Come on!, we know you have questions! We’d be surprised if you didn’t because we get them every day. And though we get so many different ones, all unique to each client’s experience there are some that most have in common. The list below are the ones we get most frequently about this crazy ocean import market we are in.
…We‘ve got answers!
Staggering increase in US consumer led demand
Overwhelmed Transportation Systems
Logistics networks suffering from COVID limitations
- Why are my ETDs changing constantly?
This is 100% due to ships not returning to Asia on time. Making the issue worse, there is no schedule or timeline that carriers are following to predict when they will return. So, a booking made on April 20th for a vessel departing Shanghai on May 15th looks great on paper, but the carrier today has no idea when that specific vessel will return to Shanghai. As May 15th gets closer and vessels are not returning on time, ETDs get pushed out – and in many cases, will get pushed out numerous times.
- If I do not accept the premium, how much of a delay (how many days) will it be until I get a spot booking?
Currently, it is impossible to predict. It is very fluid right now. There is no way to answer this question because the underlying carrier does not know when each ship will return to Asia to accept cargo. When there is no clarity on when a ship will return to accept export loads from China back to the USA, there really is no way to accept bookings with certainty and guarantees.
- How did it get this bad?
So much has been written about this but there are three main reasons:
- The entire transportation system is being overwhelmed by a staggering increase in US consumer led demand because of COVID-19.
- The network of physical assets supporting that demand and more importantly, the “flow” of those assets (chassis, empty containers, vessels, trucks, ports) is not capable right now of accommodating this level of demand and cannot be easily scaled up.
- The people managing the transportation networks (drivers, longshoreman, factory workers, warehouse workers, carrier employees, forwarder employees, inspectors, Customs officials, and many others) are suffering from COVID limitations and are entirely overwhelmed trying to solve these insurmountable issues one by one, on every single shipment. Burnout is a real problem.
- What is the biggest issue right now?
The number one issue is there are no vessel schedules. It seems crazy to even think about that, but with all the delays and vessels stuck in LA/LGB, Oakland, Savannah and elsewhere, there is no clarity or predictability on when those ships will return to Asia. For origins that require trans-shipment (Thailand, Malaysia, India, Bangladesh, Philippines, Indonesia) it is even worse because there is no predictability to when containers that require transshipment will have a vessel to transfer to.
- Is Laufer looking at all options, or just certain carriers for inland bookings?
Our teams and partners are leaving no stone unturned. We are looking at all West Coast gateways, East Coast gateways, changing container sizes, and looking at all destinations. We are touching each booking at least 4 to 5 times to accommodate all the vessel changes, and available options.
- If I must accept a port to port move rather than an inland rail booking, why would this still book to LA with all the delays in LA?
Even with the current port delays, there is more carrier capacity into LA/LGB than other locations. As a result of the Suez blockage, we are experiencing blank sailings to the PNW and now to the East Coast, so, despite the delays, LA/LGB is still a viable option. There is no silver bullet, so sometimes the best option is to take the least bad option.
- If all this traffic moves into West Coast ports only, won’t the West Coast become more congested than it already is?
Yes. But there are no great options here. And with many importers having access to distribution channels already established in southern California, it continues to remain an option. In some cases, the best option.
- Does Laufer offer domestic intermodal options for transloads that are forced to be accepted to port only?
Requests for transloads have increased over 500% for us, so finding a good home for this has been challenging as warehouses, truckers, dray carriers are all operating at full capacity. In almost all cases, they are operating with limited staff due to Covid restrictions.
- What is your schedule ex-Shanghai for the month of May?
It sounds crazy, but there really is none that can be 100% count on. It’s taking so long for the vessels to return that even Maersk and Zim, who published two new services to be launched in May, had to postpone them both because the ships that were supposed to be in that rotation are stuck elsewhere.
- I approved Premium service, why was the booking rejected?
It could be several reasons, but most Premium booking cancellations are the result of someone else approving it faster. If a carrier is releasing Premium-only space, they are releasing to a limited number of customers or forwarders, so the first to approve it gets it. If the forwarder or customer must seek approvals, which can take anywhere from 24-48 hours, often that Premium space is already sold out. Premium space is selling out in hours so “fast-tracking” or “green-lighting” approvals will help you get to and stay in front of the line.
- Why is the Premium on “Carrier A” different per port and per week?
Each carrier has a different strategy. Most are offering different Premiums per vessel depending on the space and equipment availability for each vessel. We have seen some carriers offer Premium-only extra loaders so this is also priced differently. Premiums may also be larger for high demand or difficult origins, such as Qingdao or Fuzhou, that do not get many direct calls and rely on feeder vessels and space at trans-shipment hubs.
- When will we be back to normal?
That is the million-dollar question. What’s normal? As the challenges resulting from the Suez blockage dissipate, we think All Water East Coast services will normalize sooner, perhaps by Q3. We do not expect Gulf All Water to normalize this year because of the lack of capacity in general (Houston, Mobile, Tampa, New Orleans). West Coast services will be last to normalize, especially LA/LGB. If the average number of ships at anchor off LA/LGB and Oakland combined is 30, and the average number of days each vessel is waiting at anchor is 8 days, then this will reduce capacity to the west coast significantly all year. The ships simply can’t return on time. We do not expect the West Coast situation to improve significantly until after Lunar New Year 2022.
- What will the Spot rates be next month?
Spot rates actually have been very stable (thanks to the Chinese government regulators). We can predict that spot rates will remain where they are today for quite some time. The difference is the Premium pricing. That is changing every week, every vessel and every carrier. So far, the highest Premium price we have seen is in the $15,000 / 40’ range to the East Coast from China Base Ports. Could it go higher than $15,000? We didn’t think it would ever get this high so who knows?
- Why are carriers blanking sailings when demand is so high? Shouldn’t they be adding vessels?
First, all available steel is in the water. Carriers are at maximum deployment, utilizing all maximum available capacity. Everywhere. There is no “reserve” right now they can tap into. The blanking’s are simply a result of vessels not returning to port on time, so the carrier options are to delay the schedule, or cancel the voyage and hope that ships reenter the rotation on time on the next rotation.
- Why does the tracking not seem to work as well right now?
Tracking in our industry has made huge progress over the years, but tracking is a visual representation of milestones happening. So, on Peerplus (Laufer’s visibility tool) for example, we are reporting rail move milestone updates as quickly as every 25 minutes. However, when milestones don’t happen, there is nothing to report or update. When a ship is at anchor for 9 days off the coast of Oakland, there are no ETA updates because the carrier has no idea when that ship will be pulled in to port.
- What space do you have available for the next three weeks?
The environment is so fluid right now that it is hard to forecast. Regular allocations that we have relied on are under duress because of ships not returning, blank sailings, and schedules that are meaningless right now. Every booking requires a process that includes vetting the carrier, allocation, equipment availability, Fixed Market or Premium rate level, ETA of the vessel, and planned vessel departure date. So much of this is at the last minute. So, we encourage our clients to place the bookings first, then we can find a home for it.
- Why does my shipper have to wait so long for the S.O. at origin?
It is simply because we must wait until the last minute to get confirmation from the carrier on sailing, cut-off, empty return, and equipment availability dates.
- My supplier is booking the same freight with five forwarders, and whoever gets space first wins the booking. Why doesn’t that work right now?
This strategy doesn’t work right now because each of those forwarders is making the same bookings, to the same carriers, at the same time. Once the booking is released to one forwarder, al the others have to cancel their booking with that carrier. Cancellations are penalized in Asia right now. Those shippers who make multiple bookings, and then cancel a lot have been getting restricted by carriers. We recommend having a strategy for a specific allocation with one partner/forwarder and to partner with them to act on your behalf as your local advocate.
- I just signed a Fixed Rate Agreement, why can’t I get space on it yet?
Most contracts in our industry go into effect May 1. This year however, carriers are restricting fixed agreements and moving more and more to the spot market. We expect allocations this year will be limited. In addition, with carrier contracts being concluded so late in April this year, the next available vessels to book on won’t be until June. May in essence is already sold out.
We hope this list addresses many of the questions you may have. In the event you still have more, let us know, we are here to listen and help! Please check out our earlier post, SIX STEPS TO SUCCESSFULLY NAVIGATE THIS YEAR’S CONTRACT SEASON for other recommendations. If you are interested in additional insights and help please reach out to our TPEB experts, Michael Van Hagen, VP, Sales and Marketing or Brian Martorano, National Director of Business Development Ocean Import.