BRi Global - News Update 3rd August 2021
Dear all Valued Customers
Asia-West Coast Container Rates Hit New High Ahead of Surcharges
A key indicator of container shipping rates from Asia to the US West Coast broke a new record this week, as container lines ready another wave of surcharges (ocean freight increases) that kick in next week - many of them focused on routings through Southern California.
According to one report, the average price to ship an FEU from Shanghai to Los Angeles was up 10 percent this week from the prior week. Asia rates to the US East Coast also hit new highs this week, as the average rate to ship an FEU from Shanghai to New York surged 18 percent.
US Importers should be prepared for even higher rate pressure as traditional peak-season volumes build and cargo delayed from the pandemic-driven slowdowns in Southern China soaks up vessel capacity. Furthermore, retailers are projecting year-over-year increases in US imports of + 10% percent in August and + 3% percent in September.
With the addition of new routings, premium rates, and lengthened vessel wait times, this unprecedented time of demand has urged importers to re-evaluate their supply chain needs.
- Space is extremely difficult to secure and is subject to rolled bookings. Currently, most if not all importers are paying ridiculous rate levels to move cargo, and limited capacity has caused a large volume to be postponed. Therefore, carrier premiums still don’t guarantee cargo movement in all cases. These are evaluated by the carriers on a case-by-case basis. During these critical times, everything is uncertain until cargo is loaded on board. Booking lead time is currently 4 weeks with an additional 4 weeks being recommended when it comes to the into store date
- It is expected that general rate increases (GRI's) and port congestion surcharges will continue to climb. MSC, CMA-CGM, Matson, ZIM, and Hapag-Lloyd have all announced their own varieties of surcharges or increases.
- The number of container ships at anchor in San Pedro Bay off the ports of Los Angeles and Long Beach rose back to 30 on July 23. There were 27 at anchor on Friday. Additionally, there were 16 ships scattered in various anchorages in the Pacific Northwest on Friday awaiting berths in Seattle or Tacoma: one each off Everett, Victoria, Port Angeles and Vashon Island; two each off Seattle and Bellingham, and three each off Manchester, Bellingham and Whidbey Island.
- Altogether, around 80 container ships are awaiting berths at ports on all three U.S. coastlines, and peak season is now set to begin in earnest, implying even more congestion ahead. Whether it be a port congestion surcharge or an emergency intermodal surcharge, container lines are levying charges ranging from $350 to $5,000 on Asia imports starting as early as August 1.
- Equipment supply continues to be tight. It is reported that there is currently a 40% imbalance - meaning that for every 100 containers entering the US, only 40 are sent back overseas. Furthermore, 3 out of 4 containers going from the US to Asia are empty.
- All shipping lines are in tight supply of 40HQ at this moment.
- The passenger-freighter flight phenomenon seems to be winding down in the US and Europe, as economies open up and authorities weigh safety considerations of carrying cargo in cabins, as well as the extra handling time required. However, with no let-up in travel restrictions, Asian carriers are planning more passenger-freighter flights to cope with peak season demand.
- Air cargo's peak season is set to begin this month. A perfect storm of high demand – in part driven by the slow-moving and expensive sea freight market, low sales-to-inventory ratio, increased e-commerce and low capacity – is setting up for a busier than ever peak season for airfreight.
- Carriers are booking space 21 days in advance for US imports and exports.
- We are seeing massive delays at the airports and airline handling units when it comes to the arrival and availability of air cargo.
Domestic Trucking USA
- Most domestic loads are booked now weeks in advance; however, we are specifically seeing a lot of intermodal and dray moves being delayed due to massive chassis shortages and imitations around drivers. Delays of 2-6 weeks after arrival are being reported and it appears this will continue through 2021
- Outbound truckload spot rates from Southern California are rising above national averages as intermodal delays and port congestion generate more truck demand. These outbound spot rates from Southern California to the Midwest could surge again with the suspension of intermodal rail service by Union Pacific Railroad (UP) and the rationing of capacity by BNSF Railway, which is pushing more freight off the rails and onto trucks.
Vietnam’s Pandemic Lockdown Squeezing Container Supply
Carriers are warning that Vietnam faces a shortage of containers in the coming weeks due to a combination of disrupted sailing schedules of ships returning to Asia, as well as trucking delays and factory closures due to a COVID-19 outbreak.
After more than three weeks of lockdowns, importers from Vietnam are increasingly concerned about getting goods out of factories and finding truck drivers to haul the goods to the port. Like most other major Asia ports, shippers moving goods out of the Cat Lai and Cai Mep ports in Ho Chi Minh City are seeing delays of two to five days.
Keeping you updated
BRi Customer Solution Team
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