2021.08.31 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. The impact of COVID has contributed to port closures, labor shortages, surges in ecommerce, 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.
Continue to expect shipping delays and freight rate increases for the foreseeable future, especially with rising demand created by the inflow of inventory for holiday retail. Major players and industry experts do not anticipate any significant easing until at least Q1 of 2022.
"The chances of your vessel arriving on time are about 40%, when it was 80% this time last year."
Bob Biesterfeld, CEO of C.H. Robinson
The port of Ningbo experienced partial closure for nearly two weeks. Ningbo is the world's third largest container port, and handled more freight than any other port in China during the first seven months of the year. During that time, some ships waited offshore, building up congestion to as many as 141 ships waiting in the Shanghai/Ningbo area. As of 24 August, ships have been reported leaving the Meishan portion of the Ningbo port, indicating operations are resuming. The impact of this two week closure will reverberate through the system in the coming weeks.
US ports are also under heavy strain. The port of Los Angeles has recently seen between 30-40 ships waiting offshore for berths. The average wait time has recently risen to up to 6.8 days. On the other side, capacity to handle the domestic flow of goods from ports to railheads and warehouses is faltering.
In addition to the strain on international transport, domestic trucking is experiencing a shortage of drivers. FreightWaves reports driver shortages at an all-time high, prompting carriers to offer increased pay incentives to attract drivers. Overall labor shortages of dock workers, warehouse, and trucking services (e.g. dispatchers, customer service, etc.) are still impacting efficiency as well.
As before, Firsd Tea encourages all our clients to engage in as much advance planning as possible to avoid disruptions in supply. We are experiencing an above average degree of spot orders that place added strain on our ability to keep teas in stock. If the captains of industry are correct, uncertainty in logistics systems may last until at least Q1 of 2022, if not longer.
"We currently expect the market situation only to ease in the first quarter of 2022 at the earliest,"
Rolf Habben Jansen, Hapag-Lloyd CEO
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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