Questions from importers…
I’m experiencing unprecedented container import delays and congestion. I’ve been importing for decades. Has this ever happened in the shipping industry?
This is an absolutely unprecedented time. There’s no way to adequately describe it other than “drastically congested.” Personal consumption among Americans increased 11.4% in the first quarter of 2021. Congestion and impacted shipping costs are affecting goods from coffee to toys to those computer chips we’re hearing so much about. According to JOC.com:
West Coast ports handled 4.9 million TEU of laden imports from Asia in the first five months of 2021, accounting for 61.8% of all US imports from Asia, according to PIERS, a JOC.com sister product within IHS Markit. That was up from 59% market share in January through May last year and 60.8% in the first five months of 2019.
East Coast ports handled 2.6 million TEU of imports from Asia for a market share of 32.7 percent, down from 35.2% last year and 34.3% in January through May 2019. Gulf Coast ports handled 408,528 TEU of imports from Asia for a 5.1% market share, down from 5.5% in the first five months of 2020 but up from 4.6% in 2019, according to PIERS.
How long is import congestion that’s creating delays expected to last?
The monthly Global Port Tracker report released in April from the National Retail Federation and Hackett Associates says the situation is expected to continue at least through the end of this summer as retailers work to meet increased consumer demand.
According to data published in JOC.com in May:
- April was the busiest month on record. United States imports from Asia increased 29.3% in April from the same month in 2020, marking the 10th consecutive month of year-over- year growth since the U.S. economy reopened last summer from initial COVID-19 lockdowns.
- April’s imports from Asia totaled 1.55 million TEU. That was down slightly from the historically high 1.72 million TEU in March, but still up 25.7% from April 2019, the latest available comparison not skewed by the effects of the COVID-19 pandemic, according to PIERS, a JOC.com sister company within IHS Markit.
We keep hearing about disruptions related to shipments. What’s the latest?
- In China, the Yantian port area, a major transport center in Guangdong where workers handle some 25% of shipments in/out of Asia, suspended operations in late May due to a COVID-19 outbreak. The Wall Street Journal reported in mid-June some 50 container ships sat waiting to berth at the port. Port officials say operations are back to 70% capacity. In early June that figure was 30%.
- 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. In Chicago, a chassis shortage has left 2,500 containers stacked awaiting transport in a Joliet, IL rail yard.
We are advising customers to continue to plan for unplanned disruptions such as these.
Are port operators doing anything to help the situation?
Yes, 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.
Ports also are looking for 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.
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.
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.
- 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 that lessens and more flights are taking off, there is more space. That means air rates are going down a bit since the high mid-pandemic. Still the delays at major airports are causing problems. We’re seeing two to three days before cargo that arrived on 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.
How long do you think this congestion/delay period last?
We could see a “rate reduction” period at the earliest in the fourth quarter. Customers are still ordering heavy and the lead times for many manufacturers overseas has been stretched 60 to 90 days or longer, and in some cases, before product ships. Several economists also are predicting a shift from a goods economy, meaning everyone’s ordering things for their homes, back to a service economy with people beginning to spend cash on experiences.
Why did I pay premium and still have to wait and be a part of the congestion?
Carriers offered premium options to guarantee space on the vessels, but the vessels don’t go faster. The premium payment also doesn’t guarantee a slot(s) at the port, on the rail, or on a truck. It’s only a spot on a vessel. Many vessels are berthed and waiting for their turn to be unloaded.
If you have questions that are not asked and answered here,
contact your Cargo Services representative or our office directly.