Shipping Market Conditions Remain at Critical Levels

The port of Yantian in China has stopped receiving export laden containers until the end of May, 2021 due to a COVID outbreak, causing major congestion at the port and peripheral areas. The government mandated restrictive measures within the terminal complex have brought the flow of containers waiting to get in the terminal to a halt. Steamship line carriers are working to bypass the Yantian port where possible, utilizing Hong Kong as an alternative. Equipment shortages are expected to increase in the coming weeks.

Vessels out of China and surrounding S.E. Asia and India Subcontinent origins remain full and have been for consecutive weeks since April. Carriers and terminals are reporting 99% to 100% vessel utilization and validating the ongoing concerns for space. This pattern is likely to be maintained for quite some time, especially as the traditional peak season is approaching and volumes continue to increase. 

Premium/Equipment Surcharges are at record levels out of China, S.E. Asia and the ISC region ports, increasing regularly as supply and demand escalates weekly. These surcharges nearly quadrupled from past levels in the last couple of weeks and continue to increase each week. These charges, which are added on top of the already historical freight levels, are in the thousands of dollars and can range up to as high as $5000 per container. These premium charges can be even higher and there is no guarantee that the equipment or space will be granted.

There is analyst belief that we will face many obstacles through Q4 and possibly into Q1 2022. With Chinese New Year starting February 1, 2022, momentum is likely to carry over even further based on continued demand and due to the fact that the production of new, empty container equipment is not keeping up with the demand.

The ports of Los Angeles and Long Beach continue to experience the ongoing congestion with an average of just over 20 vessels anchored in San Pedro Bay the past few weeks. Many are concerned that it will be months before there is any significant improvement and it will continue to remain volatile based on surges, making planning very difficult.

Rail movement inland from both East and West coasts continue to experience volatility and are causing a high level of delay. Peak surges have already caused containers to be delayed as much as 30 days.

As usual, we must continue to advise that there is still a great deal of uncertainty ahead and major challenges to endure. We do highly recommend that you continuously review your supply chain and keep preparing for continued disruptions, volatility in costs, increased congestion, and long delays.