Market Conditions – We would love to start the new year providing some short-term optimism, however it’s unfortunately not possible as market challenges continue to mount as Chinese New Year nears. The abundance of PSW sub-trade blank sailings coupled with some ocean carriers limiting local Southern California cargo is creating tremendous pressure on other sub-trades already operating near capacity. The extended roundtrip voyages on the TPEB have also created short-term equipment shortages throughout Asia.
On a positive note, intermodal rail congestion has drastically improved with very few long-term dwelling containers waiting to depart port terminals. Enhanced rail fluidity has encouraged ocean carriers to increase USIPI capacity bringing much needed relief to importers with distribution centers in our heartland. The only problem is the queue of vessels in the Pacific awaiting berth in Southern California is at historic highs. There are some reports of well over 100 container vessels waiting to berth with the average dwell of around a month!
Market Rates – The typical cargo rush prior to factory closures in China is well underway. Coupled with the market challenges highlighted above are sending premium rates to near historic levels once again. Premium rates on the co-load market are ranging from $15,000-$20,000 from base ports. Origins such as Vietnam and Thailand are reporting premium rates between $20,000-$22,000 to the USWC and $22,000-$24,000 to USEC! The pool of available FAK rates is quickly evaporating as ocean carriers implement yield management and release a higher percentage of capacity for premium rate cargo. We expect another substantial round of GRI’s on January 15th as majority of carriers announced $1,000+ potential increases. We expect FAK rates and premiums to peak by the end of January before relaxing somewhat when production levels fall during the holiday.
Ningbo Covid Outbreak – The most current update indicates that the ports in Ningbo are open along with warehouses in the city’s Beilun District. However, local trucking is being significantly impacted as only some 30% of the 20,000 drivers have received special passes to enter and leave the port via designated routes. As Chinese New Year’s quickly approaches, we’re expect that the local China authorities will do their utmost to keep freight moving provided the outbreak is kept under containment.
Omicron Impact on US Labor – Terminal operators, rail carriers and warehouses brace for short-term impact from the ongoing pandemic as cases skyrocket across the nation. The timing can’t be worse as vessels sail from Asian ports at full capacity before Chinese New Year’s. It’s too early to speculate about the potential impacts at all major ports and terminals around the country, however it’s likely US supply chains will face labor shortages in the short-term.