General

In the past few months, the congestion of major ports on the west coast of the United States has eased and ship turnaround times have improved. However, importers and logistics companies will face more troubles in the coming months.

Seko Logistics executives said the surge in cargo volumes has put new pressure on rail and truck transportation networks in the ports of Los Angeles and Long Beach and other areas.

The number of imported cargo handled by the port complex for ten consecutive months has reached or approached a record level: In May, Los Angeles handled 1,012,048 TEUs, which is the first time that the West Coast Port handled more than 1 million TEUs in a month.

According to data from Panjiva, a supply chain consulting agency, the total volume of container shipments to the United States increased by 47.1% year-on-year, which was 18.3% higher than the data in May 2019. Imports from China increased by 51.1% year-on-year, while imports from other parts of Asia increased by 44.5%.

At present, not only the ports of Los Angeles and Long Beach are very congested; the ships waiting to unload have all stopped outside the port of Savannah, Georgia. In addition to the problem of port congestion, when a large number of imported goods hit the freight market, it will put huge pressure on truck transportation capacity or truck transportation demand. The current shortage of truck drivers and the shortage of equipment such as the chassis for transporting containers near the port is particularly serious. Even with all supply constraints, the North American freight cycle is "still in a high-growth mode." The truck loading index has hit a record high for three consecutive times and may rise further. Despite the steady influx of imported goods, the truck turnaround time at the Los Angeles/Long Beach terminal has improved from January, but this respite may not last long.

The Port of Los Angeles announced two weeks ago that it has received notice from the Chinese shipping companies BAL Container Line and China United Container Line that they intend to call at the port to provide services this summer. Recently, two budding Chinese shipping companies are joining the trans-Pacific route. The rapidly expanding China United Lines will launch a service from China to the west coast of the United States from China to the west coast of the United States starting from next month. BAL Container Line will soon launch a CPX service network connecting China and California directly to the US West. The service will launch four 2400TEU ships calling Qingdao, Ningbo and Los Angeles. BAL plans to arrange more trans-Pacific routes in the next few weeks, chartering feeder ships from different ports in China and arriving at the Port of Los Angeles. HMM has stated that it plans to increase its trans-Pacific voyages.

Craig Grossgart, Seko's senior vice president of global shipping, predicts that a large amount of cargo will flow to the west coast in the next few months. He pointed out that due to the lockdown last year, as children and young people return to school and adults return to work, there will be strong demand for various demands, which will lead to further congestion.

In addition, the U.S. economy has been operating at full speed. The Organization for Economic Cooperation and Development predicts that the United States' GDP growth this year will be 6.9%, which is the fastest growth rate since 1984.

Seko's Brian Baskin in Los Angeles said that as container shipping companies have consolidated their demand in US ports and have put more containers into major ports, the volume of container cargo flowing into major ports will further increase. Coupled with the full resumption of operations at Yantian Port, the cargo accumulated in the port and nearby warehouses was released. The freight volume of Yantian Port is expected to soar further.

The heads of the Ports of Los Angeles and Long Beach emphasized that the congestion that bothers them does not reflect their actual capacity to handle cargo volumes. Gene Seroka, executive director of the Port of Los Angeles, pointed out that the port's throughput last year was not significantly higher than in 2019, and there was no serious congestion problem in 2019.

The current congestion comes from the pressure of the entire land-side transportation network and extends to the inland. There have been recent reports that Asian shipping companies have refused to book inland destinations such as Indianapolis, Minneapolis and Toronto.

According to Craig Grossgart, Seko's senior vice president of global shipping, the current situation is very unstable. He said: "In the next few months, this will create a chain of interruptions. From the IPI point of view, certain ramps will be closed, and certain ramps will suspend the entry of any more containers."

He added that although it is difficult to predict where and when these events will occur, there will definitely be problems in Chicago and Dallas. In Chicago, the number of stranded containers has been increasing. He pointed out that customers cannot pick up counters for circulation, but still need to pay storage fees. In turn, carriers are also troubled by storage fees, due to the suspension of land-side rail transportation due to the suspension of container transportation at the terminal.

Craig Grossgart said: “Traffic congestion is everyone’s price.” He predicts that as more goods flow in from Asia, the situation will worsen. "It will get worse before it gets better."

U.S. lawmakers are drafting a bill to force shipping companies to accept U.S. export orders instead of hurriedly shipping empty containers back to China for better returns. Craig Grossgart predicts that if this happens, it will further aggravate landside congestion.

Seko's Brian Baskin in Los Angeles does not expect things to improve quickly. "The situation in the next few months is very severe, and in the coming year, we will continue to see this situation repeated." He said.