2021.12.07 Conditions of ocean freight, ports and domestic carriers
In September 2020, Firsd Tea first began reporting on the challenges facing global shipping and domestic logistics. Both ongoing and residual effects of COVID continue to combine to create port delays, labor shortages, and insufficient access/supply of shipping containers. While some of these conditions may have improved, new and other factors have arisen, impeding the path to equilibrium in the system.
While there have been some recent, (sometimes temporary) declines in ocean freight rates, prices continue to remain high. Firsd Tea is seeing rates for 20 foot containers bound for either US coast in excess of $10,000. The burden of moving holiday retail goods has shifted from the ships to the warehouses and trucks. Major players and industry experts still do not anticipate any significant, overall easing of rates and more reliable delivery speed until at least Q1 of 2022.
Reports show that the ports of Los Angeles/Long Beach have recently had up to 93 ships waiting for a berth. The major difference is that these ships are placed into a new queuing system, so these ships are scheduled and physically spaced over a larger span. The new scheduling system allows ships in the queue to slow their approach across the Pacific to better time their arrival as their spot in the queue is held for them.
News stories also suggest a buildup of empty containers that are clogging up the ports. Historically, Asia-bound ships were often loaded with empty containers waiting to be filled for the next trip to the West Coast. But the holiday season rush saw carriers unload their cargo in LA/LB and return empty in order to speed back to China for the next, more profitable load. The excess empty containers take up space that could otherwise be used for offloaded, full containers.
Labor shortages at various positions at the ports can create administrative delays in addition to the actual work of offloading goods. Costs also remain high as the short supply of labor means higher amounts of overtime pay for those who are on the job.
Even with the new system in place, wait times from dropping anchor to actually getting a berth have recently risen to as much as 18.6 days.
Ground transportation is also still plagued by logjams due to a combination of factors. Trucks sent to the port to collect containers bound for warehouses and distribution centers may have to wait hours or days for their container to become available for pickup. A labor shortage at warehouses can mean further delays in unloading incoming and loading outgoing shipments. These delays at warehouses also tie-up available trailers, making it harder for some LTL carriers to find available trailers. Labor shortages at trucking companies can mean an insufficient supply of drivers, maintenance crew, and office workers.
The overall logistics system, including ships, warehousing, and trucking, are exhibiting increased delays and higher costs.
Speak with your Firsd Tea contact to plan ahead for delivery delays and to uncover any logistical efficiencies that may be available. We will look for ways to save you time and money. We continue to urge our customers to develop a supply strategy that factors in these longer transit times and higher transport costs.
California Ship Pileup Still Piling Up- But Out Of Sight, Over Horizon
https://www.freightwaves.com/news/california-pileup-still-piling-up-but-out-of-sight-over-horizon
Ships In Logjam Now Stuck Off Mexico, Taiwan and Japan
https://www.freightwaves.com/news/ships-in-california-logjam-are-now-stuck-off-mexico-taiwan-and-japan
What's Tougher - Finding Drivers or Trailers?
https://www.freightwaves.com/news/whats-tougher-finding-drivers-or-trailers
Firsd Tea is the North American office of China's largest tea exporter, and the world's largest green tea exporter.
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