Trans-Pacific deteriorating, brace for shipping ¡®tsunami?
Source
American Shipper
Post Date
04/28/2021
The number of container ships stuck at anchor off Los Angeles and Long Beach is down to around 20 per day, from 30 a few months ago. Does this mean the capacity crunch in the trans-Pacific market is finally easing? Absolutely not, ¡°It¡¯s not getting better. It¡¯s getting worse,¡± he told American Shipper in an interview on Monday.
¡°What I¡¯m seeing is unprecedented. We are seeing a tsunami of freight,¡± he reported.
¡°For the month of May, everything on the trans-Pacific is basically sold out. We had one client who needed something loaded in May that was extremely urgent and who was ready to pay $15,000 per container. I couldn¡¯t get it loaded ¡ª and we are a growing company that ships a lot of TEUs [twenty-foot equivalent units]. Price doesn¡¯t always even matter anymore.¡±
Restocking driving volumes higher
Trans-Pacific import volumes are still rising. He noted that January trans-Pacific imports were up 10% versus 2019 (comparisons to 2020 numbers are skewed by COVID) and 13.5% in February, then jumped 51% in March. ¡°So, we¡¯re now at 1.5 times pre-pandemic levels.¡±
With imports far outpacing retail sales growth, he attributed volumes to inventory restocking. ¡°The restocking is actually affecting the trade even more than growth in demand. That tells me that this will last even longer. Let¡¯s say U.S. consumer demand slows down in Q3 and Q4. That¡¯s not expected, but even if it does, [capacity availability and rates] shouldn¡¯t improve quickly, simply because of the huge restocking demand.¡±
There is a growing export backlog piling up each day in Asia, awaiting available ship slots. If that backlog grows too big, he said, ¡°I honestly don¡¯t know what¡¯s going to happen.¡±
As a result of the backlog and restocking demand, he thinks ¡°prices will remain high and shipping will probably remain difficult for the rest of this year. And then after that, you have the peak for Chi
