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A growing volume of North American imports due to leave central and southern China over the past two weeks has been rolled to later sailings after a sudden surge in imports collided with the sharp COVID-19-related reduction in trans-Pacific capacity.
Importers are hoping cargo rolling will stop within a couple of weeks, when vessels that have been booked to 110 percent of capacity will be back in the mid-90 percent range. Outbound ocean slot space to North America is getting tighter amid a surge in Asia imports and reduced capacity, which has been cut by 17.3 percent through scores of blank sailings.
A carrier executive told JOC.com that several trade lanes from China, including the eastbound trans-Pacific, are indeed overbooked. He described the situation in the trans-Pacific as a return to “normal cargo volumes” for this time of year rather than an atypical surge in volume.
Volatility in eastbound trans-Pacific to continue
US imports from Asia were weak in the past two months. Imports declined 1.3 percent in April after falling 17.4 percent in March. It is expected these sudden swings in cargo volume in the Asia-North America trade will continue in the coming months.
A maritime expert from Sea-Intelligence said blank sailings, which peaked over the past two weeks, are “historically high,” but will trend lower in the coming month. Previously Sea-Intelligence said carriers from early April into late June planned to blank 80 sailings to the West Coast and 43 to the East Coast. However, it appears that carriers do not plan to blank sailings in Q3, which is usually the busiest period in the eastbound trans-Pacific, with vessels filled with holiday season merchandise. “No blank sailings beyond Q2 are on the books,” he said.
Q3, Q4 still uncertain
Supply and demand projections for the third quarter are still murky, although the carrier executive said that, “Carriers feel Q3 and Q4 will be pretty good.” Sea-Intelligence said the fact that no blank sailings are on the books beyond Q2 indicates carriers anticipate a period of stability this summer. However, judging by their success in preventing a plunge in spot rates the past two months through blank sailings, it must be assumed they will resort to more cancelled sailings in Q3 if need be.
Importers should not expect that there will be a return to the pricing in the eastbound trans-Pacific that existed during the recession, but neither should they feel they should be subjected to continued blank sailings simply because carriers want to prop up spot rates. “There is no need to roll,” one analyst finalized.
Major U.S. Ports Status Update
Ports of Seattle & Tacoma – The Ports of Tacoma and Seattle reported a 23.5 percent drop in volume due to 39 cancelled sailings in April, however, the ports and terminals have all remained operational throughout the coronavirus crisis. Terminals 5, 18 and 30 are open for normal hours on Memorial Day, all remaining terminals will be closed.
Port of Los Angeles/Long Beach – The Port of Los Angeles/Long Beach has put together a task force to focus on enticing businesses to bring cargo back to the West Coast. The task force is reviewing port upgrades and customer incentives as part of the directive. The US Naval Ship Mercy departed Los Angeles this week after a six-week stay at the port to handle COVID-19 patients. All terminals are open this week and closed Saturday and Sunday, except for Everport Terminal, which will operate Saturday gate hours only.
Port of Oakland – The Executive Director of the Port of Oakland has announced plans to reduce operating income in an effort to encourage business recovery. Reductions in travel and capital improvement projects are included in the cuts to the port’s budget. The port is open and operating as normal, with most terminals closed on Memorial Day for import activities, but operating a reduced crew for export load-ins.
Port of Houston – Both Barbours Cut and Bayport Terminals are open and operating normal business hours, closed Saturday and Sunday. Both terminals are closed on Monday for Memorial Day.
Port of New York/New Jersey – The Port of NY/NJ has continued to move PPE and medical goods via the ExpressRail facilities including ExpressRail Port Newark, ExpressRail Elizabeth, ExpressRail Port Jersey and Express Rail Staten Island. The facilities are directly served by the CSX and Norfolk Southern railroads. The next port briefing is scheduled for May 28, see the full schedule here. Most terminals in the Port of NY/NJ are closed for Memorial Day.
Port of Virginia – As a reminder, the port has new hours container yard hours to 1700 hours, Monday – Friday for Norfolk International Terminals (NIT), Virginia International Gateway (VIG), Pinners Point Container Yard (PPCY), Portsmouth Chassis Yard (PCY) and the Reefer Service Area (RSA). Gate hours at Newport News Marine Terminal, Richmond Marine Terminal and the Virginia Inland Port are unchanged. All terminals are open and operating as normal otherwise. For Memorial Day weekend, all truck gates will be closed Saturday, May 23-Monday, May 25, but vessel and rail operations will continue.
North Carolina Ports – The Port or Wilmington and Morehead City both fared well with no damage or disruption after the landfall of Tropical Storm Arthur earlier in the week, the first official storm of an earlier than normal US hurricane season. Wilmington is welcoming one of the largest containerships this week, the MV Hyundai Hope. Both Wilmington and Morehead will be closed for Memorial Day.
South Carolina Ports –South Carolina Ports Charleston, Greer and Dillon are operating normally for gates and vessels. All container terminals will be closed for Memorial Day, except Charleston Container Terminals, which will be open for vessel activities only.
Port of Georgia - Ports will be open for vessel activity on Memorial Day.
USTR Accepting Public Comments on Exclusion Extensions
As a reminder, the USTR will consider a possible extension for up to 12 months on goods included in the initial 11 product exclusion notices under the $200 billion action. The products which are granted for the Section 301 List 3 exclusions are scheduled to expire August 7, 2020 unless an exclusion is granted.
• 84 FR 38717 (August 7, 2019)
• 84 FR 49591 (September 20, 2019)
• 84 FR 57803 (October 29, 2019)
• 84 FR 61674 (November 13, 2019)
• 84 FR 65882 (November 29, 2019)
• 84 FR 69012 (December 17, 2019)
• 85 FR 549 (January 6, 2020)
• 85 FR 6674 (February 5, 2020)
• 84 FR 9921 (February 20, 2020)
• 85 FR 15015 (March 16, 2020)
• 85 FR 17158 (March 26, 2020)
Additionally, List 1 and List 2 exclusions are also expiring soon and the portal for comments on these lists closes on June 1, 2020.
• List 1 ($34 Billion) – Exclusion granted effective date 7/9/2019 will expire as of 7/9/2020
• List 2 ($16 Billion) – Exclusion granted effective date 7/31/2019 will expire as of 7/31/2020
Memorial Day Office Closures
All BRi offices will be closed in observance of Memorial Day on Monday, May 25. Offices will reopen on Tuesday, May 26.
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