BRi Global News - Important Shipping/Market News Update 25th May 2021
Dear all Valued Customers
LA-LB Terminals Worried About Rail Backlog Ahead of Peak Volumes
Terminal operators at the ports of Los Angeles and Long Beach are concerned that increasing rail container dwell times at their facilities will severely compromise their ability to handle import volumes during what promises to be a peak season that arrives four to five weeks early this summer. This means that peak season could begin in early July, rather than August as it has in past years.
Almost every performance indicator in Los Angeles-Long Beach is trending positively, but increasing rail container dwell times could threaten the terminals’ ability to handle peak season volumes if the backlog of rail containers isn’t moved soon. Rail container dwell times in April averaged 11.2 days, up from 10.5 days in March and the highest level of the year, according to the Pacific Merchant Shipping Association, a non-profit group that represents carriers and terminals, mostly in legislative matters.
This is congesting the terminals and slowing down the entire port-related supply chain, as the longer containers stay on terminals waiting to get picked up, the more unnecessary moves have to be made in order to reach older containers underneath stacks of new ones.
With peak season just around the corner, it is imperative that rail dwell times improve otherwise the backlog of containers on the West Coast will continue to delay freight worldwide. On the plus side, chassis shortages at the port complex - an issue that contributed to delays last year - have been corrected.
With the addition of new routings, premium rates, and lengthened vessel wait times, this unprecedented time of demand has urged shippers to re-evaluate their supply chain needs.
- 2M, Ocean Alliance and THE Alliance carriers have all announced varying GRIs effective in mid-May. The only exception is EMC, who is holding current rates until the end of the month.
- On the transpacific, carriers are sold out for the rest of May, and space is fully booked until the second week in June. Booking lead time is currently four weeks.
- FAK space is extremely difficult to secure and subject to rolled bookings. Currently, nearly every shipper is paying the premium to move cargo, and limited capacity caused a large volume to be postponed to June. Therefore, carrier premiums may not guarantee cargo movement in all cases. These are evaluated by the carriers on a case-by-case basis.
- Ports in Los Angeles and Long Beach remain strained mainly due to labour constraints. There are on average 20-25 vessels at anchor in Los Angeles with an 6-8 day wait time and an average of 20-25 vessels at anchor in Long Beach with a 6-15 day wait time at any given point.
- Zim Integrated Shipping Services says that it will increase its global container ship and equipment capacity by half in the coming months to handle what it expects will be a 30 percent increase in volume this year, thanks to rising demand for expedited services particularly on the eastbound trans-Pacific and intra-Asia.
- South Korean container lines HMM and SM Line will inject more than 82,000 TEU of monthly capacity on the trans-Pacific and Asia–Europe trades via extra loaders and the accelerated deployment of newbuild ships on existing loops.
- Based on some market forecasts, the equipment shortage problem is not likely to be resolved soon. Tighter box capacity means higher rates shippers must pay liners to move their cargo. Transit times from Asia will continue to be affected, too, with some doubling.
- Shipping lines will continue the “blank sailing” initiative in June.
- All shipping lines are in tight supply of 40HQ at this moment.
- Capacity is up 50% on domestic lanes. However, international air cargo capacity has decreased by 10% from January 2021. Additionally, rates for international lanes are up 10% from January 2021, remaining 30% higher than April 2020.
- Carriers are booking space 7-10 days in advance for US imports and exports.
- We are seeing delays at the airports when tendering the cargo for exports, and the airlines will not hold cargo until the flight schedule departure date.
- Several airlines are moving shipments on more expensive Express Services only.
- Some small package carriers are increasing air cargo peak surcharges again on the Asia-US trade, as business-to-business (B2B) parcel demand rises on increased US domestic manufacturing demand and importers move from cheaper but less reliable container shipping services. Some international peak surcharges have increased between 25 percent and more than 70 percent, depending on the service offering and origin country, since the beginning of the year.
- Truck capacity is tight, especially with intermodal moves as many truckers are preferring to carry over-the-road loads currently.
- Rates are primarily a spot quote market due to fuel being higher and a lack of stability. Adding to the volatility, the volume of freight moving has made the demand even higher.
- Most domestic loads are booked a week in advance; however, we are specifically seeing a lot of intermodal and dray moves booked 3-4 weeks in advance.
- Truck capacity remains very tight at the following inland ramps/terminals: Charleston, Savannah, Jacksonville, Cincinnati, Detroit, Indianapolis, Atlanta and Memphis. Chassis are in short supply at Baltimore, Long Beach, Cincinnati, Columbus, Chicago, and Detroit. In Memphis, volume remains high and chassis are becoming an issue once again.
The BRi USA team is monitoring the global situation carefully and will provide updates as they are made available.
More Supply Chain Delays in India as Cyclone Forces Pipavav Port to Close
Cyclone Tauktae has forced the Indian port of Pipavav to shut, putting increased strain on the country’s shipping networks. Pipavav, operated by APM Terminals, said it had declared force majeure and would suspend operations until 1 June, following the cyclone making landfall last week along the coast of Gujarat in the north-west.
With winds up to 115 mph, Tauktae is categorized as “extremely severe” and is one of the worst Arabian Sea-cyclones to hit India in a decade. Pipavav said there had been no major damage to port infrastructure, but its power supply and communication links had been disrupted.
In addition, due to the resurgence of a COVID-19 outbreak, BRi USA is seeing these issues reported in India:
- All ports and CFS stations are operating, but with limited staff.
- Indian Customs is working limited crews on a rotating basis at ports and airports.
- Many passenger airlines have withdrawn service to India, which is decreasing the availability of air cargo space. Freighters are still operational, but must be secured with an advance booking. Airport cargo ground handlers are working on a rotating basis.
- There are no restriction for vehicle movements (intra and inter-state). However, truckers are only accepting advance bookings with all appropriate documentation ready.
GSP and Miscellaneous Trade Bill Update
The Chairman of the Senate Finance Committee announced last week that he will soon introduce a bill to renew the Generalized System of Preference (GSP) through 2027 and the Miscellaneous Tariff Bill (MTB) through 2023. The proposed bill does include adding new mandatory requirements regarding human rights, environment, and digital trade.
More Delay for Shippers as Ever Given's Legal Battle Escalates
Shippers with cargo on board the arrested Ever Given are likely to have to wait another week to find out when their goods might be released.
Over the weekend, an Egyptian court heard from the shipowner’s legal team, which argued that the Suez Canal Authority was at fault for the grounding of the vessel in the waterway on 23 March, as, given its size and the weather conditions, it should have been accompanied by two tugs.
Japan’s Shoei Kisen also filed a $100,000 compensation claim against the SCA for “losses related to its detention." However, the court in Ismailia yesterday rejected the appeal and upheld the SCA’s continued detention of the vessel, referring the case to a higher court, which is expected to hear claims on Sunday.
Keeping you updated,
BRi Customer Solutions Team
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