (TEU) in August, marking almost a year of consecutive volume declines at the port. Similarly, the Port of Oakland saw TEUs declines of 13.1 percent.
At Port Houston, volume fell 20 percent year over year to 307,624 20-foot equivalent container units (TEU), the highest decline of the year. On the East Coast, the Port of Virginia reported a 15.7 percent decline, processing 287,232 TEUs.
The Port of Los Angeles was the exception, notching a 2.8 percent annual gain in container volume during the month, moving 828,015 TEUs. The Port of New York & New Jersey doesn’t report until weeks after the other major ports.
Lower demand means lower ocean freight rates. Drewry’s World Container Index (WCI) fell by 5.2 percent to $1,479.48 per 40-foot container as of Thursday, marking the fifth straight week of spot rate declines. This is just ahead of the 2023 low of $1,474.32 on July 6.
The Freightos Baltic Index (FBX) saw a similar 4.5 percent price decline to $1,389.50 per 40-foot container.
The falling rates are linked to more blank sailings, further impacting container port throughput.
According to data from maritime research analysis firm Sea-Intelligence, 29 new blank sailings—where vessels skip their normal rotations—were scheduled on the Transpacific route, and 18 more on the Asia-to-Europe trade lane in the span of two weeks as of Sept. 13.
Scheduled capacity reductions on Asia-to-North America West Coast routes rose from 3.7 percent to 14.1 percent in the two-week period, and from 2.2 percent to 16.1 percent on the Asia-to-North America East Coast route. The Asia-to-North Europe trade lanes saw reductions of 19.9 percent, up from 6.8 percent, while Asia-to-Mediterranean went from 7.7 percent to 21 percent.
Blank sailings can be an inconvenience for shippers, as they have to arrange alternate transportation when goods arrive at a different port. But carriers opt for blank sailings when there is overcapacity at sea to try to increase freight rates.
