Transpacific ocean rates fall as retailers accept goods will not be on shelves in time for Christmas

1:35am 9th November 2021

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Delays in ocean logistics make holiday season orders placed now unlikely to arrive in time. Those delays, along with some constraints to the supply of goods due to energy shortages in China, drove an easing in transpacific rates this week with Asia-US rates falling by more than 6% to both coasts and Asia-US West Coast prices now 22% below the mid-September peak. 

Freightos.com marketplace data shows that, in response to the ocean delays, more shippers are looking to air cargo as a last resort, according to Judah Levine, Head of Research, Freightos. “Pre-pandemic, only about 15% of bookings on the marketplace were for air cargo, with the rest ocean bookings.
 

  

 

“In October, despite spiking air cargo rates, air accounted for 35% of all shipments, a 150% increase compared to June when the congestion at LA/Long Beach started to build.”

Although rates are falling, they are still much higher than in 2020. Asia-US West Coast prices decreased 7% to $16,145/FEU – 320% higher than the same time last year.

Asia-US East Coast fell 6% to $19,451/FEU – 316% higher than rates for this week last year, according to Freightos FBX daily rates.

Port congestion at Los Angeles and Long Beach continues to cause delays and contribute to continuing high rates. A lack of space for arriving containers at the ports has emerged as the main choke point, with 79 ships – a new record – waiting in the bay. 

Will penalties work?

To address these issues, the ports of LA/Long Beach have announced new penalties they will soon charge carriers for containers that aren’t picked up on time, though this is not a simple task.

“While the underlying principle of this measure reflects initiative on the part of the ports, we believe that there are many layers to this problem which will need attention from all decision makers and stakeholders,” said Dr Johannes Schlingmeier, Cofounder and CEO, Container xChange. “It is important to reflect on the problem of the record volume and congestion problem at these ports and identify who could possibly play a key role in reducing the congestion.

“The intermodal stakeholders like the truckers and rail transport play a vital role in delivering the boxes on time. As much as they are important to the situation, they are beyond the capacity and control of the carriers and these charges to the carriers will likely not increase trucking supply.”

He said that the result of the penalties will simply be “an added burden passed on to the shippers from the ocean carriers who are the customers of the carriers. Hence, there will be limited impact of this measure on the improvement of cargo movement and congestion at the LA and LB ports if we look at it in isolation.” 

In trucking there is a shortage of both drivers and equipment, exacerbated by the lack of space at warehouses where empty containers often get stored on chassis when there is no place to stack them. And to complete the loop, the empty containers are often sitting at warehouses because of a limit on how many empties can be returned to the already-full ports.

By Yvonne Mulder

Source: lloydsloadinglist.com

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