Maersk ship loses containers, becoming the second trans-Pacific incident in two months. The Maersk Essen ship recently lost approximately 750 containers after it encountered rough seas while en route from Xiamen, China to Los Angeles, California. The incident occurred on January 16th, approximately 450 miles north of Hawaii. A detailed cargo assessment is in progress, and the ship is scheduled to arrive at the port of Los Angeles on January 28th. All crew members are safe, and the U.S. Coast Guard and other relevant authorities were notified of the incident. Because of this incident, it is recommended to make sure you have insurance on your shipments in case an incident like this happens again.
Ocean space and empty containers are still difficult to find. Capacity is quite limited as the logistics industry continues to handle record import volumes and unprecedented congestion. For the best chance of any movement of shipments, booking will need to be done on the premium services ocean carriers recently began offering.
Ocean rates for main shipping lines extended. Shipping carrier Maersk is extending its freight rates to February 14th, while MSC and Yang Ming are extending their rates to the end of February. These rate extensions indicate that rates could be plateauing and that the industry is approaching the “ceiling” of record rate increases. However, with the Chinese New Year coming up, it’s possible that rates could increase even more.
Aluminum license requirements delayed to March 29, 2021. The U.S. Department of Commerce delayed the deadline for having an aluminum license for importers of aluminum products from January 25, 2021, to March 29, 2021. The delay was implemented to give the new Biden administration time to review the rule and consider any comments before full implementation. More information can be found on the Federal Register’s website or the AIM System website.
The Biden administration plans to take a multilateral approach on tariffs imposed on Chinese goods and takes steps to fulfill the “Buy American” campaign pledge. The Biden administration plans to evaluate the tariffs in place that the Trump administration imposed and work with partners and allies to develop a plan of action, according to Press Secretary Jen Psaki. Additionally, President Biden signed an executive order that imposed tougher rules on government procurement practices to increase the purchase of goods made in the United States. This executive order includes making it harder for federal agencies to purchase imported goods, revising the definition of “American-made” products, and raising local content requirements.
COVID-19 surges at the ports of Los Angeles and Long Beach. Dockworkers at the ports of Los Angeles and Long Beach have been testing positive for COVID-19, with nearly 700 union members at the ports recently testing positive. This increase in infection rates has been hurting productivity at the ports, but officials say that cargo-handling will not be interrupted. Officials are also saying that they’ll do their best to avoid shutting down the terminals. On top of these recent infections, congestion is growing, with as many as 45 vessels waiting to be berthed, with even more vessels coming to the port. With the combination of COVID-19 surging and record import volumes, congestion at the port is likely to get worse, so delays should be expected.
Air freight rates are increasing, again, despite the recent decline. Air rates are going back up again, even though there was a dip in the rates a few weeks ago. Because shippers now have to book on premium ocean services for new bookings and standard services are being rejected entirely, importers are looking to switch from ocean freight to air freight. Therefore, the demand for air freight is increasing, which is increasing the air rates, again. Because of this demand, delays are expected in the coming weeks. If you’re considering air freight, don’t hesitate to reach out to one of our experts.
Truckers in China are starting to break for Chinese New Year. With the Lunar New Year coming up, truckers are already starting to take off to travel back to their hometowns to visit family for the holiday, one to two weeks earlier than usual. They are traveling earlier to decrease the chance of contracting COVID-19 by avoiding the anticipated congestion leading up to Chinese New Year and to isolate for a sufficient period in their homes to follow health safety protocols. The same scenario is expected after Chinese New Year; drivers may be reluctant to return or may have to isolate again prior to returning to work.
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.
More Chinese factories will be working during the Lunar New Year. Rather than shutting down for the Chinese New Year, more factories will be producing exports for European and North American consumers, indicating little reprieve as record volumes continue. Government agencies are also giving bonuses to workers to not return home to catch up on back-orders and to not travel due to COVID-19.