Inbound Shipping and Logistics
The Ocean Freight Logistics of Importing Products from Asia
As reported in our June Special Market Update, importers are dealing with a global supply chain mess. Rampant escalation in ocean freight expense, limited space on ships, backlogged ports, twice-normal time for products to reach inland hubs … non -stop headaches with no quick, easy or inexpensive solution.
▪ HIGH-DEMAND Imports from Asia at record levels for 10 consecutive months, North American consumer demand up over 27% in 2021. April shipping volume from Asia to North America rose 53% vs. 2020, 44% vs. 2019. (WSJ) ▪ LOW-CAPACITY Shipping container availability remains constrained, with too few in-number, and too many tied up in port backlogs. As result, trans- pacific berths to move finished goods from Asia to North America are scarce and costly. ▪ COSTS ARE HIGH … Average ocean berth prices are now well over $10,000, 6 times higher than a year ago. Expect to see $20,000 rates soon and don’t look for rate reductions to come this year, nor anything approaching pre-pandemic until possibly 2023. (Souhang APP, DC Velocity) ▪ … AND DELIVERY RELIABILITY IS LOW Transit time for cargo from start of packing in Shanghai through to delivery in Chicago has risen from 35 days pre-COVID to 73 days now. Global schedule reliability has dipped under 39%, down from routine averages above 75% prior to mid-2020. (Flexport, Sea- Intelligence) ▪ A FRAGILE SYSTEM New coronavirus outbreaks in China’s major manufacturing center, Guangdong Province and its port complex at Yantian caused world-wide disruption to the ocean freight system already proving costlier than the $10 billion per day impact of the two-week Suez Canal blockage in March. ▪ PROFITEERING Shipping industry consultants have noted geo-political and economic leverage present in the situation for various industry players and predict on-going delays in scheduled ship sailings, unplanned changes to port-calls, mid-voyage re-routings and recurring instances of ships skipping ports altogether to route elsewhere for more profitable cargo loads. (Total Logistix)
Composite Container Cost Index - Worldwide
(Drewry)
Global Schedule Reliability – Ocean Container Shipping
(Sea Intelligence)
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