Huge container ship traffic jam in California is still really stuck

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Peak boating season is coming soon – and the “parking lot” of container ships stuck at anchor off the California coast is still here, with Oakland overtaking Los Angeles / Long Beach as the epicenter of congestion.

Shipping giant Maersk on Wednesday warned in a customer advisory that Los Angeles and Long Beach “remain under strain with ship wait times averaging one to two weeks.” But he said “the situation is even more dire at the Port of Oakland, where wait times now extend to three weeks.”

Delays at west coast ports are having serious repercussions on line schedules. Congestion in California equates to canceled trips because ships cannot get back to Asia in time to load cargo. Even as demand for imports from the United States increases, the effective capacity of trans-Pacific trade is severely reduced by trip cancellations.

For importers, this means even longer lead times, even higher all-inclusive freight rates, and a cap on how much can be shipped at any price.

Maersk said 20% of its capacity from Asia to the West Coast had been lost so far this year due to operationally induced “virgin” (canceled) crossings. It currently expects 16% of its Asia-West Coast capacity to be lost by the end of June and 13% from now through the end of August. “This unfortunately means that Maersk might not be able to fully honor its original allocations for all customers,” the carrier admitted.

To put the current cancellations into context, they are now operating at the same percentage that carriers intentionally canceled in Q2 2020 to compensate for the sudden collapse in import demand when U.S. companies were shut down by lockdowns at nationwide.

The deadline will be missed

Port of Los Angeles executive director Gene Seroka has said on several occasions that anchorages in San Pedro Bay need to be cleaned up before the traditional peak season begins. He expressed a June 1 target for “few or no ships” at anchor.

This deadline, which is in a week, will not be respected.

The daily number of vessels stranded in San Pedro Bay rose from an average of 31.8 in January to mid-March to 21.3 from mid-March to Tuesday. However, the numbers stubbornly refused to come down any further. As of Tuesday, there were still 20 ships anchored in San Pedro Bay.

Port of Los Angeles Gene Seroka (Photo: Port of Los Angeles)

Asked about his June 1 goal for clear anchors, Seroka told American Shipper, “Import volume continues to be heavy and consistent, more than we expected earlier this year. The reduction in residence times stabilizes and the subsequent decrease in [ships at] the anchoring has slowed down. Our goal remains to eliminate the anchorage situation as much as possible before the end of summer and the start of the traditional high season. “

Unfortunately, peak season is expected to start earlier than usual this year. Time seems to be running out – which means even more congestion.

According to Maersk, “Peak season is expected to start early this year as retailers prepare for a strong back-to-school season that will likely merge into the peak holiday season that typically begins in August. This will unfortunately put more pressure on an already strained network, with the potential to cause further disruption. “

Oakland congestion issues

As of Wednesday, there were about 10 container ships anchored in San Francisco Bay, off Oakland, according to vessel positioning data from MarineTraffic’s Automatic Identification System (AIS). But that’s less than half the story. Off the coast, at least 15 additional container ships were drifting in the Pacific.

container ship
Interior anchor (left); ships drifting offshore (right). Maps by MarineTraffic; ship positions from Wednesday morning.

The number of waiting ships has a different meaning for Oakland than it does for Los Angeles / Long Beach, as Oakland is a much smaller port. Oakland’s import throughput in January-April was about one-tenth of the combined Los Angeles / Long Beach throughput.

Oakland has two temporarily out of service berths. The ONE-operated NYK Delphinus suffered an engine room fire on May 14 and docked in Oakland on May 18. AIS data showed the vessel was still docked on Wednesday. In addition, a berth at the Oakland International Container Terminal was unavailable for an extended period due to crane installations. This place should be back online by the end of the month.

The biggest problem in Oakland, according to carriers Maersk and Hapag-Lloyd, is a shortage of available longshoreman labor. Maersk said in a customer note last week: “Terminals are limited to two gangs per ship on most ships due to the unavailability of the manpower needed to meet current demand.”

Hapag-Lloyd informed customers on Tuesday: “Massive import volumes combined with labor shortages are the main drivers of continued congestion and delays in vessel operations. [in Oakland]. “

Asked about the manpower shortage, Andrew Hwang, Director of Business Development and International Marketing for the Port of Oakland, replied, “There is good news to report. We understand that the ILWU [longshore union] is preparing 300 new casuals to be added and another 150 ILWU members are being trained so they can fill the skilled positions… needed to move cargo more efficiently. New dockers and skilled labor should be ready and able to join their colleagues this summer. “

Abrupt start of the “ fast ” ZIM service

An example of how Oakland congestion affects carriers and shippers is with ZIM (NYSE: ZIM). The Israeli carrier has just introduced a new Asia-West Coast service called Central China E-Commerce Express ZX3, designed to provide fast trans-Pacific service for urgent cargoes. It is planned to call first in Oakland, then Los Angeles.

It does not go as planned. The first ship, the 4,254 Twenty Foot Equivalent Unit (TEU) Volans, was unable to enter Oakland on its maiden call due to congestion and diverted to Los Angeles. A source told American Shipper the ship was promptly serviced in Los Angeles, with urgent cargo unloaded. On Wednesday, AIS data showed the Volans were drifting with all other vessels off Oakland.

The new service is already so late that the chain’s next ship, the 4,250 TEU Navios Chrysalis, is expected to arrive in Oakland in just three days.

LA / LB congestion in figures

While congestion is more extreme in Oakland, the anchoring situation off Los Angeles / Long Beach is more important in terms of overall import volume.

American Shipper has received daily counts of container ships at anchor and dockside from the Marine Exchange of Southern California. Cumulative numbers show the reduction in severity from mid-March and the persistence of anchor numbers since.

container ship at anchor
Chart by U.S. shipper based on data from Marine Exchange of Southern California

A look back, in the pre-COVID era, shows the scale of the current import surge. In January-May 2019, Los Angeles / Long Beach had an average of 14.9 container ships per day, including those at dock and at anchor. Since the start of 2021, the average is 53.9 ships per day, 3.6 times pre-COVID levels.

mooring containers
Chart by US shipper based on data from Marine Exchange of Southern California; December 2020 data is daily, previous data is bi-monthly

Looking back even further, the current congestion crisis can be compared to the last major disruption: the labor unrest on the west coast that crippled port operations in January-April 2015.

American Shipper mapped the curves of the ships at anchor during the 2015 incident against the current curve. Six years ago, the disruption peaked three months after it started and quickly subsided. The current crisis is already almost three times as long as the previous one, and the number of ships at anchor is still close to the peaks recorded in 2015.

container ship at anchor
Chart by U.S. shipper based on data from Marine Exchange of Southern California

In reality, the decrease in import demand is the most important factor (if not the only one) that would allow the West Coast port system to widen its hole and thus allow carriers to add canceled crossings.

But the data shows that the demand for imports continues to increase.

FreightWaves’ SONAR platform includes a proprietary index of shipper ocean reservations (SONAR: IOTI.USA) measured in twenty-foot equivalent units (10-day moving average) at the expected date of departure overseas and indexed to January 2019.

Although these are reservations and not loads, the index provides a directional indicator of US import volumes in the future, when ships from various export destinations arrive at US ports. The index was considerably higher in May than in April, implying that volumes hitting U.S. shores next month will be even higher than current levels.

Graphics: FreightWaves SONAR (To learn more about FreightWaves SONAR, Click here.)

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