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Container lines have blanked an unprecedented number of sailings to bring capacity in line with the coronavirus-stricken cargo demand.
Blank-sailings data is a key leading indicator for U.S. ports, cargo shippers, truckers and railways. A container ship that doesn’t depart from Asia equates to a container ship that doesn’t arrive on the U.S. West Coast two to three weeks later, or on the East Coast four to five weeks later. What matters to American businesses is U.S. port arrivals, not foreign departures. American businesses want to know exactly how much arrival capacity will be reduced, exactly when it will be reduced, and how this reduced capacity will compare year-on-year.
The latest data shows changes to head haul capacity from Asia to North America, as well as changes to mainline capacity to individual U.S. ports. Taken together, this offers the clearest publicly available picture yet of how the coronavirus is affecting the container-shipping network that supplies America. According to the data provided by eeSea, 51 of 243 scheduled North American arrivals from Asia have been cancelled in May; 44 of 236 in June; and 23 of 240 in July.
Major capacity reductions in May and June are telling — and ominous. Lower cancellation numbers starting in July do not prove a positive trend because the carriers have not decided on schedule changes that far out. May arrival numbers are set, June numbers have room to increase, and numbers for July forward could increase substantially.
West Coast versus East Coast
In comparing trade lane data for Asia-West Coast arrivals to Asia-East Coast arrivals, blank sailings will cut inbound capacity to the West Coast by 23% in May and 17% in June. The data reflects a different scenario for the East Coast, possibly due to the longer transit times from Asia. Blank sailings will reduce this May capacity by 16% and will lower capacity in June by 23%.
Capacity Vs. Volume, Does the Data Indicate Recovery?
While it is clear that container-ship capacity to the U.S. will definitely fall in both in May and June, and possibly thereafter, there are a few caveats to the data.
Capacity is a strong leading indicator of throughput trends, because it shows carriers’ reaction to cargo demand, but ship-capacity reductions do not directly translate into volume reductions.
The relationship between capacity and volume depends on utilization — the percentage of available container slots on the ships that are used. If total ship capacity is reduced but average utilization is increased, volume may fall at a slower rate than total ship capacity. If utilization decreases despite reduced total capacity, volume may decline faster than total capacity.
Blank-sailing data is important shippers as they plan for supply-chain disruptions. It is also a good indicator that if carriers have still not brought their July and August capacity cuts up to the 15-20% levels of May and June, it would imply that carriers see cargo demand rebounding — a positive signal on the coronavirus recovery.
U.S. Ports, Terminals, Stevedores Seek Federal Aid to Weather COVID-19
US ports and marine terminals are seeking federal help to shoulder additional costs tied to cleaning their facilities and investing in personal protective equipment (PPE), as well as weathering the impact of the coronavirus disease 2019 (COVID-19) on volumes.
Groups representing US ports — both landlord and operating ports — marine terminal operators, and stevedores, tell JOC.com they hoped-for federal aid via grants and loans would ensure their members can keep the nation’s containerized supply chains flowing. The scale of federal help the industry needs isn’t yet clear, but proposals for a seaport grant program up to $1.5 billion and another $400 million for personal protective equipment (PPE) and cleaning supplies give a sense of the damage that has been inflicted and is still expected.
The impact of COVID-19 is pulling down cargo volumes by double-digit percentage rates, making it difficult for marine terminals to meet lease requirements while they have to spend extra money on cleaning supplies and PPE to keep workers safe. Marine terminals will have a hard time meeting minimum cargo volume commitments via leases with landlord port authorities, while those ports with an operator model will suffer the loss in volume revenue more directly.
Marine terminal operators need help managing these challenges not only from port authorities, but also from the federal government, two members of the Federal Maritime Commission (FMC), told Congress. They noted that existing federal programs limit or shut off marine terminals entirely from tapping federal programs.
PPE grant request coming
Marine terminals and waterfront employers will ask Congress this week to create a one-time, $400 million grant program to help pay for cleaning supplies and PPE equipment, including plexiglass between truck gate operators and drayage drivers. The size of marine terminal operators and stevedores prevent most from accessing Small Business Loans, and while they serve the public good, their status as private companies excludes them from other federal COVID-19 aid programs. The grant would help its members maintain their workforces and weather financial shocks as ports face a loss in volume.
Major U.S. Ports Status Update
Ports of Seattle & Tacoma - Washington United Terminals will implement an appointment system for import pickups beginning June 1, 2020. The system will be managed through eModal. All terminals except Husky and Washington United are closed Friday, Husky Terminal will remain open on Saturday and all remaining terminals are closed Saturday and Sunday.
Port of Los Angeles/Long Beach - Blanked sailings will decrease the port’s volume by 21% in May and 16% in June. All terminals except Pier C are closed second shift Friday and closed Saturday and Sunday. All other operations are normal.
Port of Oakland - A sprawling vessel service begins this week with 18 megaships linking the Port of Oakland to Asia, including Saudi Arabia. A highlight of the new service: the first-ever direct link between Oakland and the Middle East. All terminals are open for normal business and closed Saturday and Sunday, excluding the Matson Terminal that is open Sunday.
Port of Houston - A new Evergreen Line weekly service has started at the Barbours Cut Container Terminal. The transhipment service, named CAJ, will further connect Houston to major trade lanes around the world. The service began with the maiden voyage of the M/V Arkadia. The port is operating normal business hours, and closed Saturday and Sunday.
Port of New York/New Jersey – The Port of NY/NJ is forecasting a 12% decline in capacity for May and 14% in June. The port has identified available warehousing in the region and has amassed a list of facilities with additional storage capacity that range from traditional warehouse space and pallet positions to yard space and parking. All ports are open and operational as normal.
Port of Virginia – As a reminder, the port has announced that effective May 4, 2020, the Portsmouth Marine Terminal (PMT) will be closed due to a downturn in volume. Truck gate openings at Norfolk International Terminals and Virginia International Gateway will also be shortened one hour to open at 0700 hours, Monday – Friday.
South Carolina Ports – While South Carolina ports are anticipating a decline in capacity of 18% for May and 17% for June, SC Ports in Charleston, Greer and Dillon are operating normally for gates and vessels.
Port of Georgia – Savannah capacity is planned to be down 16% in May and 19% in June. Saturday gate hours are suspended until further notice.
More Airlines Trade Passenger Interiors for Cargo
LATAM Airlines and Austrian Airlines are the latest passenger carriers to make room for cargo by removing seats in the cabin as shippers frantically seek more airlift to move their goods. Airlines opting to reconfigure passenger aircraft as full freighters in the seven weeks since cargo-only flights became a phenomenon have cleared all the seats, but Chile-based LATAM is taking the unusual step of dismantling only some rows to improve capacity. Austrian, too, is leaving some seats in place.
LATAM on Monday said it has modified a Boeing 777-300 extended-range aircraft to temporarily fly from Asia to Latin America with medical supplies needed for the coronavirus outbreak. The company’s maintenance centre completed the interior changes in three days, adding 20% more room by volume compared to planes only using the lower cargo hold and seat areas. As previously reported, LATAM is putting cargo on top of seats in some cases. Remaining seat rows help brace cargo.
Meanwhile, Austrian Airlines, which suspended all passenger flights March 18, last week converted the first of two Boeing 777s, in which 270 of the 306 passenger seats from all travel classes were removed. The second conversion is scheduled to be completed Thursday. Clearing out the cabin, which took 500 man-hours per aircraft, increases the cargo capacity of the widebody jets by about 35%, Austrian Airlines said.
This week, several airlines have announced added capacity and additional routes for cargo shipments including American Airlines, Delta Air Lines, Philippine Airlines and Finnair.
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