15/2/2021

Dear all Valued Customers

 

As Asia rings in the New Lunar Year, typically supply chains are experiencing some slow downs due to the holiday. However, nothing is typical in the industry right now, and shippers can expect conditions to remain this way for quite some time.

 

Congestion in China, Some Factories and Customs Working Through the Holiday

 

Equipment imbalances have troubled carriers for months now, but most recently congestion in key gateway ports in China are also causing vessel delays. Shanghai, Shenzhen, Ningbo and Dalian are the most affected right now due to the Pre-New Lunar Year rush to fulfill the strong demand before the holiday. Other factors causing congestion were the high use of the terminals with traffic jams from already strict trucker testing requirements and capacity shortages, as well as general COVID-19 restrictions that left the ports short as many people returned home early for the holiday. The average vessel wait time at these ports ranged from one to three days, with Hong Kong experiencing similar congestion levels.

 

With the Chinese Government discouraging people from “nonessential travel” due to a new wave of COVID-19 infections, many factories have announced that they will be keeping production open through the holiday to clear the backlogs of orders. While it is unclear exactly which factories will remain open, it is expected that congestion problems will persist as they will also be looking to get the orders off their dock.

 

Carriers have said that they will clear the port congestion after New Lunar Year, it is questionable that it will actually occur as these factories feed cargo to the ports. Last year, ocean carriers cut 112 vessel departures at Chinese ports, or about 20% of capacity. This year there were only 63 blank sailings, with the primary reason being due to rotation issues – not a lack of demand. Backlogs for airfreight shipments are also expected as a large number of freighter flights were cancelled weeks ago in anticipation of a dead shipping period that didn’t happen.

 

China Customs is also working during the holiday to clear congestion. While closed during the weekend, China Customs has announced they will operate a reduced staff beginning on Monday through the balance of the holiday. Customs authorities will also be working road border crossings to clear truckers moving freight from open factories.

 

Freight Bound for LA-LB? Delays continue

 

The Ports of Los Angeles and Long Beach (LA-LB) have also been inundated with severe port congestion for months now. Newly released U.S. Coast Guard video shows just how extreme the congestion has become at the ports. In this historic traffic jam off the coast of California there are 25 container ships at berth at the port and 32 at anchor awaiting entry. This number is slightly down from its peak of 40 ships at anchor on February 1.

 

Shippers may also consider other ports to avoid the LA-LB congestion, as Trans-Pacific carriers are adding capacity to Oakland and Seattle-Tacoma. Executives at both ports have assured carriers they have the terminal capacity to handle an influx of inbound ships, but both are already experiencing delays due to an increase of export containers as well as elevated truck turn times.

 

Will the end of the second quarter of 2021 bring normalcy to the Trans-Pacific supply chain? Only time will tell, as most industry experts believe this will last through second quarter with possibly some sense of normalcy by the beginning of Summer.

 

BRi ERP and Order Management Program

 

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As a valued customer, we hope that you will continue to trust us to source the best options for your supply chain needs now and into the future. Should you have any questions regarding this news, please contact you Customer Solutions Representative.

 

 

Keeping you updated,

BRi Customer Solutions Team.

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