March 2021 International Market Update
An update from Sunset’s International Team:
US importers are continuing to experience a complex ocean market as we close the Chinese New Year period and move towards the tail end of the 2020-2021 contract season. Today’s update will focus primarily on the Europe and Asia – North American Trade Lanes, while also highlighting some of the US infrastructure challenges impacting all ocean cargo.
OVERALL ON-TIME PERFORMANCE:
Global ocean carrier schedule reliability was on a steady decline for most of 2020, however, the beginning of 2021 saw these figures worsen even further with January 2021 on-time percentage coming in at less than 35%. This result looks even worse when compared with January 2020, when global reliability was 68.4%. The January 2021 global on-time percentage is the worst ever recorded according to Sea-Intelligence.
The average delay for late vessels also worsened in January 2021, and none of the major ocean carriers recorded a month-over-month or year-over-year improvement, demonstrating that the lack of reliability is an industry-wide problem.
The Transpacific trade lane in particular favored the worst in January 2021. Asia – North America WC vessels arrived on-time just 13.8%, and ocean cargo destined for the North America EC hit a schedule reliability of only 21.5%. Asia-North America WC average delays were over 10 days, while the Asia-North America EC average delays were almost 6 days. All of these numbers are significant reductions, both year-over-year and month-over-month.
The Transatlantic trade lane schedule reliability also suffered last month, with an 8.2% drop compared to December 2020. Average delay of late vessels was also significant in January 2021, coming in at 6.56 days.
TRUCK POWER AND CHASSIS AVAILABILITY:
The combination of significant volume increases, poor weather conditions throughout the country, COVID-19 restrictions, and an imbalance of imports/exports has led to operational challenges facing the port terminal and drayage communities. Large Southeast ports such as Charleston, Savannah, Miami, and Norfolk are all facing availability and truck power delays, which can add more than 7 days to the destination lead time. The Northeast ports are encountering their own challenges as well, with destination dwell times exceeding ten days in certain cases in New York/Newark. Lack of schedule reliability and rising fuel costs have also stressed the drayage community, making it more difficult to pre-plan truck power to meet delivery requirements.
On the West Coast, the ports of Oakland/San Francisco and Los Angeles/Long Beach are experiencing extreme delays, with vessels idling off of the LAX/LGB ports for up to two weeks waiting for berth windows. Once the vessels do arrive, we are seeing, at times, up to 21 days before containers are discharged and available for collection. Obtaining drayage capacity is very challenging as well, with delays at the terminal aggravating this problem. These congestion and operational challenges also extend to inland rail moves, CFS’ and terminals, with multimodal lead times and deconsolidation services impacted as well.
- Demand on the Italy – US Trade Lane is extremely high, with rates increasing steadily and vessels filled 4+weeks out. Our recommendation is that suppliers book 4-6 weeks prior to cargo ready date to ensure minimal interruptions in the supply chain. Premium service and associated rate offerings will likely be available in the coming weeks.
- Equipment shortages have continued to plague many countries throughout Europe. This, coupled with increased demand, will lead to a more challenging Transatlantic trade lane in Q2.
- Transatlantic – NORAM LCL cargo is becoming more expensive with carriers pushing for GRIs which will be effective March 1st.
- Competition for space from Asia-US is still the biggest hurdle facing US importers. Please continue to work with suppliers to book far in advance and adjust lead times to account for delays at origin, on the water, and when cargo arrives on US soil. Equipment shortages out of Asia continue to be a challenge in most markets, along with frequent blank sailings.
- Updated Transpacific – NORAM FCL rates have been published with carriers securing moderate GRIs. Premium rates vary per steamship line between $1,000 and $3,000 surcharge on top of standard FAK rates.
Source: JAS Forwarding
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