Market Conditions – The TPEB market continues to show mixed signals. On one hand, capacity remains readily available on all sub-trades, providing some optimism that our industry has turned the corner with easier times ahead. At the same time many industry stakeholders are reporting deteriorating supply chain fluidity at East Coast ports and major rail hubs across the nation. Ocean terminals in Southern California are seeing rail dwell times spike as fewer trains are departing due to the inland ramp congestion. The number of vessels dwelling off New York and Savannah are at historic levels. Combined with the highest number of USEC services deployed in history we do not see any short-term relief on last mile deliveries for importers in the near future.
With the busiest shipping weeks of the year only two months away, it is safe to say that choppy waters will remain for the remainder of 2022 even as downward pressure on ocean freight rates provides a sense that a return to normalcy is on the horizon.
Market Rates – Downward pressure on container rates continues with the USWC local port cargo spot market experiencing the steepest discounts over the last few weeks. Rates for inland rail destinations and USEC ports are also continuing to trend lower, however the declines here have been slower and highly destination dependent, especially to inland rail points. Due to demand, USEC rates have only decreased marginally compared to USWC and major rail destinations. With heavy congestion at USEC ports and forecasted blank sailings later this summer, we do not expect to see rates to USEC ports falling much further until after October’s China National holiday.
OSRA 2022 – Representing the first meaningful ocean legislation in over twenty years, the signing of the ocean shipping reform act on June 16th is providing some optimism in the marketplace. Importers and exporters alike will need to remain patient as studies, processes and implementation are carefully reviewed by industry stakeholders and the Federal Maritime Commission. For more information, please see our essential takeaways of OSRA-22 on our Laufer Group insights page.
301 Tariff rollbacks for certain consumer products? – Reports are surfacing that the Biden administration is close to announcing a rollback for some tariffs on Chinese made consumer goods to help lower inflation for US consumers. News that the US government is considering a rollback was welcomed by many companies but not by everyone. The US trade representative’s office received more than four hundred requests earlier this week petitioning to keep the tariffs in place. The 301 tariffs cover approximately $370 billion in Chinese imports.
Rail Dwell Times Skyrocket – Southern California is back in the spotlight as the average rail departure dwell time spikes to nine days. Ocean terminals have been processing vessels faster over the last couple of months which is partially the reason for the building delays. Chassis shortages at inland rail hubs are also adding to the delays as rail cars are out of service longer and rail depots try to avoid stacking containers.
Containers are getting “buried” in stacks once again and “first in, last out” is an unfortunate reality for some shippers. We see some containers offloading from vessels and departing within four days while others are delayed for over two months. Rail carriers are hopeful that added labor will help prevent conditions from deteriorating further and they can clear the backlog before the holiday shipping season later this summer.
East Congestion Port Congestion – Combined New York and Savannah ports account for the majority of USEC port congestion with approximately forty-five vessels at anchor. In many cases dwell times are running up to two weeks before a berth can be made available for discharge. We do not expect any significant improvements this summer due to the increase of additional USEC services on top of the pro-forma services calling both ports. Transit times are imploding with an additional thirty plus days on such services. We recommend having a conversation with your Laufer Group sales representative and operations team members to focus on ocean carrier services that will prevent avoidable delays where possible.
Please contact your local sales representative for additional information and service options during these challenging times on the Transpacific. Please check out laufer.com for more market Insights.