The volume of containers in the Asian-American trans-Pacific trade has reached its limit. Large-scale port congestion in the ports of Los Angeles and Long Beach is forcing carriers to take extreme measures. Today, ship voyages are cancelled not because of insufficient demand, but because ships are waiting for berths at anchorages; as more and more container ships arrive every day, the backlog of Southern California ports has reached a record level of 67 ships. This is the first time a ship has berthed outside the San Pedro Bay anchorage in 17 years, and the congestion is expected to continue until at least mid-to-late February.
When the ship is delayed due to long waiting in the port, the carrier will usually add "recovery vessels" to replace and maintain the weekly voyage. But now there are no more "recovery vessels" left. Hapag-Lloyd said, "Since our fleet has been fully deployed and has exceeded its capacity, unfortunately this is not an option at this time."
Therefore, Hapag-Lloyd cancelled 19 voyages in February. "It needs to be emphasized that the ships will not be idle at any time, and we have set sail as much as possible," the company emphasized.
Urgent need to resume suspended voyages
"The reliability of the sailing schedule is too poor. At this time, we should not'withdraw the capacity and stop sailing', but'need to resume the voyage as planned.'" said Simon Sundboell, founder of eeSea.
Due to the decrease in export volume during the Lunar New Year holiday, carriers usually suspend their flights at this time of the year. In order to deal with the backlog of export goods at Chinese ports, carriers initially chose to guarantee voyages during the Spring Festival. However, the congestion in the ports of Los Angeles and Long Beach caused the carrier to have no vessels to deploy. This means that the congestion problem in Asia will take longer to resolve.
Real-time blank sailing data display provided by eeSea platform. As of last week, compared with January, the Asian-American route has dropped by 11% from January. Although the demand for goods continues to rise.
In a webinar hosted by the freight forwarder Flexport last week, Lars Jensen, CEO of Seaintelligence Consulting, explained: “When all the ships are waiting outside the port to berth, they can’t return to the voyage, so they can’t start what they should have set off. Voyage. Suspension is not an option but a necessity."
San Pedro Bay is congested
At any time since the beginning of this year, no less than 30 container ships have been anchored at the San Pedro Bay berth near the ports of Los Angeles and Long Beach.
According to Southern California Maritime Information on January 31, all anchorages in Los Angeles/Long Beach and all emergency anchorages near Huntington are full! There are 67 container ships in the port area, setting a new record. More than 10 containers will arrive from January 1st to January 2nd. The average waiting time for berthing has already exceeded 7 days.
In addition, due to the storm and bad weather last week, many of these ships had to leave the anchorage and go to sea. Kip Louttit, executive director of the Ocean Exchange, said that in such a long period of time, with so many ships and such harsh sea winds and sea conditions, what could be more complicated than this.
Port congestion is caused by a large number of incoming cargo and dockers infected with COVID. A spokesperson for the ILWU dockworkers union said that the number of members of the union who tested positive has increased to 803, a 16% increase from 694 on January 17.
Nerijus Poskus, head of global shipping at Flexport, said: “They are unable to provide timely services to ships, which leads to 10-14 days or even longer waiting times, depending on the terminal.” He added: “ As of last week, there are Nearly 300,000 20-foot TEUs are waiting to be unloaded."
According to the data from the Los Angeles Port signal platform as of the 29th local time in the United States: 17 ships are at anchor with an average anchoring time of 7.3 days; 13 ships are waiting to be pre-anchored.
Jensen said: "As long as there is such a waiting time, it is equivalent to canceling all the services of the five transpacific shipping companies." "The impact is huge."
Global shipping on-time rate has severely declined
The reliability of the on-time rate of global shipping has dropped to about 50%, while the normal level is 70%-80%. Receiving a box on time is not much better than flipping a coin. To be worse in reality, blank voyages are not considered in the schedule reliability data. It also does not consider "rolled" cargo-pushing to the next voyage.
Ocean Insights aggregates the freight volume data of the world's top liner companies in the world's top ports. According to published data, the share of ships that did not sail as originally planned rose to 37% in December. This is a significant increase from 29% in July and 25% in December 2019.
An importer transporting goods from China via Los Angeles said: “The shipping time that normally took 28 days has now been increased by 60 days. The container shipped in November last year has not yet reached its final destination.” All of this, American consumers should See the increasing shortage of goods on the shelves. In turn, this will further boost import demand in 2021.
The dawn of hope is here
One of the main reasons for the current shortage of capacity is the shortage of containers. But there is also a silver lining. The Container x-Change container availability index tracking shows that the availability of 40-foot high containers (40HCs) is still extremely low. However, the availability of 20-foot dry containers (20DC) and 40-foot standard dry containers (40DC) this month has increased significantly this month.
David Amezquita, head of data tracking and analysis at Container xChange, asserted that the index "finally shows a positive trend." The company added that the upcoming Chinese New Year may "finally become a turning point."
Index levels below 0.5 are considered shortages. In the third week of January, Shanghai’s 20DC index rose to 0.34, while the 40DC index rose to 0.37. The 40HCs index was still very low at 0.11.
When is it expected to return to normal?
Jensen expressed his belief that the challenge of container equipment will be solved soon. Chinese factories have been busy producing new equipment. "What is happening now is exactly the same as what we saw in 2010 after the financial crisis. If you look at 2010, you will be delighted to find that it took about three months from the appearance of the problem to its resolution. According to the situation, this should be resolved before the Chinese New Year.
"This port congestion has a lot to do with the ability to restore empty containers to a balanced state. This may cause delays in resolving congestion."
As more and more containers are manufactured and put into operation, liner companies should also work hard to resume normal voyages. Jensen said: "The carrier seems to be planning to use the time after the Chinese New Year to return the vessel to its original plan." "If this works and solves the port congestion problem, we can restore [service reliability] within a few months To normal levels. But this is just an optimistic view."
Volume continues to climb this week
Although major container ports across the United States have experienced a certain degree of congestion, with the arrival of imported goods from Asia, Southern California ports are experiencing the most serious congestion. According to data from the Los Angeles port signal platform, the number of imported standard containers per week has increased to 150,000 to 160,000 TEU; while the neighboring Port of Long Beach shows that the number of imported standard containers per week is 90,000 to 100,000 TEU, and the total volume of imports and exports and empty containers Nearly 200,000 per week.
Analysts who are concerned about the port situation expect that freight volumes will remain stable until at least mid-February, when there may be a slight stagnation, as China's manufacturing and shipment volumes usually decline during and after the Spring Festival holiday. However, many shipping companies hope to use this intermittent period to reduce the backlog. The National Retail Federation, which tracks retailers’ imports, predicts in its annual port tracking data that this quiet period may not arrive until April, and then it will appear briefly as retailers prepare for the summer. Strong rise.
