Friday, January 29, 2021

As Covid Cases Continue Both the US and China Feel the Effects on Container Freight

Ships Wait to Unload, a Shortage of Chassis Transport and Higher Box Rates
Shipping News Feature

US – CHINA – This week reports continue to come in outlining the parlous state of ports across America which are struggling to manage container traffic during the pandemic.

According to the Essex headquartered freight forwarder the Woodland Group, the increase in active Covid-19 cases amongst port workers is creating bottlenecks due to a lack of available workforce, while truckers report on difficulties in returning empty containers to terminals and surging Asian import volumes are squeezing chassis supply.

The increase in cargo volumes since the end of 2020 has impacted the already difficult matter of chassis shortages meaning containers cannot be unloaded fast enough at a time when an unprecedented amount of import containers have taken up all of the marine terminal space.

This at a time when ports in Southern California have been particularly hard hit by Covid-19, reporting nearly 700 new cases across Los Angeles and Long Beach ports and another 60 in San Diego. California has seen between 30,000 - 60,000 daily new cases throughout December and early January.

Nearly 1800 dock workers are currently not working as a result of self-isolation or while waiting for test results. Eugene Seroka, executive director of the Port of Los Angeles reported earlier this week, that 42 vessels are moored up awaiting berths at the ports of Los Angeles and Long Beach.

This build up has impacted ongoing shipping movements and meaning sailing cancellations which further adds to the problems. Cargo is reported to be stacking up at nearby warehouses with truck capacity tightening, and chassis dwell times, down slightly to around 3.3 days from November’s high, still longer than what is generally considered acceptable..

In a bid to head off the problem Seroka has announced a new Truck Turn-Time and Dual-Transaction Incentive Program. This offers financial rewards to terminal operators which move containerised freight through their facilities more efficiently. The scheme is due to start 1 February. The port had been receiving record tonnages recently due mainly to fears around Trump’s policy of extending higher tariffs on imports from China. Seroka said of the new scheme:

“These best practices are needed now more than ever to relieve pressure on the supply chain due to the ongoing surge. Ports are more fluid when trucks move quickly in and out of the gates and more productive when a truck delivers one container and leaves with another in a single trip.”

Woodland reports that port cut offs and first receiving dates are not reliable or consistent, causing issues with drayage arrangements. Truckers report full yards of empty and loaded containers with no designated return dates yet, and dock workers have apparently warned of possible strike action in light of the risk of Covid-19 cases across ports.

As we have previously mentioned the situation is no better for China. As the country attempts to recover from the effects of the virus, the imbalance between exported full boxes and those imported, a ratio of at least 3 to 1, the delays at US ports is making a bad situation worse, with Chinese export container prices at a premium due to the shortage of available boxes.

Last month, with the turnaround time for a China – US container extending on average to over three months, it meant a 40% increase in the time taken to re-site boxes, something that will only get worse if the current logjam persists and the result will be container rates climbing to even higher levels.

Photo: A page from the Port of Los Angeles Coronavirus Update.