Market Conditions – We may have placed our 2021 calendars on the wall, however the 2020 hangover remains as capacity, equipment, port congestion and extremely high freight rates continue to carry over into the new year. The majority of lanes are booked solid right through January and any new bookings with departure dates prior to Chinese New Year are requiring premium capacity and equipment charges. Extra-loaders added in December have provided much needed capacity in the market. However, with terminals in Southern California already operating near capacity, the additional volumes from extra-loaders, scheduled to depart before Chinese New Year will only extend the chaos well into March.
Market Rates – The majority of ocean carriers implemented either January 1st general rate increases or equipment release surcharges of various amounts. MSC and ZIM in particular pushed through significant increases of $1000 per 40’ due to the extremely high pre–Chinese New Year demand. Ocean freight rates remain at historical levels and are likely to remain this way through at least February. Normally we would see market rates quickly fall off after Chinese New Year, however with equipment shortages and shipper forecast volumes remaining well above average, it’s likely ocean freight rates will stay fairly flat for the remainder of winter, stay tuned…
Capacity at a Premium – In order to secure capacity and equipment on vessels sailing before Chinese New Year’s several ocean carriers are assessing origin premium charges on top of spot rates for new bookings. For bookings placed well in advance, the premiums are usually not applicable outside of origin equipment release surcharges. Origin premium and equipment surcharge costs are largely being pushed off onto the importer as a collect charge as shippers seek to avoid these additional costs to their bottom line. We recommend importers have discussions with their suppliers on sharing these costs until the import surge eases.
Equipment Shortages Continue – The shortage of equipment continues to be a major obstacle in the market. Origins that rely heavily on feeder vessels or barge service for equipment replenishment are worse off than major ports such as Yantian, Shanghai & Ningbo. Equipment shortages in South Asia and India are also severe with many bookings impacted. Importers are recommended to accept whatever size container is available in order to secure capacity for urgent purchase orders.
Seaworthy Equipment? – We are starting to see instances of questionable “seaworthy” containers introduced into the market. Unfortunately, this is not an uncommon practice when equipment shortages become severe. Old and damaged containers are quickly repaired and placed into circulation increasing the chances of wet damage to cargo during a container’s journey. To avoid cargo claims and more importantly potential further product delays, we recommend importers check with their shippers to assure equipment is in good condition. If you suspect your cargo has been subject to water damage, make sure to take plenty of pictures of that the impacted freight both inside and outside of the container to help with any potential insurance claim down the road.
Rail Dwells Steadily Increase, Prince Rupert Improves – Rail dwell times out of Southern California are terrible and more than 50% of containers have delays well over a week before departure. Unfortunate containers that get buried in a stack, experience extremely long delays with ocean carries unable to provide more than a guesstimate of a true departure date. A few bright spots are the US Pacific Northwest gateways along including the Canadian port Prince Rupert. The majority of containers moving to US inland points via Prince Rupert are seeing delays of 5 days or less. The problem right now is vessel capacity into Prince Rupert is quite limited and booked out through mid-February. For urgent shipments we suggest looking at premium services that can move over Prince Rupert and have destinations such as Chicago or Memphis. East Coast ports are also fairing quite well with rail dwells at the majority ports under 5 days from discharge.
India Shipping Hurdles Continue – Delays shipping out of India continue with ports such as Tuticorin and Kolkata facing more difficulties than ports with multiple direct vessel calls such as Nhava Sheva and Madras. For freight moving to US West Coast ports, where transshipment over Colombo, Singapore or Busan is necessary, lengthy delays continue averaging two-three weeks in some cases. The only good news is Colombo port is slowly recovering out of the severe port congestion and should continue to improve over the next several weeks. Equipment continues to be in short supply throughout India. ICDs (inland container depots) are most heavily impacted with some ocean carriers not releasing any bookings for the short-term. We do not expect the equipment shortage to improve in India until after Chinese New Year at the minimum.