Freight Delays Due to Hurricane Ida - Industry Update
Hurricane Ida is a dangerous tropical storm that has hit the Mississippi coast. It is headed northeast, affecting Alabama and Florida, according to the National Hurricane Center. Due to the severity of the storm and the need for people to evacuate the area, shipping for all modes in the area will be affected.
eShipping LTL and TL Shipments
The eShipping operations teams for all modes are monitoring any shipments that may be impacted by Hurricane Ida. The eShipping team will notify customers with any shipment delays due to the storm. We anticipate continued power outages in the path of the storm that already has (or will) impact shippers and receivers. Below is a sampling of notifications from various carriers. If you have any questions regarding any specific shipments, please contact your eShipping account manager or the Client Care team at ClientCare@eShipping.biz.
Due to extreme weather and mandatory evacuations along the Gulf Coast, we are taking operational precautions for the safety of our personnel and customers. We will continue to monitor the path of Hurricane Ida and provide updates on facility closings and service suspensions in impacted areas and areas of potential impact.
In preparation for Hurricane Ida, the following facilities will be closing on Mon, Aug 30, 2021:
Alabama
Mobile: OPEN, with limited service
Due to flooding in areas to the west of Mobile, there will be no pickup and delivery service to any areas in Mississippi serviced by the Mobile service center on Monday, Aug 30.
Louisiana
Baton Rouge: CLOSED
New Orleans: CLOSED
Mississippi
Jackson, MS service center and warehouse: CLOSED
Meridian: OPEN, with limited service
Due to flooding in the area, there will be very limited pickup and delivery service in the Meridian service area on Monday, Aug 30.
In preparation for Hurricane Ida, the following facilities will be closing on Mon, Aug 30, 2021:
Louisiana
Baton Rouge: CLOSED
New Orleans: CLOSED
Mississippi
Jackson, MS: CLOSED
Due to Hurricane Ida, the following terminals will be either closed or limited in status for today:
Closed:
JAM-075
HAM-085
Limited:
AXL-057
MOB-109
TPM-167
New Orleans Terminal and Ports America for containerized operations will be CLOSED Monday, August 30, 2021.
Empire, Coastal Cargo, Gulf Stream Marine and Ports America for breakbulk operations will be CLOSED Monday, August 30, 2021.
Hurricane Ida made landfall Sunday along the coast of Louisiana and Mississippi as a major category 4 storm. The storm system brought damaging winds and flooding, prompting mandatory evacuations, road and customer closures across multiple service territories. Forecasts suggest tropical storm/depression conditions to continue throughout the remainder of day as the storm moves North/North East. As a result, the zip codes tied to the following service center areas are embargoed:
Service Center Areas Embargoed:
Jackson, MS (JCK) - New
New Orleans, LA (NRL)
Baton Rouge, LA (BTR)
Lafayette, LA (LAF)
Mobile, AL (MOB)
Orange, TX (OTX)
Please continue to check our website for updates at the link below.
Weather Alert/Map: http://www.sefl.com/seflWebsite/new/weatherMap.jsp
Navigating International Ocean Freight
International Ocean Freight Market Analysis
The international ocean freight market is a mess right now, and that’s putting it mildly. As carriers continue to add more and more capacity to try and manage the recent flood of increased cargo demand, many ports are running into major infrastructure issues, especially in the U.S. In January, for example, an average of more than 30 container ships headed to the ports of Los Angeles and Long Beach were forced to anchor offshore in San Pedro Bay.
According to a report from Freightwaves.com as recently as the week of March 15th, there are currently 28 container ships anchored outside of the port complex. Terminal congestion is at critical levels with a few terminals at or above their capacity 73% - 114% in LA/LB and estimated at 85% in OAK terminals. Those ships unable to secure an anchor are being diverted even further offshore to idly wait in drift boxes until the traffic jam clears up enough to make room. While maxing out California’s offshore space is not a concern, these are unprecedented circumstances for the carriers and the shippers with freight onboard.
To put this situation into perspective, the port’s previous record for container ships held at anchor reached a total of 28 vessels and was the direct result of a labor union dispute that happened over six years ago in 2015. Prior to that, the all-time high record for the area was set during a shortage of rail staff back in 2004. On an average day though, it’d be common to only see around 12 anchored ships, and most of them wouldn’t even be container vessels. All of this goes to show just how out of control port congestion really is at this point.
With import volumes ramping up and no sign of relief on the horizon, these cargo delays are only going to continue. So, what’s causing this logistical nightmare?
Port Congestion Explained
Surprise, COVID-19 strikes again. The pandemic has not only played a large part in driving consumer demand, but it’s also taken a huge toll on port employees. When you add a labor shortage to an already constrained port terminal, you get a devastating combo of severe equipment imbalances, major freight delays, and unreliable shipment scheduling.
Containers aren’t returning empties to Asian origins fast enough to keep pace with growing demand, and because of these lengthier turnaround times due to port congestion and extended transit times, container ships are now being delayed by more than five days on average worldwide. Out of all of the major trade lanes, shipments are leaving Asian ports later than scheduled due to container equipment shortages and are then sometimes experiencing weather-related delays before reaching U.S. ports. As a result, ocean carrier on-time performance from Asia to USWC was 22.1% in December 2020, down from 70.9% in December 2019, while ocean reliability to the USEC fell to 26.3% from 70.5% (JOC.com). Taken altogether, this situation has created unheard of market conditions that are directly impacting freight rates.
Fixed Rates vs. Spot Quotes
Since container carriers control what scarce capacity is left, there’s no doubt that they’ve got the pricing power right now, and they are not hesitating to use it. According to Drewry, service contract negotiations are expected to shift into high gear in March and April, with carriers, NVOs, and shippers saying per FEU rates will increase noticeably from this year’s levels of about $1,350 to the West Coast and $2,350 to the East Coast. Except for the largest retailers, carriers are reportedly pushing for rates of about $2,600 to $2,800 per FEU to the West Coast and $3,600 to $3,800 per FEU to the East Coast. This means contract freight rates in eastbound trans-Pacific trade could increase by up to 65 percent more than the current 2020-21 contract rates over the next year, starting May 1.
As for spot quotes, rates from China/East Asia to the North American West Coast have almost tripled YoY — up 181 percent as of Thursday — to reach $4,261 per FEU based on Freightos Baltic Index data. Meanwhile, rates from China/East Asia to the East Coast are listed at $5,892 per FEU, which marks a 2 percent decrease from the previous week.
Benefits of a Fixed Rate Schedule
Considering the pricing dynamics in the spot rate market right now, medium to large BCO’s will be better off negotiating a fixed rate rather than playing the spot market. Here are some reasons why.
A fixed rate schedule:
Provides access to weekly freight capacity based on weekly MQC (min quantity commitment)
Eliminates unnecessary safety and financial risks by providing consistent less volative ocean pricing
Establishes long-term relationships that lead to more consistent, predictable & quality service
Provides more control over unknown market variables like additional fees and surcharges
Helps optimize freight scheduling
Increases freight budget accuracy
Provides KPIs for companies to measure carrier performance and drive improvements
Navigating the Insanity That Is the Asia To U.S. Import Market in 2021
Supply chain disruptions are at an all-time high, and while rate increases are inevitable, it’s important to make sure you’re strategizing the best approach to secure a level of service you can actually rely on for this next year. In order to navigate the current import market insanity, shippers need to focus on analyzing data (especially figures related to on-time performance and rolled cargo) they can leverage in upcoming carrier contract negotiations. If you want to avoid running into problems later, you should also start booking your loads for summer now.
Click here to learn more about how eShipping can help you better manage the chaos that is today’s international shipping marketplace.
International Ocean Rates Continue to Surge. What Options Do US Importers Have?
We want to keep you informed on the latest market updates and news. Read the below brief for updates on international market pricing:
Ocean import rates from Asia base ports to the US west coast increased by 35% between the end of July and the end of August. This pushes the current Shanghai Container Freight Index to an all-time high of $3,639 into the USWC.
The impact of the spot rate surge is especially evident when compared year-over-year where the variance between the current SCFI rate ($3,639) and the same index from this time last year ($1,615) is $2,024.
This variance on its own is over $400 higher the actual 2019 rate, a data anomaly that has been true for each of the last 5 weeks.
One of many underlying concerns for importers right now is how to budget for ocean freight through the end of 2020 and into next year?
While certain routing adjustments have offered limited relief, eShipping is helping customers look at the bigger distribution picture and using its country-wide network of distribution centers, which all operate on the same WMS system, to shorten the length of transit between international vendors and the US based end user.
When done right this approach can lower the total landed cost of a supply chain, and actually improve customer experience by speeding up delivery times in an increasing direct-to-consumer market.
Questions? You can learn more and request a quote online at https://www.eshipping.biz/home/international.
July Sees Continued Surge in Full Truckload and International Rates
A quickly changing market and increased rates can affect our customers’ FTL and international shipping. We want to keep you informed to help you navigate your distribution chain strategies. Please read the below summary of an update on July’s rates from Freightos:
Full Truckload rates in July were the highest they’ve been in more than 13 months. International Asia to US ocean rates are up 73% compared to this time last year.
Aggregated national full truckload data compiled by DAT show rates continued to rise through July. They now average $2.02 per mile (incl. fuel), the highest monthly average in more than 13 months.
The rates surge since the record-breaking low’s in May are remarkable, climbing $0.43 per mile (27%) in just two months.
Looking further upstream, International import spot rates shows a similarly dramatic increase.
The Freightos Baltic Index which tracks Asia to US West Coast pricing has current market conditions at $2,711 per 40' container which is $1,185 (73%) higher that this same time last year.
Having been relatively flat year to date, the rates surge since the end of May has seen container prices increase by $1,173 (72%) in just two months.
Source: Freightos.com
Asia to US Capacity Update
eShipping’s primary agent in China and SE Asia reports that ocean vessel space to the United States continues to be tight despite the removal of nearly all blank sailings.
Overall, capacity is beginning to approach 2019 levels; however, based on carriers’ prospective September bookings, there are indications that the back half of August may see volumes peak for 2020 before tapering off.
Vessel space out of Cambodia in particular remains extremely tight.
Current capacity notes from China for weeks 34-39:
Central China: Shanghai space to the USWC and USEC remains full due to elevated levels of PPE. COSCO and other carriers still have weight limitations to the USEC. Ningbo space to the USWC and USEC is full especially for Ocean Alliance carriers. Gulf Coast routings have capacity and present valid possible routing alternatives.
Northern China: Compared to peak congestion near the end of June space out of Dalian has improved considerably. COSCO has available capacity to the USEC and MSC, ONE, and YML are seeking volume to both US coasts. Qingdao space to the USWC ports is full however capacity is available on USEC routings.
Southern China: Vessel space on all services remains very tight.
Taiwan and Fujian services are full through the end of August.
Current capacity notes from additional SE Asian locations:
Operational Summary by Location:
PierPass Fees at Ports of Los Angeles and Long Beach to Increase 4.2% Effective Aug. 1
Bill Mongelluzzo, Senior Editor at the Journal of Commerce, provides this update on the LA-LB port complex announcement regarding PierPass changes:
“Terminal operators will increase the traffic mitigation fee (TMF) used to fund night and weekend gates at the Los Angeles-Long Beach port complex by 4.2 percent starting Aug. 1.
The TMF, which is adjusted each year based on the West Coast longshore contract, will increase to $33.47 per TEU and $66.94 per FEU on all non-exempt containers, the West Coast Marine Terminal Operators Agreement (WCMTOA) announced Tuesday. Exempt containers include empties, laden containers that transit the Alameda Corridor, and containers that are transshipped. Empty chassis and bobtail trucks are also exempt, WCMTOA said in a statement.
In addition to the 8 a.m. to 5 p.m. weekday gates that most US ports offer, the 12 container terminals in Southern California normally operate four weeknight gates and one weekend day gate. When it was instituted in 2005, the TMF was charged only on container moves made during the peak daytime hours when traffic on local streets and freeways was the heaviest.
Originally, truck moves in the off-peak hours did not pay the fee, but that changed in late 2018.
By discouraging daytime traffic, the TMF created operational problems, including truck “bunching” in the late afternoon as truckers queued up outside the gates, waiting for the fee to end with the beginning of the night shift.
PierPass Inc., which manages the extended gates program for WCMTOA members, in late 2018 switched to a flat fee charged on all non-exempt truck moves, both day and night. John Cushing, PierPass president, told JOC.com last December that as a result of the new flat fee, truck bunching at terminal gates was eliminated, truck turn times improved, and the approximately 50-50 split between peak and off-peak hours remained.”
US Ocean Import Rates Continue To Rise Despite Low Volumes And Blank Sailings
Ethan Buchman, in the Freightos Weekly Update makes note of two key Ocean Import trends at the moment:
US ocean import volumes are still low, significantly so, with no sign of normalizing any time soon
US ocean import spot rates are the highest they’ve been in 18 months
Full Article:
“Summer import projections are better than they were a month ago, but ocean volumes to the US are still expected to be down significantly through September. And ocean carriers agree, announcing 75 more cancellations this week, with more expected in the coming days.
So far 10-15% of sailings from Asia to Europe have been cancelled through August, and 5-10% have been blanked to the US. The bump in demand has also resulted in some rolled shipments out of China, with some shippers reporting delays of up to two weeks to get on overbooked ships.
But there are some signs of a return to normal: Air rates continued to decline from their near-record highs out of China as PPE demand cools, with Freightos.com marketplace data showing rates falling by 5-25% across lanes out of China since last week.
Data from WebCargo – who announced a new partnership to offer live eBookings and pricing with Air Bridge Cargo this week – shows a 63% increase in air cargo eBookings in May compared to April, as some shippers may be motivated by the recent decline in rates and some commercial cargo returns to the market. And after being hit hard by travel restrictions, some passenger air travel is also being restored, which will add capacity to the cargo market even as volumes dipped in the last few weeks.
There are also signs of life in US trucking employment, with Wall Street taking note, and eCommerce is still surging. As a result, both UPS and FedEx announced rate hikes for high-volume shippers this week, and logistics operators added thousands of jobs in May to keep up with the volume of orders.”
Record Drop in Ocean Container Volumes Within Last 30 Years
Sam Chambers, writing for Splash 247, reports on new data from London based research firm, Clarksons who expect 2020 to see the sharpest contraction in global ocean container trade on record. The research considers both the recent volume contraction as reported by several of the major ocean carrier’s as well as the projected recovery through the remainder of this year.
Overview:
Container volumes contract at sharpest levels in 30 years
Carriers manage vessel capacity accordingly to hold rates firm
Sam Chambers, writing for Splash 247, reports on new data from London based research firm, Clarksons who expect 2020 to see the sharpest contraction in global ocean container trade on record. The research considers both the recent volume contraction as reported by several of the major ocean carrier’s as well as the projected recovery through the remainder of this year.
While container volumes plummet, Lars Jenson from SeaIntelligence Consulting tells Splash that “unlike in the financial crisis, freight rates are holding firm [and that] the outlook for 2020 cannot at this moment to said to be as bad as what we saw a decade ago [Financial Crisis] from a profitability perspective.”
Through a series of blank sailings readjusting sailing schedules ocean carriers have successfully been able to hold the line on container rates. The Global Container Freight Index managed by Freightos bears this out. The COVID-19 related post Chinese New Year rate dip from mid-January to the beginning of March has recovered, with global container rates now just about where they were at the start of the year
The Asia to United States Capacity Crunch
Jessica Wang, Global Pricing Manageress at Honour Lane Shipping, in her weekly market update - notes the alarming capacity shortage on Asia to US and Canada West Coast lanes.
“The current space to the USWC is serious,” Ms. Wang says. So much so, that shippers are resorting to paying a premium charge to increase their chances of getting their containers loaded. As Ms. Wang notes though, “Not all carriers can provide this service, it depends on carriers’ actual space situation and policy… Carriers cut a lot of space normally dedicated to their fixed rates due to the big rate difference between the Spot and Fixed rates.”
Overview:
Shippers opt for a premium charge to guarantee to load
Fixed-rate capacity cut
USEC and Gulf routings offer some relief
Jessica Wang, Global Pricing Manageress at Honour Lane Shipping, in her weekly market update - notes the alarming capacity shortage on Asia to US and Canada West Coast lanes.
“The current space to the USWC is serious,” Ms. Wang says. So much so, that shippers are resorting to paying a premium charge to increase their chances of getting their containers loaded. As Ms. Wang notes though, “Not all carriers can provide this service, it depends on carriers’ actual space situation and policy… Carriers cut a lot of space normally dedicated to their fixed rates due to the big rate difference between the Spot and Fixed rates.”
The capacity crunch is as much to do with carriers imposing their own blank sailings and rerouting popular sailing routes which had been left depleted during the height of the COVID-19 global shutdown, as it is to do with a surge in bookings as the US begins to reopen. Carriers are expected to add additional vessels into their rotation to address the backlog, but the impact of that capacity will be incremental. Ms. Wang expects the space to improve “… step by step around the end of June or early July.”
Ocean container rates continue to stay strong. The China to US West Coast spot rates are around 30% higher entering June than they were this time last year. eShipping is encouraging US consignees who have the flexibility to route their containers through the Gulf or US East Coast to consider doing so. The capacity crunch is less severe on many of those lanes, and rates remain flat relative to the same time, 2019.
