Thunderbolt Global Logistics International & Domestic Mid-Year Transportation Update
GLOBAL LOGISTICS ISSUES
The definition of chaos is “Complete disorder and confusion”. This is the state of the global logistics world right now. It seems that every couple of weeks a new event happens that causes a hiccup in global shipping. From the Ever Given blocking the Suez Canal for 6 days to a Covid outbreak in the Port of Yantian in China we are faced with events that impact the entire supply chain.
We still have lengthy delays on shipments coming into the United States from Asia and Europe. Capacity from/to the East Coast of South America to the United States are running full on the northbound leg. It’s very hard to get space from Brazil. Empty containers are in short supply in Asia, Europe and South America, especially in Brazil. In the United States there are pockets of containers shortages in inland depots but the more chronic problem is a lack of chassis available at ports and inland rail terminals. Containers are sitting in stacks in places like Chicago for weeks waiting for an available chassis. On top of that, demurrage and detention are being assessed and importers are paying tens of thousands of dollars in charges. It’s a very serious problem that has to be solved by the ocean carriers and chassis suppliers.
Container terminals are congested and problems exist with returning empty containers at some ports. New York is in a very bad state right now as truckers in some cases are not being allowed to return empty containers to the container yards or off-site locations as they are full.
Import air freight rates to the United States are still at a high level due to the lack of passenger flights worldwide. There is hope as the world recovers from Covid and more people travel. Airlines are adding passenger flights especially to/from Europe. There still isn’t enough belly space in passenger planes to meet the demand
EUROPE TO THE UNITED STATES
Full container shipments from North Europe and the Mediterranean region are severely overbooked to the United States. It still can take up to 30 days to get space from most European countries. Germany in particular is in a difficult place right now as there are container shortages, trucking capacity problems and overwhelmed terminals in Hamburg and Bremerhaven. Even LCL shipments are impacted as consolidators have a limit on the number of pallets they are willing to accept per booking.
Rate increases are planned for July of up to $1,000.00 per container and they will most likely continue to rise further in August. Even though some factories in Europe close during July and August there appears to be no letup in demand for space on vessels. There doesn’t seem to be any indication that this is going to change anytime soon. There still isn’t enough capacity to keep up with the demand. A lot of cargo that would normally move in containers or flat racks are moving on mafi trailers on RO/RO carriers like Wallenius Wilhelmsen, K-Line and Hoegh Lines. It’s a creative way to get the cargo moving.
We still recommend that any importer tell their suppliers to make their bookings at least 30 days in advance to secure space. Last minute space is really impossible right now. Be prepared for continued higher shipping costs from Europe.
ASIA to the UNITED STATES
Imports from all over Asia into United States have not let up. Space and available equipment are very difficult right now from all countries in Asia. Rates are in excess of $14,000.00 per 40’ standard/HC container from some origins in Asia to the east coast of the United States. The rates are still climbing to to the West Coast and inland locations like Chicago, Kansas City and St. Louis. Ports like Xingang and Dalian in Northern China that rely on feeder vessels to marry up with mother vessels from ports like
Busan or Shanghai are severely backlogged with space very hard to obtain.
Ocean carriers are charging “premium rates” which can be $5,000.00 or more above the current market rate in order to get space on a vessel. The carriers are also charging cancellation fees of up to $1,000.00 if a confirmed booking is not used or a container misses a cut off at the port.
Space still needs to be booked 3-4 weeks or more in advance to get the process going. We are actually entering the “Peak Season” for imports from China as holiday merchandise typically ship from June – October. Space and equipment will become even more scarce and rates will continue to rise. I’m told that rates into Canada are exceeding $20,000.00 per container from China. That could happen to the United States too.
The Covid outbreak at the Port of Yantian spilled over to the Port of Nansha and reduced operating capacity to 30%. Vessels have skipped their port calls adding further congestion. Yantian is now back at full capacity but has a major backlog of cargo rotation.
Ocean carriers are still trying to get the empty containers back to Asia at the expense of loaded exports from the United States. Import rates from Asia are 6x higher than export rates to Asia. The greedy ocean carriers are making a fortune yet their customer service is still terrible for the most part.
Space from India to the United States is at a premium as well with rates rising every 15 days. There is high demand and not enough space from the Indian Sub Continent to the east coast of the United States.
EXPORTS FROM THE UNITED STATES TO ASIA AND EUROPE
Container availability at inland depots is still a problem. Vessel schedule delays are causing cut offs to change at inland depots and ports and this can add costs for shippers that have already loaded their containers but they can’t be returned to the rail terminal or port due to a change in the earliest return date. We are seeing carriers charge export container demurrage. Rates are going up, especially to Asia but not nearly at the level of import rates.
Exports to Europe are difficult now. We are seeing delays with some carriers to North Europe and the Mediterranean region (Italy/Spain in particular) of up to 1 month. Space is tight to Middle East ports in Saudi Arabia and the Persian Gulf. The rates have not really risen compared to the import side but the space problem has persisted.
PORT CONGESTION ISSUES IN THE UNITED STATES
The port congestion problem on both coasts are still happening. Vessels are still waiting to berth for several days in Long Beach/Los Angeles and Oakland. It’s even impacting the Northwest ports of Seattle and Tacoma. New York, Savannah and Miami have congestion problems and it will probably continue as volume of imports increase further this summer/fall. The current heat wave in the northwest is impacting terminal production and causing slowdowns.
Terminal congestion is a major problem as it’s taking several hours for truckers to pick up or return containers to the port. This is adding a cost to both imports and exporters when truckers have to wait for long periods to pick up or return containers.
The Port of Baltimore is actually in very good shape right now. The port will extend gate hours when necessary to alleviate congestion. Truck capacity is not nearly as difficult compared to ports like New York and Savannah.
We are not hearing of any major issues at the Port of Philadelphia or Boston. Service is limited at each port, especially to/from Europe and Asia.
The Port of Norfolk is seeing much higher volume and truckers there are backed up to 2 -3 weeks.
A lot of containers move inland by rail from Norfolk. Containers are moving without much of a delay by rail from Norfolk to interior locations like Louisville, Columbus, Chicago, St. Louis and Kansas City.
Hopefully that trend will continue.
The Port of Savannah has seen their volume of containerized imports go up dramatically. There are berthing delays in Savannah partly due to the fact that it is a river port and the tides dictate when vessels can travel up and discharge at Garden City Terminal.
The Port of Miami and Port Everglades are now seeing major problems with congestion and truckers not being able to get in and out of the port due to lack of available appointments.
The Port of Houston is having congestion and also chassis problems which impacting the pick up of containers at the port.
CANADIAN PORTS
The labor problems at the Port of Montreal have been settled for now however there are delays from Montreal to inland rail destinations in the United States. The same holds true at the Port of Halifax.
A lot of cargo to/from the U.S. Midwest arrive at Canadian ports and go by rail to U.S. inland depots.
There are delays for cargo moving by rail from the Ports of Vancouver and Prince Rupert on the west coast of Canada to the U.S. Midwest locations in Minneapolis, Chicago and Detroit.
INLAND RAIL RAMP LOCATIONS IN THE UNITED STATES
Chicago, Minneapolis, Kansas City, Memphis and Columbus, OH are inland terminals that have so much volume that truckers can’t keep up. Chicago is a huge consumer market and the other locations are major distribution centers for large retailers. Delays in containers coming off the train and either being grounded or mounted on chassis are happening in places like Chicago, Minneapolis, Memphis and Kansas City. Some rail terminals in Chicago are severely congested and have a chronic shortage of chassis.
Chicago, Memphis and Minneapolis have been having container shortages for export shipments.
TRUCKING ISSUES IN THE UNITED STATES
Container drayage problems are getting worse in many ports. Truckers don’t have enough drivers to handle the surge in imports. We are seeing some truckers booked out until in August in New York, Savannah and Charleston. Chicago has a chronic truck capacity problem. Kansas City, Minneapolis, Memphis and Columbus are difficult. Miami and Port Everglades are now seeing problems with available truck capacity. Many owner operators are still on the sidelines due to Covid 19. As unemployment benefits run out that may bring back some of the drivers. The Port of Baltimore is in good shape and there is available truck capacity.
The chassis situation is also compounding the problem. We are told that in Chicago Wal-Mart has taken thousands of chassis off the street and are sitting at their distribution center. They are using containers as short-term storage due to space problems at their distribution center. Truckers that are using chassis on a daily basis are keeping them and paying the daily costs to keep their trucks moving.
Flatbed and step deck trucks are in short supply in many locations. Norfolk in particular is really difficult right now as is Savannah. We are seeing a capacity crunch around the country. We are still seeing rates rising seemingly on a weekly basis, especially for flat bed trucks. The demand still far exceeds the supply of available trucks. Heavy haul capacity is starting to tighten up. Multi-axle trucks are seeing an increase in volume and that will put a squeeze on rates and availability. Summer construction is also causing permit delays for oversize cargo.
WHAT DO WE RECOMMEND
Continue to plan ahead for expected delays. The chaos will not stop anytime soon. This may last into 2022. Be prepared to pay more for freight charges for international and domestic freight. Tell your suppliers and customers to be aware of potential delays. For import shipments tell your suppliers to book 4 weeks in advance. Space will remain tight through the summer and fall. We hope it will let up some in the July/August in some European countries due to factory shut downs for summer vacation and maintenance. We need at least 2-3 weeks notice for any export shipment to check available space and truck capacity.
If you are importing from Brazil your suppliers need to book at least 4-5 weeks in advance and even with that there is a problem with empty containers being available at the time of shipment.
WHAT IS THUNDERBOLT GLOBAL LOGISTICS DOING?
Our dedicated team of professionals are working tirelessly to keep the cargo moving. It’s not easy and it’s taking longer to handle each transaction but we are getting the job done.
We did reopen our office on May 3rd and are working in a hybrid manner. It’s great to see some members of our team in person. There is no substitute for direct human contact.
Please contact us if you have any questions or need more information.
Be safe!
Jim Shapiro
Director