Customers no longer place orders! The US West offer has reached 32,000 US dollars, and 80 container ships are waiting for berths! The port is stuck in peak season congestion deadlock again...
With the advent of the peak season, freight demand in Europe and the United States is flooding in like tides. However, the backlog of foreign destination ports is unable to correct empty containers in time, resulting in a shortage of export containers in Asia.
This deadlock has delayed Asia's main export trade for several weeks, and a series of weather and epidemic-related incidents and operational accidents have exacerbated the deadlock.
Recently, the Freightos Baltic Daily Index adjusted its method of tracking ocean freight rates. For the first time, it included various premium surcharges required for booking, which greatly improved the transparency of the actual cost paid by shippers.
According to the adjusted index, the freight rate from Asia to the US West Coast is US$18,345/FEU, which is six times higher than a year ago; while the freight rate from Asia to the East Coast of the US has quadrupled to US$19,620/FEU. The freight rates in Asia-Northern Europe have climbed 4% from last week, more than eight times the level of a year ago and more than 2.5 times the level at the beginning of the year.
The high freight rate has exceeded the affordability of some shippers. Orders for low-value items such as wooden assembled furniture were stopped when the shipping cost rose to about $1,400. The customer must make a very difficult decision to choose which goods to abandon.
To some extent, some companies have been squeezed out of the market just because of prices.
With the advent of the traditional peak season, carriers begin to charge port congestion charges and surge demand charges, while restricting multimodal transport bookings, and shippers’ pain may increase.
For example, starting from mid-August, the container shipping company Hapag-Lloyd will impose a surcharge of US$5,000/FEU on trans-Pacific eastbound cargo, and other carriers are also officially implementing similar charges.
Due to the excessive shortage of space on the Asia-North American West Coast route, most shippers have to use some unconventional means, including the use of interpersonal relationships, to obtain space.
Logistics consultant Jon Monroe warned last Thursday: “Now we have a large number of charter charter carriers putting ships into operations on the China-Pacific Southwest route. At the same time, large shipping companies are adding additional loading vessels. It is expected throughout August. The west coast will be hit hard. We are facing a deadlock in the peak season."
According to the latest data from the signal platform of the Port of Los Angeles on July 30, the situation in Southern California is not optimistic. There are 17 container ships at anchorages and 12 container ships waiting to be anchored outside the port.
The average waiting time for berth increased from 4.6 days in the previous period to 4.8 days.
According to statistics, there are about 80 container ships at anchorages waiting for berths at the three major U.S. coastlines (Western U.S., Eastern U.S., and Gulf Coast) ports, including ports such as Los Angeles, Seattle, Port of Savannah and Houston.
the logistics industry generally believe that this situation will not be alleviated until the Spring Festival of the Year of the Tiger. A ‘pessimist’ said that unless consumers are worried about inflation, or there is external intervention that causes the economy to slow down.
If demand does not decrease, the market may not change until at least the middle of next year. But in the final analysis, when will a new price equilibrium appear. This is not a problem of capacity shortage, but a problem of infrastructure capacity.
Before the peak season, the capacity of the Port of Los Angeles was as high as 160%, so no matter how many ships are added, the problem will not disappear. Therefore, under the condition of the same infrastructure, only a 60-70% drop in demand can we see real improvement.
In order to minimize the waiting time for ships, logistics companies are also urging customers to book space 8 weeks before the scheduled departure. According to a fact sheet on the website of a logistics company, retailers who need to put their products on the shelves before November 1 should ensure that they are shipped to the east coast by August 21/september 3 to the west c