GLOBAL LOGISTICS ISSUES
There are transportation bottlenecks all over the United States and the world right now. Vessels are arriving late and leaving late on both the east and west coast of the United States. This is happening from/to Asia and Europe. Vessels are also delayed from/to Asia to Europe and this is impacting available equipment in Europe for export to the United States. Capacity to/from South America has been reduced, especially on the East Coast of South America. Port congestion in the United States is growing and causing huge headaches and extra costs for importers and exporters alike. Covid 19 has definitely played a role in this situation.
The supply chain is being impacting in numerous ways. Import volumes have reached levels that have outpaced available truck capacity in most ports and inland locations. Ports are struggling to keep up with the volume. Export shipments are being impacted with all the vessel delays. Cargo receiving dates at seaports and inland rail terminals are constantly changing, sometimes on a daily basis. This leads to extra charges for exporters as the trucking company must hold an already loaded container until the vessel opens for receiving. There are extra charges for yard storage and daily chassis fees.
WEST COAST USA PORT CONGESTION ISSUES
The problem that grabs the most attention right now is the port congestion in Long Beach and Los Angeles. Surging imports from Asia (mostly China) into the west coast along with labor shortages at the pier due to Covid 19 cases have created a situation unseen for nearly 20 years. Vessels are stuck for up to 2 weeks waiting to discharge their import containers and load export containers. On a given day there can be anywhere from 30-40 container ships at anchor awaiting a berth in either Long Beach or Los Angeles. These are huge vessels carrying thousands of containers per ship.
The two Southern California ports are the first port of call for most vessels arriving from Asia to the United States that do not sail directly to the Northwest. The delays in the import arrival create a ripple effect both at the port of arrival and in the interior of the country. It also has a negative effect on exports from the United States to Asia. Only in the past 2 weeks has a carrier announced that they will bypass the ports of LB/LA and discharge first in Oakland. CMA CGM made that announcement as the frustration with the delays caused them to rethink their port rotation.
EAST COAST USA PORT CONGESTION ISSUES
On the East Coast there is serious port congestion at the Port of New York. Not as many ships are at anchor however there is a surge of imports from Asia and Europe. Terminal congestion and a truck driver shortage has created significant problems there. Truckers are charging congestions surcharges at some of the terminals at the Port of New York. There are serious rail delays for inbound cargo that discharge in New York and are destined for inland cities like Chicago, Kansas City, Minneapolis, Columbus, Cleveland and Pittsburgh.
The Port of Baltimore is seeing few congestions issues other than when vessels bunch up and discharge back to back. The port has extended gate hours when necessary to alleviate congestion. When vessels delay it creates a space issue as loaded export containers are still sitting on the terminal and that creates congestion inside the terminal.
There are no issues at the Port of Boston. Their volume has increased from Asia but they don’t have that many vessels calling the port directly so it rarely has the congestion issues that other ports have on the East Coast.
The Ports of Norfolk and Savannah have gained the most volume from Asia due the number of distribution centers that are in close proximity to the port. Even with the increased volume the ports are not feeling the congestion issues that New York is having.
We haven’t heard too many reports of any major congestion issues at the Port of Charleston, Jacksonville, Port Everglades or Miami.
IMPACT ON CARGO MOVING BY RAIL TO/FROM THE MIDWEST
Inland rail depots in Chicago, Kansas City, St. Louis, Memphis, Louisville, Cincinnati and Columbus are seeing a surge of imports as well. There are rail delays both from the west coast and east coast to these areas. In some cases, it’s taking 14-21 days for a container to move by rail from Southern California ports to the Midwest and 7-14 days or more from New York to the Midwest. The rail delays are not as acute in the Northwest ports of Seattle and Tacoma. Ports in Canada (Vancouver & Prince Rupert) that handle containers destined to the Midwest also have delays but nothing near what we have in Southern California.
From the East Coast the ports of Norfolk, Charleston and Savannah are not experiencing delays longer than 3-5 days at this time. Norfolk is a major gateway to/from the Midwest. Rail service is to Chicago, Detroit, Louisville, Cincinnati, Columbus and Cleveland are best served from Norfolk compared to New York. From Europe the Canadian gateways of Halifax and Montreal are not experiencing abnormal delays to the Midwest.
For export cargo the delays have caused empty container shortages at many inland depots in the United States. Equipment availability is very limited in many locations in the Midwest. It’s a real problem for exports as some inland terminal locations have no available empty containers. The delays also impact the earliest return date at the rail ramp. When vessels delay at the port the ocean carriers then delay the earliest return date to the rail ramp.
IMPACT ON OCEAN FREIGHT RATES
This surge in demand for import cargo has resulted in a nearly fourfold increase in ocean rates from Asia to the United States. This has also raised the cost of LCL (Less than Containerload) rates as well. Space is not available from China and most other ports in Taiwan, Malaysia, Vietnam, Thailand, Singapore and Philippines unless an importer wants to pay a premium of up to $ 3,000.00 per container. It’s especially difficult right now with Chinese New Year coming at the end of the week. It should get a little better after Chinese New Year. The ocean carriers are blanking sailings to reduce congestion in Southern California. A blank sailing is essentially a carrier skipping a call at a given port or the entire voyage. The hope is that the backlog in Southern California will clear up to a more manageable level by the end of March.
Right now a steamship line would rather take an empty container back to China in order to get it turned around and exported back to the USA or Europe for 8 times the rate they get for an export from the USA to Asia. They won’t admit it but that’s the reality. They aren’t enthusiastic about carrying export cargo back to Asia. Exporters and freight forwarders are protesting loudly to the ocean carriers and Federal Maritime Commission.
NEW FREIGHT SURCHARGES
Ocean carriers are charging equipment imbalance surcharges of up to $200.00 or more from some European origins to the United States due to shortages of containers in Europe. Importers should tell their suppliers to book at least 3 weeks in advance to secure space and equipment. We are monitoring this situation very closely.
USA CONTAINER TRUCKING ISSUES
This leads us to the container trucking problems right now in the United States. There are major capacity issues in most ports/inland rail terminals in the United States. We must issue delivery instructions to our truckers at least 2-3 weeks in advance for import shipments and 10-14 days or more for export shipments. It’s extremely difficult in New York, Chicago and Long Beach/Los Angeles. Most other ports or inland depots require 7-10 days advance notice to secure a truck. We are adding more truckers that can help us pick up and deliver containers for our customers and overseas agents. We are also looking at using flat bed and step deck trucks when possible.
For instance, in New York most truckers are booked out at least 14-21 days or more. The snowstorm last week made it even worse. In Long Beach/Los Angeles it’s practically impossible to find any available truck capacity to pick up or deliver containers one month in advance. It’s at least 7-10 days in most other ports and inland rail terminals around the country. It’s a very challenging time.
Flatbed trucking is also seeing a capacity crunch around the country which is leading to increased rates.
It’s not as acute as it is for containers but there are issues. Heavy haul capacity is still available though we expect to see it tighten up as the year progresses.
Air freight rates continue to be on the high side from all worldwide destinations.
Rates are at their peak now from China due to Chinese New Year CNY) on Feb. 12th.
The rates should ease up some after CNY as there isn’t the surge in masks or other Personal Protective Equipment (PPE) that we had last year.
Passenger flight capacity is limited due to reduced flights. Until Covid 19 restrictions are eased up there will not be an increase in passenger flights. This is especially true from/to Europe and to the Middle East.
WHAT CAN YOU DO?
Try to forecast, and plan ahead for expected delays. Make your suppliers and customers aware of potential delays. Please note that this is a global logistics issue that does not seem to have an end in sight at this time. If you have an export shipment contact us weeks in advance not days in advance of the ready to ship date. For an import shipment tell your suppliers to book early not matter what the shipment size is going to be. All shipments are impacted by this problem.
WHAT IS THUNDERBOLT GLOBAL DOING?
All of us at Thunderbolt Global Logistics are working diligently to keep the cargo moving without delays. Some delays are out of our control. We will strive to keep our customers and overseas partners updated on their shipments.
All of our employees are currently working remotely due to Covid 19. We hope to be back in the office in some hybrid manner in March.
Please contact us if you have any questions or need more information.
Thunderbolt Global Logistics