Container lines are increasing capacity on the Asia-US trades by double-digit percentages, but port congestion in Asia and the US is blunting the actual capacity available to shippers — keeping upward pressure on rates.
Container lines this month began upping their deployment of trans-Pacific capacity, with approximately 22 percent more capacity available to the West Coast through December than was available in March through July, according to eeSea, a platform that maps carrier schedules. Carriers are also adding approximately 14.4 percent more capacity to the East Coast through year-end, eeSea said.
Carriers in recent months have announced dozens of extra-loader vessel deployments and several new weekly services to meet surging demand by US consumers that is projected to remain strong through the end of the year. US imports from Asia increased 32.4 percent in the first seven months of the year over the same period last year, and 21.7 percent from pre-COVID-19 2019, according to PIERS, a JOC.com sister product within IHS Markit.
However, the double-digit increase in capacity is likely to further stress ports that are already contending with vessel bunching in the early days of peak shipping season. For example, there are 40-plus vessels at anchorage in Los Angeles-Long Beach awaiting space, while terminals each day are working about 30 container ships at berth, with more vessels scheduled to arrive daily, according to the Marine Exchange of Southern California.
The ports of Los Angeles and Long Beach provide an egregious example of vessel bunching, but other ports, including Oakland, the Northwest Seaport Alliance of Seattle and Tacoma, Savannah, and New York-New Jersey have contended with vessel bunching on and off over the past few months.
Alan Murphy, CEO of Sea-Intelligence Maritime Analysis, said the next three months will be difficult for ports and their severely taxed inland supply chains. “Within the coming months, carriers are aiming at what can at best be described as a capacity explosion on the trans-Pacific trade — good for a booming market, but [it] could lead to even worse congestion,” Murphy said in his Sunday Spotlight newsletter.
Deployed capacity sufficient to meet demand, on paper
Trans-Pacific carriers in March through July deployed 1.37 million TEU of capacity each month to the West Coast. Actual TEU carried averaged about 1 million TEU per month, according to PIERS. Carriers deployed an average of 661,268 TEU capacity per month to the East Coast during the same period, while TEU carried averaged 521,00 TEU per month.
On paper, carriers deployed sufficient capacity to handle the containerized imports from Asia, but glitches throughout the international supply chain reduced the effective capacity of the vessels being deployed. Vessels were delayed leaving some Asian load ports, including Yantian and Ningbo, because of terminal closures related to COVID-19 outbreaks. Once they reached US ports, vessel delays have ranged from several days to more than a week as the ships idled at anchor awaiting berthing space. For example, according to Monday’s Port of Los Angeles Signal, which is published daily, the current average anchorage time at the port is 7.6 days.
Vessel delays at a number of US ports are being caused by terminal congestion and chassis shortages at ports and inland rail hubs. Retailers project that August will set an all-time record for imports. The Global Port Tracker, published monthly by the National Retail Federation and Hackett Associates, projects near-record year-over-year monthly import volumes continuing through the end of the year.
Given the current level of congestion at major US gateways, the capacity increases of 22 percent to the West Coast and 14.4 percent to the East Coast through year-end portend elevated vessel bunching at the ports, congestion at marine terminals, and chassis shortages at ports and inland locations. The capacity gains will also put stress on the intermodal rail networks from both the West and East coasts as railroads continue to “meter” the volume of intermodal containers they move each week from the ports so as not to further congest their inland rail ramps.
“The deployment of more capacity will create a surge of cargo at the destinations, with the potential of making the congestion even worse,” Murphy said.