The industry is then faced with a complex mix of traditional shipping modalities and ships that are doing multiple round trips to create a hybrid that places additional burdens on schedules, services and loading. Ships are being withdrawn from other trades to service as extra loaders for the lucrative routes. At the same time, lanes remain steady ranging between 42-46 between 20 resulting in ports that are struggling with queues. For example, East Asia-West Coast services have risen from 48 at the beginning of 2021 to 67 in late September. Meanwhile the number of services is rising. Premiums may be increased for space even as the overall pricing strategy for the industry is flexible. As operators push their vessels to more lucrative routes, those journeys have become congested and logistical nightmares. The flexibility of allocation in modern times has sometimes led to price wars as suppliers run after buyers. The fact that the trans-Pacific rate could fall from $2,000 to $1,500 per FEU in a week speaks volumes about the state of the industry 20 years ago. Ships are now volatile and mobile assets, quite different from the stagnation of the 1990s. A case in point is the trans-Pacific route where spot rates, including premiums, may currently go higher than $20,000 per forty-foot equivalent unit (FEU). In making a decision about where to place ships, the priority are those routes that are the most lucrative. This is often indicated by a change in the shipping routes and the type of cargo that is prioritized. For example, operators have demonstrated a history of changing their models to focus on the most lucrative trades. Nevertheless, there is an opportunity in the single ocean trade lanes which can be flexible and absorb some of the volatility in demand.Įven though the number of ships that are available across the globe is finite, there are opportunities for other adjustments that might relieve some of the pressure on the industry. Such capacity may include trucking, warehousing, and rail services. Landside capacity has emerged as a major driver of congestion in both Asia and North America. Where the demand and trade are high, the ships will congregate in those places, and this leads to congestion. It is a truism of this industry that ships tend to follow the money. For the moment, it seems that ships are voting with their feet. A congested system becomes unwieldy if there are too many changes that are happening too quickly. Instead of having stability, the industry must adjust to wild swings that do not allow for effective planning. Simon Sundboell of eeSea is of the view that there is a whiplash effect that is going to send the shipping industry into a spiral of operational challenges. Unfortunately, this was only a temporary relief because soon after there was a surge in the delayed cargo statistics. At that point, the number of ships anchored at the San Pedro Bay in California were declining. The challenges started as far back as June when the COVID-19 disruptions held back operations at Yantian. Nevertheless, this remains a challenging situation. There is a positive aspect regarding the delays in China in that they offer a bit of relief to the beleaguered ports of Long Beach and Los Angeles which have been struggling to manage all the cargo that is brought their way. Undeniably, trade flows have been volatile recently as US importers are worried about the congestion in China. Regardless of the causes, the trans-Pacific trade has become a wild card of congestion and uncertainty. Experts offer a variety of explanations for this situation including the rise in export volumes, the pandemic, and Typhoon Chanthu. Worldwide reports indicate that over 240 container ships are still waiting for berths. In recent weeks, there has been a surge in the number of container ships that are anchored in China. It is reported that there are as many as 154 container ships that are still waiting to load export cargo off Ningbo and Shanghai ports in China. This is yet another blow to the shipping industry that has had to contend with the COVID-19 pandemic and several operational challenges in the last 24 months. Reports indicate that more than 60 container ships are stuck offshore of Long Beach and Los Angeles. Container ship being loaded and unloaded at terminal freight port, international shipping and global commerce, modern cargo harbor and yard for maritime shipment and delivery, worldwide transport.
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