Post-holiday freight rates are likely to rise! More than 1,800 workers at West Coast Terminal were infected with COVID-19

The "supply chain nightmare" that plagues the global maritime industry is likely to continue into 2022, although the recent significant decline in freight rates, but the difficult to alleviate the problem of the port of Cyprus and the strong market demand in the future, will support the price to rise again. More than 1,800 dock workers in the West Coast port have been infected with the new crown and the rise in the strike crisis, which has had a great impact on this year's sea freight rates, and the following Hugo bacteria take you to see the latest cross-border logistics news.

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The "supply chain nightmare" of the global maritime industry is likely to continue! Freight rates will rise after the Spring Festival!

The "supply chain nightmare" that plagues the global maritime industry is likely to continue into 2022, although the recent significant decline in freight rates, but the difficult to alleviate the problem of the port of Cyprus and the strong market demand in the future, will support the price to rise again. Click here to enquire about cross-border logistics services

According to recent data from S&P Global Platts, the total sea freight cost per FEU from Asia to the United States after the Spring Festival is about $12,000, and the price per FEU from Asia to the United States is about $13,000; the price per FEU quoted from North Asia to the United States and west is flat, and if other additional costs are added, it will increase by about 2,000-3,000 US dollars.

In addition, the total freight cost per FEU from Southeast Asia to the United States is about $17,000-19,000, slightly lower than the $20,000 a week ago, and the freight rate to the West of the United States will be $13,000-16,000, compared with $15,000-17,000 in the previous week. Tariffs per FEU on Asia-Europe routes are also currently reduced by around 15%.

Just before the Spring Festival, 2M, the world's largest shipping alliance, announced a reduction in voyages from Asia to North America in February. Maersk Line of the 2M Alliance said that its TP6/MSC Pearl service will be postponed by one week from the February 1 departure date, and the TP2/MSC Jaguar Ring Line service will also be delayed by one week from its announced February 14 sailing date; mainly considering that the Asia-North America route has been delayed due to the port factor, the sailing schedule has been delayed, and the demand is expected to slow down around the Spring Festival, so it decided to adjust the voyage schedule.

MSC will cancel four separate voyages between January 30 and February 14 due to the expected slowdown in demand around the Spring Festival and the usual weakness within a week or two after the Spring Festival. "This change will help us match capacity to the expected weak demand for consolidation services," MSC said. ”

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More than 1,800 dock workers at the West Coast port have contracted COVID-19, and labor shortages have hampered the port's recovery

In an interview with JOC, Jim McKenna, president of the Maritime Pacific Association (PMA), said more than 1,800 dock workers on the West Coast tested positive for COVID-19 in the first three weeks of January, more than the 1,624 confirmed cases in all of 2021. The association manages the West Coast Labour Contract with the International Union of Terminals and Warehouses (ILWU).

According to the Southern California Ocean Exchange, 101 container ships waited to berth outside southern California ports last Tuesday, an increase of six from the previous week. According to the latest data from the Port of Los Angeles, there are currently 85 container ships waiting to berth outside the southern California port, a decrease from the previous week. However, import containers and empty containers increased, with 56,112 imported containers and 59,603 empty containers in terminals and off-terminal warehouses as of Feb. 7.

According to the Pool of Pools website, the average length of stay on the streets for a Southern California frame is 8.8 days, up from 11 days in early January, but still more than double the average length of stay before the pandemic.

Matt Schrap, chief executive of the Port Freight Forwarders Association (HTA), said the combined effect of labor shortages, frame shortages, too many empty containers at the terminals and excessive imports is leading to increased congestion at the port, which is reflected in longer truck turnaround times, saying: "Terminal congestion is severe and (truck turnover) is difficult to operate." ”

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The strike crisis at West Coast Pier rises! This year's sea rates are likely to rise above the sky!

A few days ago, J Mintzmyer, founder and chief analyst of Value Investor's Edge (a well-known shipping analyst), warned in a latest interview that the strike crisis at the West West Terminal is at risk of escalating, and if it is not handled well, the 2022 sea freight rate may "blow through the roof".

The International Federation of Warehouse and Dock workers (ILWU) rejected a one-year extension of the labor contract by its employer, the Pacific Maritime Association PMA, in November 2021, which could set the stage for heated negotiations between the two sides this year and also bring chaos to the operation of the port, where current congestion at the ports of Los Angeles and Long Beach makes it take longer for similar port disruptions to resume in 2022.

Mintzmyer warned that if there is no consensus between labor and management, leading to a workers' strike or a port closure, the congestion could worsen, causing sea freight rates to break through the sky.

If this is the case, will the share price of shipping stocks such as Star Shipping (ZIM) rise by more than $200? Mintzmyer said it's really hard to predict, and labor negotiations are never easy, but the industry may privately hammer out "sweetheart deals" with unions, or provide generous extension clauses until things return to normal.

Mintzmyer pointed out that the global response to the new crown pneumonia (COVID-19) policy is an important factor in the disruption of supply chains. He said that the industry market situation at the end of 2019 has been quite tight, and the US ports (especially the West Coast) have faced the dilemma of insufficient investment for 10 years, and large-scale blockade interference has undermined the overall operation of the port. While easing restrictions has helped, supply chains have largely been disrupted, and even the most optimistic scenarios will take months to ease.

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Only 32%! The on-schedule in the container market fell to an all-time low

The global port problem is difficult to solve, the container ship on-time rate has hit a record low, it is expected that the market will be difficult to return to normal before the middle of this year, and the soaring freight rates may repeat itself.

According to the latest data released by shipping analysis and consultancy Sea-IntelligenceSea-Intelligence, the vessel on-schedule fell to 32 percent in December last year, the lowest level since the company began monitoring relevant data in 2011, a further 12.5 percent drop from the December 2020 figure, while the ship on-board rate reached 78 percent in 2019 before the outbreak.

Sea-Intelligence analyzed 34 routes and more than 60 consolidation companies. Throughout 2021, the ship on-schedule has remained at a low level of 32-40%, but there has not been much fluctuation. The average delay in the arrival of a vessel in December continued to grow to 7.33 days, the fifth consecutive month of delays of more than 7 days.

In December 2021, Maersk once again became the "champion" of the top 14 containership companies with a vessel on-schedule rate of 46.2%, followed by Hamburg Süd with a 41.4% on-time schedule. Only Mediterranean Shipping, with a punctuality rate in the range of 30-40 per cent, was 31.1 per cent. Six companies have a punctuality rate of between 20 and 30%, namely Hapag-Lloyd (28.1%), HMM (27.4%), CMA CGM (26.9%), Estar Shipping (25.4%), PIL (24.6%) and ONE (23.2%). The remaining five companies have a punctuality rate of less than 20%, namely Yangming Shipping (19.7%), COSCO SHIPPING (19.7%), OOCL (17.1%), and Wanhai Shipping (15.5%), and the minimum punctuality rate of Evergreen Shipping is only 14.5%.

Experts believe that the global container ship manpower scheduling problem and local port control, as well as the labor-management consultation of workers in the West Coast, are the key to whether the quasi-shift rate will continue to be explored. The problem of the port of Cyprus will not be able to improve the relationship between supply and demand until at least until the middle of the year, whether consumption will decline, and whether there will be a large number of new ships in the future.

05

Due to severe shortages in foreign exchange, the country announced an exemption from fines for goods stranded in ports

In the context of severe shortages of foreign exchange in the domestic market, many goods in Sri Lankan ports have been undelivered for several consecutive days or months, so the Sri Lankan government has decided to give special consideration to granting exemptions from fines.

Sri Lanka's president has instructed port authorities to review eligibility for exemption from fines, a special benefit for importers, for goods unloaded at Jaya Container Terminal (JCT) and East Container Terminal (ECT) pending customs clearance until January 2022.

The importer must submit a copy of the bill of lading, a confirmation letter issued by the importer's bank stating that customs clearance of the goods/containers has been delayed due to a shortage of foreign exchange in the domestic market, indicating the date on which the importer submitted the documents to the bank and the date on which the bank issued documents to the importer to clear the goods/containers. In addition, an invoice for payment to the Sri Lanka Port Authority must be attached to the application.

It is understood that the secretary of Sri Lanka's Ministry of Ports and Maritime Transport also submitted a letter to the South Asia Gateway Terminal (SAGT) and the Colombo International Container Terminal (CICT) requesting an extension of the exemption for long-term stranded cargo.