Market Conditions – Conditions since our last update have significantly deteriorated with most import lanes fully booked at maximum capacity through April. USEC capacity has been especially hard hit since the Suez Canal debacle “poured additional fuel on the fire” as shippers had already begun to shift product to East Coast based distribution centers to avoid the lengthy delays through the Southern California gateway. Several ocean carriers have limited new East Coast booking releases this week as blank sailings will cut capacity for the next several weeks due to the ongoing global terminal congestion further hampered by the Suez related delays.
Congestion in Southern California continues with approximately 20 container vessels at anchor as of March 31st. Berthing delays are averaging 6-8 days. The Port of Savannah continues to see berthing delays however, as of April 1st only a few vessels were currently at anchor. We expect current market challenges to continue for the foreseeable future as strong shipper forecasts and blank sailings due to capacity displacement seem relentless as of now.
Market Rates – Several carriers have extended their base port rates to USWC and USEC ports. However, April 1st fuel costs increased by varying amounts, in general $50/40’ to USWC and $100/40’ to USEC. Yang Ming increased USIPI rates by several hundred depending on inland destination point and Wan Hai increased their peak season surcharge by $300/ 40’ container through April 14th. Market rates remain at historic levels and are expected to remain at these levels through April and likely well into May.
USIPI service restrictions increase – Most ocean carriers are temporarily reducing USIPI destination cargo as slow turn times on equipment are forcing them to make tough decisions on discretionary cargo. To ensure empty equipment is available in Asia, carriers feel they have no choice but to reduce acceptance of cargo moving to interior points throughout the US. Due to current market challenges, the dwell time on equipment moving to inland IPI points can easily add an additional 45-60 days to the container roundtrip voyage. For the time being, ocean carriers are recommending that shippers terminate their cargo at West Coast ports and transload into domestic trailers - easier said than done! Expect additional pressure on USIPI cargo through the remainder of Spring.
Premium Service Option Dilemma – Many shippers have difficult decisions to make weighing premium service options versus waiting for standard service options to become available. As capacity in April disappears due to blank sailings and no short-term signs of improvement in the forecast, waiting for standard service can be risky. We recommend considering premium options for urgent shipments in April as it is doubtful the market will see a big improvement in May, especially for USEC services where the impacts from the SUEZ congestion continue to exacerbate an already challenged situation.