Chinese export rates still tumbling, but transatlantic rates tread water
Navigating the container spot rate market has become a minefield for shipper procurement managers under ...
Extra loaders deployed by transpacific carriers to meet booming import demand have overwhelmed the US gateways of Los Angeles and Long Beach.
According to a survey by Alphaliner, the capacity of the 27 ships berthed and 41 at anchorage at the San Pedro Bay ports stood at a massive 579,100 teu on Monday.
The consultant calculated that the 41 ships at anchorage – some facing a wait of up to two weeks for a berth – equated to some 336,500 teu of idled capacity.
MSC, with a capacity increase of 81.4%, compared with July last year, has injected by far the largest amount of additional capacity on the transpacific trade, followed by Yang Ming at 29.9% and Hapag-Lloyd’s 20.3%, according to Alphaliner data.
It noted that MSC had launched several new services between Asia and the US west coast ports outside its 2M alliance with Maersk, with ships of up to 15,000 teu.
In order to restore the weekly frequency of transpacific services being subjected to delays, Alphaliner suggested carriers would need to find an additional ship for each of the current 29 weekly loops serving the LA/LB gateway.
Notwithstanding the difficulties of finding additional tonnage in a charter market that is ‘sold out’ ,Alphaliner estimated the hypothetical cost of hiring the vessels at $1.4m a day.
However, it said, the main issue emanating from port congestion for carriers was the loss of revenue from ships at anchor.
“A typical VLCS [very large containership] taking 4,000 40ft containers with spot cargo between Shanghai and Los Angeles would generate revenue of $16m from the headhaul voyage alone,” said Alphaliner.
This week, Hapag-Lloyd CEO Rolf Habben Jansen told customers that, in the absence of open charter vessels available to perform “recovery voyages”, the carrier would be obliged to adopt a strategy of delaying, or ‘sliding’, advertised sailings from Asia in order to recover weekly schedules.
“This will result in some services not having a sailing for one to two weeks,” he warned.
And according to a calculation by Washington state-based consultant Jon Monroe, Asia to US shippers have seen lead time from cargo ready through to delivery go from four-to-five weeks in 2019, to nine weeks-plus currently, due to port and landside congestion and equipment and space shortages.
Meanwhile, CMA CGM, which according to Alphaliner data has increased its capacity offering from Asia to Los Angeles by 6.8% since July, said it was removing the port from its premium Seapriority Express service, (now redubbed GGB) in favour of Oakland.
The chronic port congestion impacting the San Pedro Bay ports is also hobbling the restitution of empty containers back to Asia, a logjam in the supply chain that is further restricting the availability of boxes for US export loads.
For months carriers have been prioritising the return of empty equipment back to Asia over offering them to US exporters in order to return equipment back into the more lucrative headhaul leg, but many boxes have been left stranded on the quay or stuck in export holding areas.
According to the latest data from online equipment platform Container xChange’s CAx index, container availability in Los Angeles has slumped to a reading of 0.29 for 40ft containers – a level of 0.50 considered a balanced market.
“We’re expecting further volatility in container availability in the coming weeks, with every element of the transpacific freight supply chain under unprecedented pressure,” said Florian Frese, marketing lead at Container xChange.