Questions from importers…
Freight congestion will continue into 2022. Research commissioned by the Pacific Maritime Association (PMA) finds that equipment shortages, capacity limits, and logistical choke points throughout the entire supply chain have created the backlog of container vessels and marine terminals, slowing trade at U.S. West Coast ports.
What are current shipment import figures?
In July, it’s estimate 15 million containers moved globally. The average shipping time for ocean freight increased from 41 days a year ago to 70 days in 2021, according to Freightos.
According to data on the Port of LA website:
- Data shows over a 44% increase in containers coming into the port when comparing June 2000 to June 2001.
- In September, 60 to 70 steamships waited to dock and unload at LA/Long Beach.
Other U.S. ports are experiencing the same congestion. For example, according to data on the Port of New York/New Jersey website:
- Data shows over a 31% increase in containers coming into the port comparing June 2000 to June 2021.
According to the Global Port Tracker, which is published monthly by the National Retail Federation and Hackett Associates, when July’s import numbers are available, they will show an increase of 15.7% from July 2020, which marked the beginning of the post-COVID-19 reopenings in the U.S. last year.
Global Port Tracker projects that August imports will increase 12.6% from August 2020, while September will be up 4.9% year over year. Although it projects October will be down 3% year over year, Global Port Tracker has raised its forecast from the projections made the previous month in each report since spring.
We keep hearing about disruptions related to shipments. What’s the latest?
- In China, we are continuing to hear from partners about COVID outbreaks.
- We’re currently tracking a typhoon of the coast of China.
- In August, the Meishan terminal at the Ningbo port closed due to one COVID positive case. It is reopen. Read more.
- COVID cases are impacting manufacturing operations and production in Asia.
- Meanwhile, the Midwest has become the epicenter for congestion. Containers that moved their way from the Port of LA Long Beach into the Midwest are now awaiting chassis. Chicago rail yards are where all seven of the major North American freight railroads converge.
We are advising customers to continue to plan for unplanned disruptions such as these.
We keep hearing about skyrocketing pricing. What’s the reality?
The average cost to ship a 40-foot container is four times higher than a year ago, now $10,000. The spot price to send the same container from Shanghai to New York would have been $2,500 in 2019. Spot rate cost is now $15,000 and expect to pay upwards of $20,000 for a late booking on the busiest route.
Are port operators doing anything to help the situation?
Yes, in late September, port officials at LA/Long Beach (the nation’s busiest port) announced expanded operating hours.
Other ports also are looking at creative solutions. The Port of Charleston has expanded truck and gate hours amid a surge of cargo. Laden imports rose 39% between March and May in Charleston compared with a year ago, and 20% compared with two years ago.
We are seeing articles and hearing ideas from various partners about their plans to manage the congestion. Our trucker friends are looking to create trucker owned chassis pools instead of using the traditional leased chassis pool.
A May JOC.com article specifically outlined actions being taken at the Port of New York and New Jersey to increase container handling capacity. Leaders want to reduce dwell times from six to eight days down to the normal three days by improving operations with new ship to shore cranes and yard equipment, improving ways for shippers to move quickly to retrieve containers and creating faster gates for truckers.
What are my options for shipments?
The Cargo Services import team reviews options for clients each day. One option our clients are asking about is to simply reroute a container using truck instead of rail or vice versa. Maybe air sounds faster than a container ship.
The idea to reroute a container feels like the right thing to do, but we’re finding that can cause additional delays. In normal times, locating a container, having it pulled, processed and reloaded causes a delay. Right now, that delay would be further extended. Air prices were tracked at six times the price when compared to pre-pandemic cost. Those figures appear to be on the rise as more retailers are booking air increasing demand.
Instead of rerouting containers that are in transit, here are suggestions for supply chains:
- Consider future orders. Understand and know how the three steamship line Alliances work and their options. Diversify shipments within these Alliances. If one shipment experiences a delay, it’s likely a shipment on another carrier in a different Alliance will continue through transit. Use this infographic for information on Alliances.
- Know the different port options available. LA/Long Beach is the most congested. Could a shipment move through the Panama Canal to the East Coast more efficiently?
- Consider trucking from a different ramp. Midwest options: Louisville, Cincinnati, Chicago, Cleveland, Columbus, Detroit, St Louis.
- Space is king. If you’re offered space, book it regardless of price.
- Check out this article on our blog that outlines the current situation and recommendations.
Is air freight still an option to mix into the supply chain?
Several months ago, when we priced air cargo, many clients found it cost prohibitive due to a surge in demand. As noted above, air prices were tracked at six-times the cost compared to pre-pandemic rates. Late July rates show they appear to be rising. Delays at major airports are also causing problems. We’re seeing two to three days before cargo that arrived via a cargo flight gets unloaded and is made available. Sometimes it takes up to a week. Paying a premium air rate for cargo that has to sit because the terminal staff is unable to unload planes fast enough is costly.
My container is sitting at the port and has not moved onto rail. How long is it likely to stay there?
Some containers are moving faster than others. We’re finding it depends on the terminal at the port and how the terminal handles rail containers. The longest we’ve seen a container sit in the last three months is 66 days in Long Beach. The following week, we managed a container that moved through the port in just seven days. Plan your supply chain with delays up to 30 days in Long Beach. Rail transit is slightly delayed from the West Coast, but not nearly as bad as the congestion at the port terminals themselves.
If you have questions that are not asked and answered here,
contact your Cargo Services representative or our office directly.