Asia | US news digest. 9 Aug
A whirlwind of events takes over the industry. Companies are forced into sailing cancelations, dealing with more restrictions and shut downs but there is always hope. This time for intermodal
If the current times were named the roaring twenties, it surely would have a different meaning. The “roaring” congestion gets in full span and hits the world’s two largest ports – Ningbo and Shanghai. Further supply chain chaos is caused by the unpredictable weather, soaring demand from the US, and the new COVID outbreaks. They are experiencing unprecedented volumes of tankers, bulk carriers, and containerships backing up into the East China Sea. Meanwhile, the situation is not improving in Vietnam. The lockdown has caused a 100,000 TEU pile-up at Ho Chi Minh City’s Cat Lai Port. With the closure of factories due to health restrictions, the containers are piling up with nobody picking them up. When facilities reopen again, the sector will have to deal with severe equipment shortages. To maintain smooth operation of TCCL and TCHP, the Vietnam Maritime Administration has developed several measures, among which he suspension of the movement of import laden containers from ports in Cai Mep area to TCCL as a final destination for customer pick-up, temporary halt on transshipped laden reefer containers, customer support delivery of containers discharged from vessels, etc.
The COVID-19 pandemic has resulted not only in the productivity drop, but most importantly, it took away the lives of millions of people. In the case of the Chittagong port, 48 employees and their dependents died of coronavirus since the virus hit the country. The shipping ministry started providing vaccines to the port employees, but the labor shortage is still inevitable.
The delays have not omitted the US either. The number of vessels at anchorage in Southern California has doubled in the past several weeks. The data reports that the average dwell times in the US have increased by 35%, meaning there is 35% less capacity overall. On top of that, there are rail car shortages and rail yard capacity limitations that have forced companies to reduce the number of services from the west coast. They also have to cancel their sailings – across the major trades, Transpacific, Transatlantic, and Asia-North Europe & Med, a total of 496 scheduled sailings.
In such a challenging context, freight rates continue to rise. The VCFI index for July has grown by 9.19% with the highest increase represented in Latin America Pacific (24.87%), followed by Central America and the Caribbean (14.54%) and the United States and Canada (7.48%). However, some expect rates to increase at a slower rate in the near future. The new reports state that spot rates on Los Angeles to Shanghai and Shanghai to Rotterdam gained 5% and 2% to US$1,479 and US$13,628 for a 40ft box, while Shanghai to New York and New York to Rotterdam rates remain stable.
A glimpse of stability might be expected from dry freight shipping containers. Although the prices have doubled over the past year to reach historic highs, some predict that they will moderate over the next few years. The dry box per diems are forecast to rally 65% in 2021, which means that lease rates will stay higher for longer, but afterward, some softening of returns is totally possible.
In the race for alternative routes, OOCL has become the first one to have launched a rail-sea service from China to the US east coast operated by an ocean carrier. Extra loaders deployed between Asia and the US aim at high demand since the number of ships waiting for berths at Los Angeles and Long Beach has reached above 30.
Although, when switching to other means of transportation, much of the shipping activity is going to trucking services, the high prices do not make the latter very attractive. This is when intermodal comes in handy – its volumes increased 20.4% YoY in Q2 since 2010. Without a doubt, the challenges with capacity on intermodal are going to be an issue, but it seems like the trucking challenges are even higher. The reality is somewhat more balanced toward rail freight, at least for the US where almost a quarter of intermodal traffic is moved by rail.
Evergreen is back in the game as it plans to buy containers from Dong Fang International Container in Hong Kong. It has also acquired eight containerships in a deal worth around $94.1m. In addition, it has announced a shake-up in the registered ownership. The measures are meant to improve its competitiveness, market share and efficiency.
The transpacific marker has gotten brighter shades with the Port of Oakland’s launch of the new services from Asia. With the worsening congestion at Los Angeles and Long Beach, the port seems in a better position to hold on to the new operations.
The GL Terminal and Ezyhaul have announced a strategic partnership in Indonesia amid combine container handling and inland container depot knowledge of GL Terminal with Eyzhaul’s digital road freight platform. The initiative is expected to allow customers to make bookings for domestic short-haul, long-haul, and cross-border shipments.
