The following article is taken from CNBC:
China’s “zero Covid” measures on trucking and cross-city transport limitations continue to slow down manufacturing and logistics. The decrease in completed manufactured goods is reflected in the decrease in exports leaving Shanghai bound for the United States. The city is not expected to fully reopen until mid-to late June.
To make up time, ocean carriers are increasing their canceled sailings or skipping ports. But schedule reliability is not improving. According to Sea-Intelligence, vessels are seven days late on average. This has created a cloudy picture for logistics managers as they try to plan ahead. Crane Worldwide Logistics said it is advising clients to build in three to four weeks of advance notice to request vessel space.
The amount of cargo at sea and en route to the U.S. is 30% lower than it was a year ago
“Congestion is constantly on the move based on the actions American importers seeking ways around the West Coast labor negotiations,” said Peter Sand, chief analyst at Xeneta. “This has resulted in the U.S. East Coast ports moving record-high imports and congesting facilities. While spot prices are down, they are still historically high. Long-term contract rates have soared, up 150% up year-on-year.”
The surge in containers comes at a pivotal time for the West Coast ports. Labor negotiations between the Pacific Maritime Association and the International Longshore and Warehouse Union are reportedly set to resume after a break.
Logistics costs are historically passed on to the shipper and then passed on to the consumer. Fuel surcharges are also contributing to inflationary pressures.
European exporters are faced with a declining number of empty containers to be used for export, but there are worries about a strike in the Port of Hamburg, Germany’s largest seaport by volume, Andreas Braun, EMEA ocean freight product director at Crane Worldwide Logistics, told CNBC.
“The threat of a strike by the Hamburg Terminal Operator’s Union is slowing down the port,” said Braun. “Vessels are sitting on waiting position in the German bay for discharge in Hamburg. The coordination between terminal operators and intermodal operators is getting worse, and we expect further worsening in the ports of Germany to come.”
Congestion will get worse and containers will become less available once the backlog in China is cleared, Braun said, adding that shipping lines already have problems planning exports based on containers coming in on the import side of things.
Rail freight services are also disrupted. “Limited train operations will persist until further notice,” the German port warned.
The Port of New York and New Jersey expects to experience a “hockey stick-style surge” beginning approximately six to eight weeks after the reopening in China, according to Bethann Rooney, director at the port.
“Import containers originating in China represent 29.6% of our total imports, which pales in comparison to the China market share in the combined Ports of Los Angeles and Long Beach, where it is more than twice as much,” she said. “If we are unable to reduce the amount of long-dwelling imports and empties in the next several weeks, the surge will be very difficult to handle.”
The percentage of shipments that arrive on time has improved in 2022, but is still a fraction of what it's been in previous years
All East Coast ports are seeing an increase in vessels. Officials at the Port of Savannah told CNBC they are seeing unscheduled vessels and anticipating historic volume this month.
“Savannah is witnessing significant congestion,” said Alex Charvalias, supply chain in-transit visibility lead at MarineTraffic. “The situation is worsening. Shippers can expect the turnaround days to reach even 10 days.”
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