U.S. Port Update - March 2021

March 24, 2021

LA/LB Port 

Low U.S. productivity compared to Asia, where factories and logistics companies, including ports, work 24 hours a day compared to their counterparts in the U.S., is causing the backlog of cargo in Southern California.  

Dockers in the U.S. do not work weekends. They work only 112 hours a week on the berth and just 88 hours a week on the terminal, with warehouses only operate during daylight hours. Production in Asia is 50% higher than the U.S. Factories works 24 hours a day in Asia. This was not a problem on the first half of 2020 as demand collapsed, with vessels arriving at the U.S. West Coast only 10% full.  

Average cargo handling times in port increased from 4.5 days to 7.4 days since December. Some vessels are alongside [at the berth] for 11 days; there were no more ships to charter with 150 extra loaders in the second half of 2020. With the delays in the U.S., it meant schedules were sliding, ships were not returning to Asia because they were waiting at anchorage outside of Los Angeles and Long Beach. (Sources: Container-news) 

The goods churned out by the Chinese factories flowed across the Pacific and thus added to the cargo heap in Southern California. The Port of Long Beach reported it moved 771,735 twenty-foot equivalent units in February, a 43.3% jump from the 538,428 TEUs handled the same month last year and "the largest year-over-year increase for a single month in the port's 110-year history. 

It was also reported as the first time the Port of Long Beach handled more than 700,000 TEUs in February, exceeding the previous record set in February 2018 by 109,945 TEUs.  

Imports were up 50.3% year-over-year to 373,756 TEUs, from 248,592 in February 2020. Exports declined 4.9% from 125,559 TEUs to 119,416. 

But it is the number of empty containers that have been sticking out on U.S. port reports, and Long Beach's was jarring. The number of empty containers moved through the port in February shot up 69.6%, to 278,563 TEUs. The vast majority, 265,431 TEUs, were empties moved outbound — back to Asia.  

During a press release, the Port of Long Beach said that it "continues to collaborate with stakeholders to facilitate the efficient movement of cargo. (Source: Freightwaves) 

Shipping Congestion at Los Angeles Ports Shows Signs of Easing 

Map of congestion at portShipping congestion outside the most prominent U.S. gateway for imports from Asia showed signs of easing in mid-March as dockworkers made progress reducing by almost half a backlog that peaked at 40 vessels six weeks ago. 

Twenty-two container ships were waiting to offload at the adjacent ports of Long Beach and Los Angeles as of the second weekend of March, compared with 29 a week earlier, according to officials who monitor marine traffic in Southern California's San Pedro Bay. Thirteen more are scheduled to arrive over the next three days, with nine of those set to drop anchor. 

The average wait for berth space was 7.6 days, little changed from 7.5 days a week ago, according to the L.A. port. (Source: Freightwaves)

Graph of port statusThe ports of Los Angeles and Long Beach have settled into a pattern of congestion that virtually every sector of the international supply chain says will last at least into the summer months — and possibly longer — if second-half volumes don't wane. 
Recent metrics on trucker wait times, container dwell times, the number of ships in the harbor, and chassis availability have generally plateaued, suggesting that conditions are not improving materially but not getting worse. 

How long the congestion continues will depend mainly on import volumes between now and the beginning of August's peak season.

Anticipating record sales in 2021, retailers expect the U.S. containerized exports will increase 20 percent or more each month through June, albeit from unusually low import volumes last spring. Los Angeles-Long Beach handles about 50 percent of total U.S. imports from Asia, according to PIERS. Asian imports in Los Angeles-Long Beach have totaled about 800,000 TEU per month each month since last July, according to PIERS. That was a year-over-year increase of at least 10 percent every month.

Ocean freight pressures set to continue until at least summer

Throughout much of the global ocean freight logistics chain for several months, difficulties are projected to continue well into the second quarter (Q2) of this year, including high prices, poor vessel reliability, capacity issues, and acute equipment shortages. Of the top 14 carriers, Hamburg Süd was the most reliable in January with a performance at 46.5%, followed by Maersk Line with 46.3%. Subsequent carriers recorded schedule reliability between 20-40%, with HMM recording the lowest levels at 21.4%. (Source: Sea-Intelligence)

Port of Long Beach WAVE (Weekly Advanced Volume Estimate) 

Oakland Port
Graph of Oakland port importsMapping data from Marine Traffic today (see below) shows 17 ships now queuing at anchor at the port of Oakland further north, with many other ships inbound. Of the 17 ships waiting, 11 are box ships.

French liner CMA CGM unveiled a new Golden Gate Bridge service, the first and only direct service to Oakland from Asia. CMA CGM's new service, calling Oakland for the first time on February 12, was created as an alternative to congested Los Angeles and Long Beach, with the Marseille-headquartered liner warning this week it expects congestion issues in southern California to last through to June.

Typically, carriers activate recovery vessels, or alternate ships, to take the place of a delayed vessel. But with essentially all capacity already in use and no ships available for charter, carriers are simply canceling sailings to catch up with schedules. (Source: Splash247)

Seattle-Tacoma Port
Northwest Seaport Alliance reported that full exports in January were down 13.4% year-over-year, from 66,410 twenty-foot equivalent units (TEUs) in 2020 to 57,517 TEUs this year. 

"On an annualized basis, L.A. and Long Beach combined handle upwards of 19 million TEUs as compared to Seattle-Tacoma gateway, which handles about 3.7 [million TEUs], adding the vessels calling the San Pedro Bay ports also tend to be larger than those in the Pacific Northwest and thus take longer to discharge cargo. 
"Because of the significant demand in imports into the country from Asia, the vessel operators are increasing the eastbound rates that they charge to the cargo owners for the movement of goods from Asia into the U.S., and that is creating greater profitability for the carriers, And as a result of that, they are anxious to get those vessels with the equipment, whether it's a load or an empty, back to Asia so they can take advantage of the higher rates that they're enjoying today in the marketplace. 
Meanwhile, full imports remain strong, up nearly 11% year-over-year in January, from 102,878 TEUs in 2020 to 114,083 TEUs this year. (Source: The Northwest Seaport Alliance)

NY & NJ Port
The Port of New York & New Jersey has recorded modest growth in its container cargo volumes during the last year despite the Covid-19 demand crisis.
The major US box port has reported a new container record of 7,585,819TEU, which translates to a 1.5% increase compared with 2019 figures.
The port could have had even better results, but the pandemic, which led to vessel-call cancellations, sharp declines in factory production, and restrictions on non-essential business worldwide during the spring and summer of 2020, caused significant decreases in imports, resulting in losses of as much as 21.9% compared to the same period of 2019.

However, the Port of New York & New Jersey remained open and operational throughout the pandemic, working closely with port partners to keep commerce flowing, according to a statement.The U.S. port noted that it has broken cargo volume records in all the autumn months, exceeding the previous monthly volumes by double-digit percentages. At the same time, October was particularly strong, becoming the busiest month in the port's history, handling 755,437TEU. At the same time, the fourth quarter of 2020 was also the most active quarter in the Port of New York & New Jersey history. Additionally, the port set a record high for rail cargo in 2020 as 705,895 containers moved through the intermodal network, a 6.2% increase over 2019.

Houston Port
Port Houston is positioning itself as a viable option for handling more containerized imports from Asia, thanks to congestion woes for importers on the West and East coasts.West Coast ports such as the Port of Los Angeles still handle a large share of containerized goods coming into the country from Asia, but Houston and other Gulf Coast ports have been pulling more market share from Asia, port officials said. 

Port Houston manages the eight public terminals that make up the more than 200 terminals – most of them private – along the Port of Houston. The Port of Houston is 25 miles of the 52-mile long Houston Ship Channel, a federal waterway. In 2020, the Houston Ship Channel was ranked the busiest waterway in terms of tonnage by the U.S. Army Corps of Engineers. More vessels call the port than the ports of L.A./Long Beach, New Jersey, and New York combined, port officials said. Due to lack of power and water, Port Houston's terminals and truck facilities were closed Feb. 15-19. The closures included the Bayport and Barbours Cut container terminals and Turning Basin Terminal. 

Container activity at the port was down 28% to 198,763 twenty-foot equivalent units (TEUs) in February 2021, compared to February 2020, when it handled 255,474 TEUs. Port Houston weathered the COVID-19 pandemic for most of 2020 while continuing to see a tremendous demand for import cargo. China was the top trading partner for Port Houston in January, accounting for $1.3 billion in trade, according to U.S. Census Bureau data analyzed by WorldCity. Port of Houston's top trade partners were No. 1 China, No. 2 Brazil, No. 3 Japan, No. 4 Mexico, and No. 5 Germany. In January 2020, the top trade partners were Mexico, China, Brazil, South Korea, and Japan.

Port Houston will be the first U.S. port of call in THE Alliance's new direct Asia service.

The trans-Pacific EC6 service will begin in Kaohsiung, China, and reach the U.S. Gulf Coast through the Panama Canal. The EC6 service will call the Chinese ports of Hong Kong, Yantian, Ningbo, Shanghai, and Pusan before sailing through the Panama Canal to Houston. The service will then make stops in New Orleans and Mobile, Alabama, before returning to Kaohsiung.

THE Alliance was founded in 2017 by German ocean container carrier Hapag-Lloyd. In addition to HMM, the space-sharing network consists of Ocean Network Express (ONE) and Yang Ming. (Source: Freightwaves)

Comparison of 2015 congestion in LA/LB Port vs 2021

Graph Californian congestion crisis 2015 versus 2020-2021In 2015 massive congestion amid contentious contract negotiations with the dockworkers union convinced some importers to shift business to East and Gulf Coast ports and diversify supply chains.
The difference between the congestion in 2015 vs. 2021-21 turns out to be enormous and growing by the day. If congestion was calculated in terms of TEUs at anchor, not ships, the difference would be far more significant. 

The congestion in 2015 was mainly in the first quarter, peaking in mid-March with a high of 28 container ships at anchor and were cleared six weeks later once everyone started working usually. There are larger ships at anchor right now compared with before. This year, the number of vessels at anchor has consistently hovered around 30, reaching a high of 40.


Port Update Image at anchor and at berth

There are at least some signs that the container-shipping capacity crunch may be easing, at least temporarily.

The Container Availability Index produced by Container xChange shows a marked improvement in container-equipment availability in Shanghai. (Source:  Freightwaves)

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