User ID
Password

 

 

Maritime shipping still on troubled waters
Source
American Shipper
Post Date
07/02/2024

Rates for shipping forty-foot equivalent containers over the ocean from China to North America hit their highest levels since the summer of 2022 and are still climbing. Supply chain disruption has returned to the maritime industry, but how does it compare to the pandemic era and is it sustainable?
Reliable sourcing drives efficiency in any company? supply chain. If goods and their subsequent transportation are consistently available, then businesses can put less effort into foreing and managing inventories. These were the primary concerns during the pandemic.
The pandemic-era supply chain debacle was caused by a series of factors:
1. Spiking demand for goods well beyond expectations.
2. Limited production availability due to quarantining.
3. Insufficient transportation capacity.
4. Limited port infrastructure.
5. Panic ordering by companies due to the above.
Issues 1, 2 and 4 are not present in the current environment, but 3 and 5 are. The increase in order lead times impacts all downstream transportation and logistics.
Demand is not really the issue

Goods demand has been relatively s over the past few years, though it has been better than many economists expected. Orders for durable goods fell slightly year over year in May.

The Inbound Ocean TEUs Volume Index (IOTI), which measures bookings of twenty-foot equivalent containers from China to the U.S., is up 15% year over year but down 13% from 2023 peak levels hit last August when rates were roughly a quarter what they are now. Demand has been increasing steadily since May, but not at a particularly alarming rate compared to last year.
Capacity troubles
The Israel-Hamas war that began in October last year has destabilized one of the primary shipping routes in the world. Houthi rebels based in Yemen continue to attack ships in the Red Sea, forcing many carriers to ext their trip by an average of 10-12 days. This exted trip removes nearly two weeks of capacity and service from each vessel that normally travels through the Red Sea.
While this does not directly impact most of the transportation capacity on goods heading from Asia to the U.S., it does indirectly pull from the overall pool of available ships. This diversion impacts more than 25% of the global capacity.

There have been claims of some level of capacity management, which is difficult to say definitively, but average vessel capacity for ships moving from China to the U.S. is down about 8% y/y in June. This downward tr has been relatively consistent since last September. Seasonality and the Red Sea diversion could explain some but probably not all of it.

Service deterioration could be more of the problem as shippers may have expected transits to stabilize sustainably after the pandemic. The average port pair delay has grown from three to five days over the past year while published transits have been relatively flat from China to the U.S.

Rejection rates have been averaging higher since last November as well, moving from about 8% through most of 2023 to above 10% most of this year. The current value of 14.5% is the highest point since the start of the Red Sea issues.
Climbing the peak
Peak season for maritime imports has traditionally been in July and August. Many wonder if the current demand growth is the result of an increase in orders being pulled forward to ensure on-time delivery and availability.
If true, then the next two months?IOTI will be flat. If not true, then there will be more pressure on rates and capacity. The U.S. transportation market will also feel these effects as the growing imbalance of goods adds to international container shortages.
This could be a boon for domestic intermodal and some level of boost to the still overcapacity-laden trucking industry. While this does not look like the chaos of the pandemic era, it does look like supply chains will be much more challenged than they were last year.


Title
Source
Post Date
Visit
US East Coast strike risk could mean more spikes in f.. American Shipper 07/12/2024
40
Chinese Carrier Makes $48M Profit by Flipping Order f.. American Shipper 07/12/2024
33
Manhattan is now a ?uyer? market?as real estate price.. American Shipper 07/05/2024
73
ZIM launches Central China-LA loop.. American Shipper 07/05/2024
82
Here? what you need to earn to afford a home in each .. American Shipper 07/05/2024
72
Vornado Realty Trust Unveils Plaza33, A New Pedestria.. American Shipper 07/02/2024
75
How to plan your Delta SkyMiles Medallion qualificati.. American Shipper 07/02/2024
69
The 10 U.S. places with the highest cost of living?o... American Shipper 07/02/2024
71
Maritime shipping still on troubled waters.. American Shipper 07/02/2024
71
Ordering frenzy not over yet despite massive capacity.. American Shipper 07/01/2024
57
Page : 1   2   3   4   5        [Next 5 Page]  Last Page : 59 ( 1 of 59  Total Pages )

 

 

 

Brilliant Group Logistics INC.
159 N. Central Ave. Valley stream, NY 11580
Tel : (516) 599-2406 Fax : (516) 599-0528