Canceled sailings from China and 'drastic' ship cuts affect US ability to reach export market

Canceled sailings from China and ‘drastic’ ship cuts affect US ability to reach export market

Shipping containers at a container terminal at the Port of Long Beach-Port of Los Angeles complex in Los Angeles, California on April 7, 2021.

Lucy Nicholson | Reuters

An increase in canceled or canceled departures from Asia to the United States is hitting some of the largest domestic ports, including the Port of Long Beach and the Port of Savannah, hard, reducing their ability to ship exports. The decrease in the number of ships from Asia on the trans-Pacific route creates an increase in the wait time, or dwell time, of export containers at the Port of Long Beach.

Supply chain research firm Project44 tracks exports from “gateway to loading onto a vessel,” said Joshua Brazil, Project44’s vice president for supply chain insights, and this metric reached 18.33 days at the Port of Long Beach on November 10.

“We are expecting 28 dry starts for the fourth quarter, which represents approximately 15% of our quarterly vessel capacity,” said Mario Cordero, executive director of the Port of Long Beach. “As shipping lines reduce ship calls in the form of empty departures, this reduces capacity for outbound volumes. That said, we continue to prioritize exports over empties, which is one reasons why voids are multiplying at the terminal.”

Cordero said the port expects loaded imports to continue to decline for the remainder of the calendar year.

Carriers ‘retreat’ capacity as shipping rates crater

Ocean carriers have increased the number of canceled sailings in a bid to cope with falling ocean orders and put a floor on falling ocean freight prices.

Transport company HLS wrote in a note to customers: “More and more carriers have agreed on the strategy of ‘removing capacity to meet demand’, although no one wants to be the first to suspend a service, which potentially loses market share”.

HLS warned of more “drastic” capacity cuts from THE Alliance (the ocean alliance of Hapag-Lloyd, Yang Ming and ONE), pointing out that 2M Alliance (composed of Maersk Line and MSC) has already suspended a third of its services on the west coast. Empty sailing and suspension of service to the US East Coast are also expected to increase.

Sea-Intelligence wrote in its recent blank sailing report that it had detected unexpected cancellations for the calendar year period of weeks 42 to 52 over the past two weeks.

“Empty sailings have been increased significantly on the Trans-Pacific, but not so much on Asia-Europe,” said Alan Murphy, CEO of Sea-Intelligence.

According to its data, there were 34 additional virgin crossings on the west coast of Asia and North America and 16 on the east coast of North America, according to its data, with carriers announcing seven to 11 crossings additional virgins in all but five weeks of the analyzed period. the end of the year, he said.

But so far, for weeks 51 and 52, carriers have not scheduled any blank crossings on the Asia-West Coast of North America route, which Murphy says reflects carriers’ indecision about how to approach the potential before the Chinese New Year. Rush.

“It seems more of a wait-and-see approach, as to whether there will be a seasonal spike in demand,” he added.

On Asia-Northern Europe routes, Sea-Intelligence sees only six additional blank departures, and on Asia-Mediterranean routes an increase of four blank departures.

End of a record cycle for container volumes imported into the United States

“The blank crossings reflect the market slowdown and the response of shipping carriers to consolidate or cancel voyages to accommodate changing market conditions,” Cordero said. “After a record run that propelled us to record years, we planned this earlier this year. …Things are starting to fade,” he said. “The good news is that operations are returning to normal and the Port of Long Beach is ready to handle container volume growth,” he added.

From January to October 2022, the port’s container volumes are 1.5% higher than the same period last year. However, loaded imports are essentially stable. After peaking at 436,977 twenty-foot equivalent units (TEUs) in May, loaded monthly imports trended lower from June. On Thursday, Cordero presented the port’s October update, as dockworkers and terminal operators moved 658,428 TEUs of cargo containers last month. This is a decline of 16.6% year-on-year, with imports down 23.7% to 293,924 TEUs and exports also down 2% to 119,763 TEUs. The port also saw a 13.4% decrease in empty containers passing through the port to 244,743 TEUs.

With fewer ships calling at the port, Cordero said this has allowed port stakeholders to clear the backlog of import containers that had been at the terminal for more than nine days. Accounting for 4% of all containers, the number of long-lived containers is now the lowest since the port began tracking containers in October 2021. But containers waiting to leave the port by rail remain a problem, down from 14 days two weeks ago to a still high nine days.

The rails are caught up in ocean problems

Rails is experiencing growing pains due to the low availability of ocean chassis at the Oakland and East Coast rail ramp, especially for smaller domestic markets.

“The main contributing factor is the lack of distribution centers and warehouses receiving capacity across the United States and the dwell time of shipping containers awaiting unloading,” said Paul Brashier, vice president of drayage and intermodal at ITS Logistics. “Oakland chassis are expected to be standardized throughout November as many chassis suppliers reposition chassis from an oversaturated LA/LB market. The slowdowns and disruptions already experienced at the Port of Oakland have resulted in a increased volume in ports on the east and gulf coasts.”

Congestion at East Coast and Gulf Ports

The push for trade to the east coast and the gulf continues with an increase in ships waiting off some ports.

According to MarineTraffic, the Port of Savannah continues to see the highest number of vessels waiting outside port limits at 30, waiting an average of 5.7 days to enter port. The height of ships waiting at the port was over 40 in July. In September, Georgia Ports Authority (GPA) Executive Director Griff Lynch said he was beginning to see signs of a correction in the market.

MarineTraffic is now seeing a decrease in the number of arriving vessels. “While port congestion in Savannah remains high, since November 7 we are seeing a reduction in the number of vessels served,” said Alex Charvalias, MarineTraffic’s supply chain transit visibility manager.

Export dwell times at the Port of Savannah have shown recent improvement, according to port measurements. The average for an export container is around 6.82 days, compared to 8.34 days in the second week of October and 7.35 days on November 1.

In the Gulf, the Port of Houston will launch its own long-lived container tax next month to free up terminal space for inbound containers. The port benefited from the diversion of trade from the west coast. MarineTraffic posted a graph on LinkedIn showing the number of ships waiting at the Port of Houston. The weekly average of vessels waiting this week is 14, waiting an average of 6.3 days.

The CNBC Heat M Supply Chainap the data providers are the artificial intelligence and predictive analysis company Everstream Analytics; the global freight booking platform Freightos, creator of the Freightos Baltic Dry Index; the logistics provider OL USA; the FreightWaves supply chain intelligence platform; the Blume Global supply chain platform; third-party logistics provider Orient Star Group; global marine analytics provider maritime traffic; marine visibility data company Project44; shipping data company MDS Transmodal UK; Ocean and Air Freight Rate Market Benchmarking and Analytics Platform Xeneta; leading research and analytics provider Sea-Intelligence ApS; worldwide crane logistics; DHL Global Forwarding; freight logistics provider Seko Logistics; Planet, provider of daily satellite imagery and global geospatial solutions, and ITS Logistics provides port and rail drayage services at 22 coastal ports and 30 railroad ramps across North America.

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