Market Conditions – Finding last minute capacity before Chinese New Year continues to be a challenge and ocean carriers are charging significant premiums to guarantee equipment and loading. Significant berthing delays in Southern California are adding to the capacity shortage in Asia. This is forcing carriers to cancel sailings as idle capacity needed to fill the void is virtually nonexistent.
The FMC is also concerned with the impact of the congestion at Southern California ports and is urging ocean carriers to utilize other ports for intermodal volume to help ease the congestion. However, this is much easier said than done. Any temporary relief from vessel arrivals in early March due to the Chinese New Year holiday will certainly help terminals play catch up but other factors such as labor shortages, terminal capacity and the continual arrival of fully laden vessels will hinder any hopes for a fast recovery. The sooner ocean carriers can regain pro-forma schedules, the faster the market can recover to a level of normalcy. Our crystal ball shows congestion lasting right through the 1st quarter if not longer. Stay tuned.
Market Rates – Every month it seems a new record high is set and unfortunately February 1st didn’t disappoint. As the market takes a breather during the Chinese New Year holiday, we expect rates to remain at their current historic levels with no additional increases anticipated during the second half of February. Carrier premium costs assessed on pre-CNY sailings are expected to subside after the holiday. Ocean carriers however, will continue to offer premium service options for importers that require guarantees on equipment and capacity without rollover. These premium service options will become a staple in the new market landscape for 2021 and beyond.
Allocation Challenges – Supply chains were thrown into flux late last year as fixed container allocations slowly dissolved under the weight of market conditions in late 2020. Strong demand, skyrocketing market rates, equipment shortages, pandemic related labor shortages and port congestion were all major contributors creating the chaos we see in today’s market.
Ocean carriers and forwarders alike have been preaching the importance of providing reliable volume forecasts along with placing bookings well in advance of the cargo ready dates. Overall, the import market has obliged and most cargo is now booked well in advance of the ready dates but allocation challenges remain - why? The main reason is that the originally scheduled vessel is delayed in transit and does not arrive the port of loading on time, which sometimes causes a blank sailing. The same capacity allocation is then not available for the next scheduled vessel and an alternate carrier or service is required to keep the supply chain fluid. Nothing is easy in today’s market.
Equipment Replenishment – The Chinese Lunar New Year holiday will provide China ports an opportunity to re-stock equipment as the ports will remain open for returning vessels unloading much needed empty containers of all sizes. Many origin ports that rely on empty equipment for their feeder services are experiencing extreme equipment shortages. The holiday break should allow much needed equipment back into circulation and ports with direct calls will benefit the most in receiving the majority of empty equipment.
India Equipment and Capacity Update – We continue to see severe equipment shortages from origins such as Chennai, Tuticorin and Cochin on 40’ and 40’HC equipment. Mainline ports such as Mundra, Nhava Sheva and Pipavav remain tight but have been seeing improvement over the last several weeks. ICD origins such as Delhi are also experiencing major delays as ocean carriers limit bookings due to lack of equipment at these inland locations. In most cases equipment can be procured but flexibility is required and your ocean carrier of choice should be secondary at this point.
Capacity, on the other hand, is quite difficult on all major trades out of India and ocean carriers are limiting bookings or simply not accepting new bookings on certain Transpacific lanes. Especially hard hit are sailings to USWC ports where transshipment bottlenecks continue and service integrity is a major challenge.