UPDATED: April 2021 International Market Update
An update from Sunset’s International Team:
The number of container ships stuck at anchor off Los Angeles and Long Beach is down to around 20 per day, from 30 a few months ago. Does this mean the capacity crunch in the trans-Pacific market is finally easing? Absolutely not.
Restocking driving volumes higher
Trans-Pacific import volumes are still rising. January trans-Pacific imports were up 10% versus 2019 (comparisons to 2020 numbers are skewed by COVID) and 13.5% in February, then jumped 51% in March. “So, we’re now at 1.5 times pre-pandemic levels.”
With imports far outpacing retail sales growth, attributed volumes to inventory restocking. The restocking is actually affecting the trade even more than growth in demand. That tells me that this will last even longer. Let’s say U.S. consumer demand slows down in Q3 and Q4. That’s not expected, but even if it does, [capacity availability and rates] shouldn’t improve quickly, simply because of the huge restocking demand. It is also believed there is a growing export backlog piling up each day in Asia, awaiting available ship slots.
As a result of the backlog and restocking demand, prices will remain high and shipping will probably remain difficult for the rest of this year. And then after that, you have the peak for Chinese New Year in 2022.
About to get even worse
The situation today is the worst we have witnessed — and we believe it’s about to get even more severe. Because some shippers will have to wait in line behind the growing backlog in Asia, some importers won’t even be able to get on the boat. For them, it will almost feel like trade is coming to a halt.
Spot premiums back with vengeance
As of Friday, the Asia-West Coast spot rate at $4,797 per forty-foot equivalent unit (FEU) and the Asia-East Coast rate at $6,306 per FEU — both near all-time highs.
Added premiums to get spot cargo loaded are back and they’re higher than before. They are $2,000-$3,000 above FAK [spot price] and that’s the best case. Spot cargo that was booked 21 days prior and was forecast within the shipper’s allocation is still getting FAK pricing on spot.
Contract rates up sharply
We are seeing fixed-price increases of slightly over 100% on Asia-West Coast and about 75% on Asia-East Coast.
Advice to importers
You have to be flexible. Look for any routing and be creative. It’s a moving target. And don’t wait. If something opens up, act fast.
Source: FreightWaves, American Shipper
Port / Terminal Operations
LAX/LGB Terminal Update:
There are currently 23 ships (-2) at anchor awaiting berths in LAX/LGB as of Friday April 9th. All terminals continue to suffer from severe congestion due to the spike in import volumes. Changes of destination (COD’s) and container “dig outs” are restricted due to limited terminal space. Customers are urged to continue to expedite the pickup of import containers and inform any COD requests at least four days before the start of vessel operations. While most of the port employees are participating in the COVID-19 vaccination program, the terminals continue to work with limited labor and split shifts (COVID-19 related). The demand for available labor affects all terminals turnaround time for truckers, inter terminal transfers, the number of daily appointments available for gate transactions and generates delays in vessels operations.
Due to terminal congestion, there can be switching of vessel terminal assignments. This must be kept in mind if doing OOG and overweight bookings that are supposed to be going on dock but end up in the wrong terminal. Trucking continues to be delayed due to limited trucking power generated by terminal congestion and COVID-19. This situation affects all door and ramp intermodal moves.
The UP rail has limited the access to many US inland ramps due to capacity constraints and railcar shortages. This has created a serious backlog in many on/off dock rail services ex SoCal to many destinations and is generating delays of more than two weeks into some inland ramps
Oakland Terminal Update:
Currently there are 24 ships (+12) at anchor or drifting in the San Francisco Bay area as of April 9th. One of five berths at OICT remains unavailable due to new crane deployment. It is expected to be available end of May*.
Labor demand remains high in the port due to increased imports and vessels diverting to Oakland as first port of call. Yard re-handling and re-stows on vessels due to change of rotation and additional empty lift out of LAX/LGB is creating further delays. Export receiving is strictly controlled causing pain points for truckers, however this is mainly due to vessel schedule integrity. All berths remain occupied
New York Terminal Update:
Currently there is no berth congestion impacting vessel arrivals. Dwell times for import volumes and terminal yard utilization continue to be higher than normal. Terminal gates are being metered where necessary to steer empties to facilities which have available capacity.
Savannah Terminal Update:
Currently 9 ships (-1) at anchor as of April 9th. The river has remained open with good weather all week, which will assist to bring down the number of ships and days waiting for a berth. Wide beam vessels lead to scheduling conflicts and additional coordination with one vessel in the river at a time. The yard and gate operations remain fluid.
Canadian Terminal and Rail Delays Update:
High yard utilization at all terminals in Vancouver as a result of high import volumes. Expected to last well into Q2. Vessel productivity and yard productivity continue to improve, along with stable rail car supply, which resulted in increased fluidity on terminal. We continue to experience berth delays in VAN of 3 to 7 days. Prince Rupert (PRR) yard productivity and berth availability continues to improve.
Dwell time at the Port Terminals:
- Halifax – 3.8 Days
- Montreal – 3.1 Days*
- Vancouver – 3.0 Days*
- Prince Rupert – 8.5 Days*
Car supply into Vancouver has improved significantly and import dwells remain below average.
Dwell time at the Rail Terminals:
- Montreal – 1.9 Days*
- Vancouver – 2.8 Days*
- Intermodal Operations:
Capacity limitation in certain markets due to import volume spikes and severe drivers’ shortage. Please find main markets, and estimate lead-time to secure capacity below (Note: Lead time refers to timeframe to secure truck power, it is not dwell time):
Market / Average 12-days+:
- Los Angeles, CA (30 days +) – Long Beach, CA (30 days +) – Atlanta, GA (15 days) – Baltimore, MD (14 days) – New York, NY (12 days) – Norfolk, VA (14 days) – Savannah, GA (15 days)
Markets / Average 7-days+:
- Boston, MA (7 days) – Buffalo, NY (7 days) – Charleston, SC (10 days) – Charlotte, NC (8 days) – Columbus, OH (7 days) – Dallas, TX (8 days*) – Houston, TX (9 days*) – Jacksonville, FL (7 days*) – Kansas City, MO (10 days) – Louisville, KY (8 days*) – Miami/PT. Everglades, FL (7 days) – Philadelphia, PA (8 days*) – Seattle, WA (7 days) – Tacoma, WA (7 days) – Salt Lake City, UT (7 days*) – Memphis, TN (10 days*)
Markets / Average 4-days +:
- Birmingham, AL – Chicago, IL – Cincinnati, OH – Council Bluff, IA – Denver, CO – Greensboro, NC – Greer, SC – Huntsville, AL – Indianapolis, IN – El Paso, TX* – Laredo, TX – Minneapolis, MN – Oakland, CA – Pittsburgh, PA – Portland, OR – Santa Teresa, NM – New Orleans, LA – Saint Louis, MO*
Current chassis pool operations are improving in many markets. Below are the current locations where chassis inventory remains a concern. Shippers are urged to return containers to help improve the availability. Over 5000 chassis have been injected into various chassis pools across the US to keep up with the influx of imports. Repair vendors are working overtime and weekends to keep up with the requirements to provide safe and reliable assets.
- New York (USNYC) – Deficit on 40’ chassis due to demands.
- Chicago (USCHI) – Constrained on 20’ chassis, deficit on 40’ chassis due to surge in demand.
- Cincinnati (USCVG) – Constrained on 40’ chassis due to demand.
- Columbus, OH (USCMH) – Constrained on 20’ chassis due to demand/street dwells.
- Louisville (USLUI) – Constrained on 20’ chassis and deficit on 40’ chassis due to street dwell.
- Detroit (USDET) – Deficit on 40’/45’ chassis due to demand and street dwells.
- Oakland (USOAK) – Constrained on 40’ chassis due to surge in demand.
- Los Angeles / Long Beach (USLAX/USLGB) – Pool of Pools seeing deficits on all chassis inventory in all terminal locations
Please Note: Current average dwell times for boxes at several terminals / ramps. Includes, MH, rail and truck moves.
- New York, NY – Average 7.1 days
- MMR New York (Elizabeth Marine Terminal-Rail) – Average 5.3 days
- Long Beach, CA – Average 7.8 days*
- Los Angeles, CA – Average 8.7 days*
- Charleston, SC – Average 4.0 days*
- Savannah, GA – Average 5.6 days*
- Norfolk, VA – Average 4.3 days*
- Kansas City, MO – Average 8.5 days*
- Chicago, IL – Average 5.7 days
- Memphis, TN – Average 2.7 days*
Detroit, MI – Average 6.0 days*
- Impact on transportation due to vaccine demand has mostly been on the trucking market.
- Vaccine manufacturing facilities are focused on satisfying local demand first which has led to more regional distribution.
- The trucking market is expected to maintain high demand for the foreseeable future.
- Vaccine effect for international air freight will be felt more strongly end of Q2/beginning of Q3 – with a major surge expected in April/May to push high demand into Q3.
- Batch sizes of vaccine shipments are small enough that they are mainly filling only belly capacity at this time – but this is expected to change as vaccinations will soon take up a higher percentage of air freight capacity.
- The demand for vaccinations will not be a one time occurrence; assuming boosters required every two years this will equate to estimated 15k tons of airfreight required to move on an annual basis.
- Airport congestion continues to worsen, particularly at the major hubs of ORD, JFK, EWR, ATL, LAX, DFW, HOU, etc. We have seen instances where cargo was not broken down and made available until over a week after arrival.
- US terminal wait times are continuing to increase with truckers waiting in line for 8-10 hours once freight released.
- Commercial market rate from PVG – ORD is above $9/kg and likely to increase further.
- Commercial market from HKG – ORD is above $10.50/kg.
- Volumetric cargo is very attractive in the APAC-US market.
- Air freight rates and market capacity on the European-US trade lane are stable.
- Transpacific rates ex US are increasing with a GRI scheduled to hit on 04/15.
- US – Oceania rates are also driving upwards with a GRI announced for 04/15.
- Port / labor situation in Canada has no updates – discussions continue.
- Last 85 vessels from the Suez Canal have cleared, however, there is still a backlog of ships moving through.
- We will likely see major congestion and vessel delays as the US ports try to handle a surplus of volume as ships move through the canal.
Source: JAS Forwarding
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