The U.S. and European ports are bloated by congestion — and only time can alleviate this situation.
As we continue to read about the changing buying habits of the consumer and companies chipping away at excess inventory, the fact is the cycle of trade is so far behind that relief will not be seen in container volumes this year.
While we should be thankful the International Longshore and Warehouse Union and Pacific Maritime Association have stuck to their pledges of no strikes or lockouts, the bottom line is that the fear of a work stoppage created massive congestion with the flow of trade moving to the East Coast.
According to MarineTraffic, the twenty-foot equivalent unit capacity of East Coast-West Coast waiting off-port-limits capacity continues to swell. As of Aug. 27, around 470,000 TEU were waiting on the East Coast versus 161,000 on the West.
Now, we all know slow steaming impacts the amount of ships anchored off the West Coast because of the safety and air quality area regulations, but port productivity is hampered by severe bloat on the rails.
Logistics reports reviewed by American Shipper show the average on-dock rail dwell over at the ports of Los Angeles and Long Beach, California, is 12 days. That may be flat week over week, but off-dock interior-point intermodal service has all but disintegrated with a dwell of up to 30 days. The rails inland are just as saturated with the dwell time for IPI cargo between seven to 10 days. With no relief in sight, the containers are stacked at multiple rail terminals.
The CNBC Supply Chain Heat Map shows the slowdown in container processing at the ports of Oakland, California, and L.A. One positive indicator: Oakland has been able to cut down the backlog of containers as a result of the trucker strike in July, but the dwell time remains longer than normal.
On the East Coast, the Port of New York and New Jersey’s long-dwelling container fee goes into effect Sept. 1. Savannah, Georgia, currently has the most container vessels waiting offshore.
The rise in vessels anchored off the East Coast has held the spot rate on the Far East to U.S. East Coast for a while. It is trending down for now, but we all know that in the world of logistics, the one thing you can expect is the unexpected. You are one event away from a logistical crisis.
Peter Sand, chief shipping analyst at Xeneta, told American Shipper the flow of trade is showing the reality of consumer spending.
“U.S. retail sales are flat from last month when taking out inflation, so demand is not falling sharply,” Sand said. “Shippers are still bringing in a lot of containers on the East and West coast — Gulf Coast, too. It was only a week ago we had a new record split between spot rates from the Far East into either coast. Congestion on the U.S. East Coast though is keeping rates elevated in a combination with added disruption to that coast coming from troubles in north Europe.
“Shippers are still hesitant to return cargo to the U.S. West Coast, which is impacting U.S. East Coast congestion. The trans-Atlantic westbound from Europe to U.S. East Coast rate is holding up strongly, impacting and preventing the Far East to U.S. East Coast from falling at the same pace as Far East to U.S. West Coast.”
CNBC’s heat map was first to report the delivery of holiday items from the Port of Felixstowe, England, and Germany will be a nail-biter. Crane Worldwide Logistics has warned it will take months for the backlog to be cleared out of Felixstowe, and for the German ports, you are looking at the first quarter of 2023.
“The average number of days that import vessels wait for berthing at Britain’s busiest container gateway almost doubled last week to 10 days, while the export waiting time rose by 9%,” said Andreas Braun, Europe, Middle East and Africa ocean product director of Crane Worldwide Logistics.
Everstream Analytics broke out the inflated container volumes out of Felixstowe and the diversion of trade away from the port during the strike.
“During the strike, carriers have been avoiding the port and rerouted ships to alternative ports,” the Everstream Analytics team told American Shipper. “Port calls have dropped by 82% compared to the week before the strike, with only five ships calling at the port, down from 29 during the week of Aug. 15.”
The vessel diversions to the German ports have created higher congestion levels, which are bloated with their own container pileups as a result of labor wage disputes.
“The average vessel wait time at the Port of Hamburg increased to 42 hours on average last week, the longest wait times of the year so far,” according to Everstream Analytics. “At the Port of Bremerhaven, the daily number of vessels waiting at anchor to berth at the port has jumped to 18, the highest count of the year so far and 63% higher than the average of the year.”
Even though the strike at Felixstowe has ended, the risk of further labor action looms, which will create further congestion. Dockworkers at both the Port of Felixstowe and Liverpool could walk off the job on Sept. 19.
“Knock-on congestion and delays on other European ports are therefore likely to occur in the coming weeks as well as we head into the beginning of Q4 and the holiday season,” warned Everstream Analytics.
