Global Shipping Issues Continue to Drive Price Increases and Availability

Europe ports congestion and associated blank sailings are taking a heavy toll on space availability for cargo bookings from all European ports to the US.

Carriers warn that that shippers should book US-bound voyages from Europe or the Mediterranean up to two months in advance.

• This is up from the prior booking window of about a month just three weeks ago.

• European exporters have pointed to congestion at Mediterranean ports as one factor behind the many schedule changes that carriers have made in recent months.
• As vessels continue to be tied up in ports around the world — most notably outside of the US — European schedules have suffered heavily.
• US east coast ports are becoming more congested with slower vessel turns due to a spike in Asia origin cargo diverting from the congested US west to the US east coast ports.
• Normal vessel turn times are doubling, causing a lack of vessel capacity arriving back in Europe to handle the heavy volumes.
• Russia sanctions have also resulted in containers being discharged in North Europe and Med ports, further congesting terminals.
• As in the US, European ports are metering inbound truck and rail movements due to the high number of containers that are already sitting at marine terminals.
• Adding to the delays and congestion, some European trucking companies are reducing routes or shutting down all together due to the high price of diesel fuel.
• According to Sea-Intelligence Maritime Analysis, less than 18 percent of vessels on the westbound trans-Atlantic arrived on time in February, the lowest reliability ever recorded on that lane typically known for fast vessel turns, high frequency and reliability.
• As noted above, lead times must be increased coming out of Europe. The booking window has doubled in just the last two to three weeks. 2 months is not an exaggeration on dwell time from booking to sailing availability.

 In addition to the European delays, Korea, Japan, Taiwan and Vietnam are experiencing severe capacity shortages due to blank sailings and vessel delays in the US. The lead time for bookings is rapidly approaching a full month just to secure space. 

 Canadian Teamsters vote to strike CP rail.

• With no contract settlement in site, the 3000 CP Rail Teamsters have voted overwhelmingly to strike.
• They have give 72 hour notice for a walkout which would give them the ability to walk off the job Sunday morning.
• A strike would further cripple the US and Canadian export markets as well as heavily impact the port of Montreal and Vancouver intermodal movement.
• With the Canada still struggling with supply chain issues, the Government may have little appetite for allowing a prolonged labor action that could further cripple their industry infrastructure.
• Montreal and Vancouver ports are dependent on the CP for their imports and exports. A labor disruption will further impact their congestion issues and disrupt US and Canadian import and export container movement.
• Montreal is continuing to struggle with container throughput as their dock workers work at a pace not keeping with demand.
• Rail carriers are still being required to meter flows into the port of Montreal, causing backups in the US Mid-West terminals dependent on Montreal exports. (Minneapolis, Chicago, Memphis to name a few)

China’s COVID Zero policy continues to impact Shenzhen region.

• With 66 people in the Shenzhen region testing positive for COVID last weekend, 17 million people are required to stay at home or isolate in place.
• Chinese Government officials seemed to have learned lessons from the Ningbo lockdown that impacted industry as well as the ports, bringing the entire region to a halt just a few weeks ago.
• With Shenzhen, they are allowing the ports to continue to operate and drivers to work as long as they can prove negative COVID tests.
• Productivity at the port of Shenzhen is slowing with employees being required to reside at the port through the lockdown.
• Vessel turn times are delayed by two days from normal averages. This will result in a knock-on effect with subsequent vessels being delayed berthing slots over the next two weeks.
• Vessel delays of four days from published departure will be anticipated for the next two weeks.
• Other ports in southern China’s Guangdong province, including Nansha, Shantou, and Qinzhou, are unaffected and operating normally.
• In western Shenzhen, the Shekou and Chiwan container terminals, controlled by China Merchants Port Holdings, are also operating normally.
• Truck capacity is the biggest bottleneck with cargo transiting the region
  
• Cargo from factories outside the lockdown region are diverting the Shanghai, Ningbo/Yantian port

To summarize:

• The port of Shenzhen is operating normally but slower than usual
• Trucks are delivery to the ports but on a very limited basis (Estimated about 20% of normal flows
• Cargo moving from factories outside the lockdown area are able to move to alternative ports
• Equipment in the region is available from alternative pickup locations in the Guangdong region
• Truck capacity in the Shenzhen port area is extremely tight
• Disruptions are prevalent but not as wide-spread and they were in the Ningbo lockdown.

Congestion continues drag down production in Seattle and Tacoma ports.

Empty containers with no home are continuing to tie up valuable resources in the PNW ports, resulting in delas on imports being appointed or stuck in closed areas of the terminal.

• As vessels continue to discharge record numbers of import containers into the PNW ports, the empty containers returning for re-export are piling up, resulting in loads caught behind the congestion with no chassis available to turn the boxes.
• Imports are being stacked on the terminal and these areas of the yard are then closed to activity, so the entire terminal is not gridlocked.
• Once a container is in a closed area, it can reside is an import pile for weeks or up to a month prior to being released.
• The port of Seattle is fairing worse that the Tacoma ports with delays taking two to three weeks to clear off the ports.
• Carriers are now requiring “dual transactions”. The only way to get a empty delivered to the port it to have a load there to pick up or vice versa. This further complicates the challenges for the port truckers. You need a percent match at the port or you can’t get your import.
• If the carriers can figure out the empty termination problem, flow returns to the PNW.
• Globally, the empty container imbalance is projected to grow exponentially. As shown in the below graph. If the carriers can’t resolve the balance, “normal” is out of the question for some time to come.
  • Outbound over the road truck capacity is improving in the PNW. There are 3.8 loads for each available truck.
  • Intermodal out of the PNW continues to struggle. There is still a 10 to one deficit on available intermodal capacity for the available loads.
  • 
    East coast ports face volume surge as importers continue to divert cargo from congested US west coast and carriers continue to add capacity to handle the needs.
  • Unfortunately, port capacity is not following the trend and vessel backups along port congestion is worsening from Savannah to NY.
  • 2-week delays from availability to out gate are becoming common with chassis shortages and drivers shortages hurting efforts to keep the port flows moving.
  • There were 31 ships anchored off the Port of Charleston, South Carolina, at the end of February.
  • Another 13 were waiting off the coast of Norfolk, Virginia.
  • At the Port of Houston, 11 ships were waiting in a queue to berth.
  • Near the Port of New York and New Jersey, 9 ships were queueing up
  • These are ports that normally might have one or two vessels waiting for space.
  • Global container schedule reliability drops to record-low in February 2022.
  • Global Schedule reliability dropped again, this time by 0.9 percentage points, month-to-month to 30.9%.
  • This is the lowest ever global schedule reliability since the Danish research and analysis company Sea-Intelligence started the measure in 2011.
  • On a year-to-year level, schedule reliability was down by 3.8 percentage points, according to Sea-Intelligence's report.
  • According to the latest issue of Sea-Intelligence's Global Liner Performance (GLP) report, Maersk was once again the most reliable top-14 carrier in January 2022, with schedule reliability of 46.9%, followed by its subsidiary Hamburg Süd with 42.8%. • 
  • MSC and HMM had schedule reliability between 30%-40%, with six carriers recording schedule reliability of 20%-30%.
  • Asia to US reliability continues to sit at or near 10% on time.
  • US export capacity is worsening as carriers continue to struggle with vessel imbalance.
  • Europe is now experiencing extended booking time requirements as imports slow due to congestion.
  • Australia continues to be hit exceptionally hard with lack of vessel space and equipment.