Ocean
Limited ocean carrier space continues. There are few to no empty containers available to load in China unless bookings are completed through the recently-offered premium services. These constraints on vessel space are due to U.S. imports from Asia increasing. If customers have new shipments that need to depart China before Chinese New Year (February 12th), premium services will need to be used for those shipments. However, standard services will most likely not sail until the end of February. The rates on these standard services will most likely extend through the end of January, but there’s a chance that the rates may change if shipping lines choose to raise them.
Customs
With the Generalized System of Preferences (GSP) expired, importers should prepare for potential retroactive approval. The GSP provides duty-free treatment for thousands of imports from hundreds of countries and expired on December 31st, 2020. Should the GSP be renewed retroactively later in 2021, importers should still claim GSP on their entries for eligible refunds.
Chinese New Year is coming up, so it’s a good time for importers to do some housekeeping duties. The Chinese New Year results in the largest annual migration of people on Earth (though with the COVID-19 pandemic, this year is likely to have fewer people traveling), and because China is one of the most significant manufacturers in the world, the holiday disrupts global supply chains. Now is a good time for importers to ensure their classifications, duty rates, and policies are updated. If you need help navigating the Chinese New Year, don’t hesitate to reach out to one of our Customs Experts or read our blog on how importers can minimize the holiday’s impact on supply chains.
Ports
Port of Oakland experiences disruptions in agricultural exports due to late vessel arrivals. These late vessel arrivals have been becoming more frequent than they were last fall, disrupting agricultural shipper’s schedules to deliver export containers to terminals. These vessel delays add to the already unprecedented congestion that U.S. West Coasts are experiencing.
Cargo rolling at Asian ports has been increasing due to demand pressures. As the demand for containers from the U.S. and Europe increased, carrier and terminal capacity became overwhelmed. In some of the world’s busiest ports like Shanghai, 37% of all containers were rolled, which is a 7% increase from November to December. At Port Klang, 55% of containers were rolled, while Singapore rolled 42% of all containers, an increase of 9% and 2%, respectively. It was also found that of the 20 global ports that Ocean Insights collects data for, 75% saw an increase in cargo rollovers. This time of year, volumes are usually lower, so these increases in cargo rolling and demand underscore how unprecedented this situation is for the logistics industry.
Congestion worsens at ports of Los Angeles and Long Beach due to import surges and labor shortages. According to terminal operators, the congestion is worsening due to six months of near-record cargo volumes arriving at the port, pushing the Southern California supply chain beyond its capacity. There are longer container dwell times and rising truck turn times, and terminal operators can’t vacate laden import containers fast enough to make room for new shipments. There seems to be no end in sight for this unprecedented congestion for quite some time, at least through June or July.
Air
Air freight rates have returned to pre-COVID rates, becoming the lowest rates seen in the past year. This decline in rates indicates that there’s little to no demand for air freights at the moment, so customers looking for alternate means of shipping goods may find some use in air freight as opposed to ocean freight. It’s recommended to check regularly on these rates as it is unclear as to how long this decline in rates is going to last.
Trucking
Trucking capacity remains tight as the industry recovers volumes lost. As the trucking industry begins to recover from the 2020 recession, shippers should expect pressure on pricing to continue. Unless consumer demand suddenly drops or swings from retail goods to services, trucking capacity is on track to remain tight in 2021 so far.
Other
Union Pacific Railroad (UP) rescinded surcharges for containers on January 17th. The record-breaking surcharges went up to $5,000 per container, but UP rescinded the surcharges telling customers that the availability of equipment and containers in Los Angeles/Oakland/Lathrop and Seattle/Tacoma is no longer constrained. Moving forward, UP should be able to better supply customers with containers and cars.
J.B. Hunt Transport Services says a rise in shipper costs is necessary to address congestion. According to J.B. Hunt, certain U.S. markets will see a rise in shipper costs by more than 10% to fund more containers, drivers, and other equipment intended to ease congestion woes. Areas like Los Angeles are likely to see rises in costs by more than 10% due to the unprecedented congestion at the city’s port, but other areas in the eastern network may be different. Therefore, it’s recommended to keep an eye on these shipping costs.
