Could the historic US import crisis get worse?


The number of container ships at anchor off California is down from the record high, but that doesn’t necessarily mean the U.S. import boom is ending.

“If you think the worst is over, be careful,” warned Michael Braun, vice president of customer solutions at Xeneta, a Norwegian company that tracks container contract prices. “In some cases, it could remain as difficult or worsen – especially in the United States,” Braun said in an online presentation Tuesday.

“It’s increasingly clear that the situation we find ourselves in right now is going to stay here for a while. If you had asked me six months ago what would happen, I would say we would see relief after the Chinese New Year. But everything is dragging on longer than expected.

“We’re now pretty sure that the peak situation we’re seeing right now is going to last all summer, without any sort of [letup before] the high season which we usually see in the summer. “

According to Braun, “What we’re seeing now is that the demand on the shipper side is going to last. We are still seeing a number of shippers who have twice their regular monthly demand as they are stocking warehouses or facing additional demand. “

Stimulus controls for retail juice spending

Ed Hyman, head of economic research at New York-based Evercore ISI, said in a customer note Tuesday that his bank’s survey of retailers showed a “staggering” rise in sentiment last week. The results should remain “super strong” this week.

Hyman estimated that $ 240 billion in stimulus checks arrived last week and that another $ 100 billion will arrive this week. Much of that could be spent quickly. If $ 100 billion were spent by the end of the month, Q2 consumer spending would increase by 12%.

According to Alan Murphy, CEO of Sea-Intelligence in Copenhagen, Denmark, “In the past 29 years, the United States has never seen such a low level of retail inventory relative to sales than in January. And this despite the boom in cargo imports. “

Murphy added, “The growth rate of spending on goods in January was higher than at any time during the second half of 2020. In other words, the boom in the United States in terms of goods s ‘accelerated. It doesn’t slow down.

“These developments lead to the conclusion that the pressure on the containerized supply chain in the United States will not abate in the near future,” Murphy warned. “If anything, the data for January indicates an increase in the strength of the boom. Especially since retailers are struggling not only to keep up with sales growth, but also to replenish their stocks. “

Conference rooms focus on soaring costs

Xeneta collects comprehensive data on the rates of shipping contracts. On Tuesday, its data showed long-term fares on the Asia-West Coast route were up 50% year-over-year to $ 2,640 per forty-foot equivalent unit (FEU). Spot rates on this route were $ 4,056 per FIRE, up 156% year over year.

The company estimated long-term fares on the Asia-East Coast route were up 28% year-over-year to $ 3,659 per FIRE. The average short-term market rate for this route was $ 5,058 per LIGHT, up 79% year-over-year.

Xeneta’s long-term rate estimate for the Asia-West Coast market reflects statements made Monday by ZIM (NYSE: ZIM) CEO Eli Glickman, who revealed that ZIM’s contract rates this years were up 50%.

Such extreme rate hikes have negative implications for US importers – and are now garnering attention at the highest level.

“Usually, ocean freight is not the center of attention, covering only a few percent of indirect purchasing expenses,” Braun noted. “Nowadays, some of the biggest shippers are faced with [annual] bills of 50 to 100 million dollars. This is certainly something that is gaining attention at the global shareholder level and of course at the board level. The attention to the level of the board is extreme.

“Everyone thought it was going to be a quick storm. That it would be over in a quarter and everything would be back to normal. The longer it takes, the more companies have to start rethinking their entire strategy.

“Because it doesn’t work anymore. The additional costs cannot simply be passed on to consumers. We are clearly seeing more and more companies starting to rethink their entire procurement and transportation strategy. “

The latest news from San Pedro Bay

The focus was on container shipping congestion in Los Angeles / Long Beach and San Pedro Bay – the most visible manifestation of the COVID era import peak in the United States.

New statistics provided to American Shipper by the Marine Exchange of Southern California show some improvements. However, the numbers are still very high.

Chart by American Shipper based on data provided by the Marine Exchange of Southern California. Note: bi-monthly data from January 2019 to November 2020; daily Dec 2020-present.

The absolute record for container ships stranded at anchor – 40 – was reached on February 1. The record for the combined number of container ships at anchor or berths – 67 – was set two days earlier, on January 30. .

This year’s low for crate ships at anchor – 19 – was recorded on March 19. The same day saw the lowest this year for ships combined with anchor and berths: 47.

Container ships off Los Angeles / Long Beach on Tuesday (Map: MarineTraffic)

It looks promising. But the numbers have climbed over the past week. On Tuesday, there were 25 at anchor and 30 at berths. To put this in context: between January 1 and Tuesday, an average of 58.2 ships were at anchor or docked on any given day. Tuesday’s number was only 5% below that average since the start of the year.

In other words, as Xeneta and Sea-Intelligence analysts pointed out, the US import system is not out of the woods yet. Click for more articles on FreightWaves / American Shipper by Greg Miller

LEARN MORE ABOUT CONTAINER SHIPPING: ZIM: US importers close, sign contracts early, pay 50% more: see the story here. Shipping carriers hold all cards in contract negotiations with shippers: see the story here. A new video shows the massive scale of traffic jams in California: see the story here.

More data:

container rate data
Asia-West Coast Spot Rate vs. To learn more about FreightWaves SONAR, click here.)
import data
There was a huge year-over-year variance in the total number of U.S. ocean import customs declarations (Chart: FreightWaves SONAR. To learn more about FreightWaves SONAR, click here.)

About Dwayne Wakefield

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