{"id":1775,"date":"2021-01-28T19:53:41","date_gmt":"2021-01-28T19:53:41","guid":{"rendered":"http:\/\/www.bocintl.com\/web\/?p=1775"},"modified":"2021-12-31T18:27:39","modified_gmt":"2021-12-31T18:27:39","slug":"the-boc-blast-395-trans-pacific-trade-crashes-into-max-capacity-ceiling","status":"publish","type":"post","link":"https:\/\/www.bocintl.com\/web\/the-boc-blast-395-trans-pacific-trade-crashes-into-max-capacity-ceiling\/","title":{"rendered":"The BOC Blast 395 \u2013 Trans-Pacific trade crashes into max-capacity ceiling"},"content":{"rendered":"\n
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Trans-Pacific trade crashes into max-capacity ceiling<\/h2>\n\n\n\n

Voyages canceled as volume and congestion overwhelm capacity<\/strong><\/p>\n\n\n\n

Greg Miller, Senior EditorGreg Miller, Senior Editor
Excerpted from www.FreightWaves.com, 1\/27\/21<\/em><\/p>\n\n\n\n

It\u2019s official: Container volumes in the Asia-U.S. trans-Pacific trade have hit their limit. Massive port congestion in the ports of Los Angeles and Long Beach is forcing ocean carriers to take extreme measures. Sailings are now being \u201cblanked\u201d (canceled) not because of lack of demand, but because of lack of tonnage as ships are stuck awaiting berths.<\/p>\n\n\n\n

When ships fall behind schedule due to long waits in port, carriers normally add \u201crecovery vessels\u201d to take their place and keep weekly services going. There are no recovery vessels left. According to Hapag-Lloyd, \u201cas our fleets are fully deployed and stretched beyond capacity, this is regretfully currently not an option.\u201d<\/p>\n\n\n\n

As a result, Hapag-Lloyd has blanked 19 sailings in February. \u201cIt is important to emphasize that vessels will not be idling at any time and we will perform as many voyages as possible,\u201d stressed the carrier. Hapag-Lloyd is a member of THE Alliance along with Ocean Network Express (ONE), Yang Ming and HMM.<\/p>\n\n\n\n

\u2018Need-to-get-back-on-schedule blanks\u2019<\/strong><\/p>\n\n\n\n

\u201cSchedule reliability is horrible,\u201d said Simon Sundboell, founder of eeSea, a company that analyzes ship schedules. \u201cThese are not \u2018pull-out-capacity blanks.\u2019 These are \u2018need-to-get-back-on-schedule blanks,\u2019\u201d Sundboell told American Shipper.<\/p>\n\n\n\n

Carriers usually blank sailings at this time of year due to lower exports during the Chinese New Year (CNY) holiday. Carriers initially opted to keep CNY sailings largely intact in order to clear the export pileup at Chinese ports. But the congestion in Los Angeles and Long Beach is leaving carriers short of ships. That means the pileup in Asia will take even longer to clear.<\/p>\n\n\n\n

(eeSea) data as of Wednesday reveals an 11% dip in Asia-U.S. sailings in February versus January. This is despite continued high cargo demand.<\/p>\n\n\n\n

Seaintelligence Consulting CEO Lars Jensen explained, \u201cWhen you have all the vessels stuck waiting outside ports, they cannot make the return journey so they cannot start the sailing they were supposed to do. The blank sailings now are not a choice. They are an operational necessity.\u201d<\/p>\n\n\n\n

No letup in San Pedro Bay traffic jam<\/strong><\/p>\n\n\n\n

At any given time since the beginning of this year, there have been around 30 container ships stuck waiting at anchorages in San Pedro Bay offshore of the ports of Los Angeles and Long Beach.<\/p>\n\n\n\n

The situation has not improved at all. According to the Marine Exchange of Southern California, there were 33 container ships at anchorages and 26 at berths on Wednesday. Including all ship types, there were 55 vessels at anchorages \u2014 a new record, with all Los Angeles\/Long Beach anchorages full and all contingency anchorages off Huntington also full.<\/p>\n\n\n\n

On Monday, many of those vessels had to leave anchorage and go to sea due to extreme storm conditions. Winds gusted to 55 mph and swells reached 15 feet. Marine Exchange Executive Director Kip Louttit exclaimed that he \u201ccould not recall a more complex situation with this many vessels and this bad a wind and sea condition for such a sustained period of time.\u201d<\/p>\n\n\n\n

Port congestion is being caused by high inbound volumes combined with surging COVID cases among dockworkers. A spokesperson for the ILWU dockworkers union told American Shipper that number of its members testing positive had risen to 803 as of Monday, up 16% from 694 as of Jan. 17.<\/p>\n\n\n\n

\u201cThey can\u2019t service the ships fast enough, which has led to waiting times of 10-14 days or even more, depending on the terminal,\u201d said Nerijus Poskus, global head of ocean freight. \u201cAs of last week, there were almost 300,000 TEUs [twenty-foot equivalent units] waiting to get offloaded,\u201d Poskus added.
Jensen put it another way. \u201cIt is the equivalent of pulling five full trans-Pacific services out of action as long as you have these waiting times,\u201d he said. \u201cThe impact is massive.\u201d<\/p>\n\n\n\n

Deteriorating reliability, rising rolls<\/strong><\/p>\n\n\n\n

As previously reported by American Shipper, global schedule reliability has collapsed to around 50% versus normal levels of 70%-80%. Getting a box delivered on time is no better than a coin toss. In reality, the chance is much worse. Schedule reliability data doesn\u2019t take into account blank sailings. Nor does it take into account cargo that is \u201crolled\u201d \u2014 pushed off to a subsequent voyage.<\/p>\n\n\n\n

Data on cargo rolls by the world\u2019s top liners at the world\u2019s top ports is compiled by Ocean Insights. According to Ocean Insights data released last week, the share of shipments that did not sail aboard their originally scheduled vessels rose to 37% in December. That\u2019s up sharply from 29% in July and 25% in December 2019.<\/p>\n\n\n\n

One importer moving goods from China via Los Angeles wrote to American Shipper: \u201cWe\u2019re seeing over 60 days of additional transit time now. The entire process used to take 28 days. Now containers shipped in November have still not reached their final destination.\u201d<\/p>\n\n\n\n

Add it all up and U.S. consumers should see escalating shortages of goods on the shelves. That, in turn, should fuel import demand even further into 2021.<\/p>\n\n\n\n

Light at the end of the tunnel?<\/strong><\/p>\n\n\n\n

One of the central drivers of today\u2019s capacity crunch is a shortfall of containers. Or rather, a shortfall of containers positioned in the right place.<\/p>\n\n\n\n

But there are some glimmers of hope. Data on container-equipment availability is tracked by the Container x-Change Container Availability Index. Availability of 40-foot high cubes (40HCs) remains extremely low. But availability of 20-foot dry cargo (20DC) and 40-foot standard dry cargo (40DC) units improved markedly this month.<\/p>\n\n\n\n

An index level below 0.5 is considered a shortage. In the third week of January, the index in Shanghai for 20DCs was up to 0.34 and for 40DCs to 0.37. The index for 40HCs was still a very low 0.11.<\/p>\n\n\n\n

Getting back to normal<\/strong><\/p>\n\n\n\n

Jensen expressed confidence that the container-equipment challenge will be resolved fairly soon. Chinese factories have been busy churning out new boxes.<\/p>\n\n\n\n

\u201cWhat\u2019s happening now is exactly the same scenario we saw in 2010 after the financial crisis. If you look at 2010, they went on a building spree. It took about three months from when the problem arose to when it was resolved. If we put that in the context we have now, this should be resolved by Chinese New Year.<\/p>\n\n\n\n

\u201cThe wild card this time around is the port congestion because that ties up a significant part of the ability to reposition the empty containers back into balance. That could delay things somewhat,\u201d acknowledged Jensen.<\/p>\n\n\n\n

As more containers are manufactured, liners should simultaneously work to get sailings back on schedule. \u201cIt appears the carriers plan to use the post-Chinese New Year period to get their vessels back on schedule,\u201d said Jensen. \u201cIf that works out and if we get the port congestion sorted out \u2014 which is a big if \u2014 we could get back to normal levels [of service reliability] within a few months. But that\u2019s the optimistic view.\u201d<\/p>\n\n\n\n

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Trans-Pacific trade crashes into max-capacity ceiling Voyages canceled as volume and congestion overwhelm capacity Greg Miller, Senior EditorGreg Miller, Senior EditorExcerpted from www.FreightWaves.com, 1\/27\/21 It\u2019s official: Container volumes in the Asia-U.S. trans-Pacific trade have hit their limit. Massive port congestion in the ports of Los Angeles and Long Beach is forcing ocean carriers to take<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[507],"tags":[],"class_list":["post-1775","post","type-post","status-publish","format-standard","hentry","category-the-boc-blast"],"_links":{"self":[{"href":"https:\/\/www.bocintl.com\/web\/wp-json\/wp\/v2\/posts\/1775","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bocintl.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bocintl.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bocintl.com\/web\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bocintl.com\/web\/wp-json\/wp\/v2\/comments?post=1775"}],"version-history":[{"count":2,"href":"https:\/\/www.bocintl.com\/web\/wp-json\/wp\/v2\/posts\/1775\/revisions"}],"predecessor-version":[{"id":2158,"href":"https:\/\/www.bocintl.com\/web\/wp-json\/wp\/v2\/posts\/1775\/revisions\/2158"}],"wp:attachment":[{"href":"https:\/\/www.bocintl.com\/web\/wp-json\/wp\/v2\/media?parent=1775"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bocintl.com\/web\/wp-json\/wp\/v2\/categories?post=1775"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bocintl.com\/web\/wp-json\/wp\/v2\/tags?post=1775"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}