North America Shipping Update

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North America Shipping Update

Shipping Update

The volatility of freight rates continues, and we have not seen any stabilization yet. Full container load (FCL) ocean freight rates on the trans-pacific trade lane have increased between $14,000-$20,000 from various origins in China. Less than container load (LCL) rates have increased between $260-$350 depending on total cubic meters (CBM) shipped.

There continue to be extreme delays from China and India, currently, an average of 2-to-3-week delays from China and 4-to-5-week delays from India.

South China seaports resumed full operations late in the month of June, which means more ships are starting to head to the U.S. West Coast this month and into August. In addition to the increase of vessels coming from China since the resumption of full operations, we are also seeing seasonal items such as back-to-school, Halloween goods and fall fashion. We expect to see year-end holiday products arriving a little earlier than normal.

The main causes of the extreme congestion and delays are bottlenecks around the world. Simply, buying more ships and containers will not alleviate the current problem we are experiencing in today’s market.

The Port of New York and New Jersey experienced another double-digit increase for total container volume in May. Rail volumes broke its all-time monthly record.

Air freight demand remains very high globally. Delays at the Port of Yantian and the impact of congestion and lack of equipment at ports around the world have caused shippers to divert cargo shipments to air freight. Air freight from Europe to the U.S. is extremely tight and there is a lack of capacity.

New data from Container Trade Statistics shows global demand growth is stalling everywhere except North America. Global demand has grown 1% in May 2021 as compared to May 2019. This means the annual growth rate over the past two years is just 0.5%.

North American imports volume is up 19% in May 2021 compared to May 2019. The annual growth rate over the past two years is about 9%. Data compared 2021 to 2019 since May 2020 was when most of the world was experiencing the first wave of the pandemic.

While we haven’t seen much improvement in congestion in the supply chain, as other segments of consumer spending begin to open with less restrictions (i.e. gyms, salons, movie theaters, entertainment, etc.), we believe supply chains will become less strained.

Port Situations

Los Angeles:

  • 10 container vessels at anchorage waiting for a berth (average time at anchorage 5.3 days).
  • 18 container vessels at berth.
  • Rail: rail conditions continue to deteriorate due to lack of rail capacity and railcars from the UP rail. Lack of capacity is affecting all on/off dock intermodal moves.
  • Trucking: trucking is continuing to improve.
  • Long Beach:

  • 8 container vessels at anchorage waiting for a berth (average time at anchorage 4 days).
  • 10 container vessels at berth.
  • Rail: rail conditions continue to deteriorate due to lack of rail capacity and railcars from the UP rail. Lack of capacity is affecting all on/off dock intermodal moves.
  • Trucking: trucking is continuing to improve.
  • Oakland:

  • 5 container vessels at anchorage waiting for a berth (14 drifting).
  • 5 container vessels at berth.
  • Vessels port stays continue to increase in all terminals.
  • Increase in import volumes and labor shortages continue to drive congestion and vessel operations delays.
  • Currently experiencing labor shortages to cover the demand.
  • Newark APMT & PNCT:

  • 2 container vessels waiting for a berth.
  • 10 container vessels at berth.
  • Berth utilization continues to remain high.
  • Terminal yard utilization is expected to increase.
  • Select terminals are opening on Saturdays to facilitate increased import deliveries.
  • Savannah:

  • 11 vessels waiting for a berth.
  • Trucking volume remains tight for both imports and exports.
  • Chicago:

  • Chassis remain tight.
  • Rail: ramps continuing to experience congestion.
  • Data from maritime intelligence service eeSea examines the approximation of congestion by the sum of vessels in port compared to the sum of vessels waiting to berth. Hong Kong, for example, has a high waiting ratio of 67%. Oakland, Savannah, Seattle, Vancouver are all highly congested with a ratio above 65%.

    Chassis Pools

    The U.S. is unique in how it distributes chassis through pools and multipool agreements as opposed to truckers owning their own chassis. The recent record import volumes have caused a historically high demand for chassis throughout the U.S. The demand is persistent for 40ft chassis and intermittent for 20ft chassis.

    For example, in Chicago, during less congested times, the containers would come off the rail ramp and quickly get onto a chassis. Currently, many containers are being put on the ground due to a lack of chassis. Then, there are 1,700 containers on the ground and no chassis to move the containers.

  • Minneapolis (USMES) – Constrained on 40’ chassis.
  • Chicago (USCHI) – Deficit on 40’ chassis.
  • Cincinnati (USCVG) – Constrained on 40’ chassis.
  • Louisville (USLUI) – Deficit on 40’ chassis.
  • Houston (USHOU) – Constrained on 40’ chassis.
  • Detroit (USDET) – Deficit on 40’ chassis.
  • Indianapolis (USIND) – Constrained on 40’ chassis.
  • Denver (USDEN) – Constrained on 40’ chassis.
  • New York (USNYC) – Deficit on 40’ chassis.
  • Seattle (USSEA) – Constrained on 20’ and deficit on 40’ chassis.
  • Tacoma (USTIW) – Deficit on 40’ chassis.
  • Los Angeles / Long Beach (USLAX/USLGB) – Deficit on 20’ and 40’ chassis.
  • Truck conditions

    Truck conditions remain tight across the nation. Some areas are showing some improvement including, Los Angeles & Long Beach, Newark, Jacksonville, and Atlanta (improving but still extremely tight).

    Rail Conditions

    In a recent article on trains.com, Union Pacific has told customers it will halt all shipments of international containers from West Coast ports to its Global IV terminal in Chicago for up to a week. The embargo, scheduled to begin on Sunday night, will help the railroad clear a container backlog at Global IV. This is another indication of the massive supply imbalance affecting the U.S.

    Border Operations:

    Cross-border shipments are increasing. The trucking capacity, both north and south of the border, is very strained. There is a growing imbalance of tractors and trailers and a shortage of truck drivers on both sides of the border. Click here for current border Wait Times.

    If you have any questions about your supply chain or real-time information about the market, please contact us today. We are available to discuss multiple carrier and service options to provide solutions for your supply chain. We proactively plan with our clients to navigate any challenges in the market today.