Market Conditions – As landside bottlenecks continue to worsen, the busiest shipping period from a historical perspective is now underway. The additional capacity injected into the Transpacific market is certainly welcomed, however as port congestion escalates, the ability of extra-loaders to effectively ease capacity constraints will be difficult to recognize. With average origin port dwell times between 3-5 days coupled with similar dwell times at many US ports, it’s clear to see why capacity has been outpaced by demand over the last few months. As much as we would love to provide some optimism, it’s really a challenge when almost every link in the supply chain is under distress.
Market Rates – A September 1st General Rate increase was pushed through by many ocean carriers on the FAK market as we continue to move into the peak season. The average increase ranged from $500-$1,000 per 40’ container depending on destination. Once again Premium rates increased on inland rail destinations as ocean carriers continue to limit these bookings. In certain cases, this is forcing freight forwarders to access the co-load market at extremely high costs. New carriers such as BAL, CUL and Sea Lead are requiring ocean freight to be pre-paid at origin port and are setting the premium rates slightly below $20,000 per 40’ container. We expect premium rates to increase on the routes of least resistance into the US as importers do everything possible to deliver their goods to retailers before the holidays.
Chassis Shortage to Worsen in Southern California – The shortage of labor and warehouse capacity combined with an ever-increasing port to inland ratio of inbound containers is expected to fracture the fragile supply of available chassis in the coming weeks. We are already hearing that dray carriers are struggling to pull containers before last free day due to lack of chassis availability. With 40 vessels at anchor waiting to berth, expectations for a severe chassis shortage are becoming more likely.
Intermodal Gridlock Continues – As ocean carriers limit intermodal destinations due to the severe congestion issues at the ports, major hubs such as Chicago, Memphis, Dallas, and Kansas City inadvertently saw a huge spike in volume. Fast forward to September 1st and we now have thousands of containers stacked in multiple lots waiting to be made available for delivery in Chicago. A severe chassis shortage coupled with warehouse and trucking labor issues created the ingredients for a “perfect storm” earlier this summer.
Vietnam Lockdown – The impact to Vietnamese exports will be quite dramatic as we move into the 4th quarter and factory production levels continue to plummet. As stay at home mandates extend through September 15th in cities such as Ho Chi Minh, expectations are that factory output will drop off dramatically. We expect an uptick in blank sailings as the backlog clears and production slows in September.
For over 70 years, Laufer Group International Ltd. has been helping customers improve the way they handle their logistics. To see how we can help, or for any questions, contact Brian Martorano, National Director of Business Development, Ocean Import or contact your local sales representative.