Trans-Pacific reliability rising from record depths

Trans-Pacific reliability rising from record depths

Container carrier schedule reliability from Asia to the US West Coast improved to 51.6 percent in March, up 12.9 percentage points from February but only 0.9 points from the same month last year. Photo credit: Shutterstock.com.

Container line schedule reliability from Asia to the United States improved month over month in March as container volumes dipped in the post-Lunar New Year lull, but schedule integrity in the eastbound trans-Pacific remains deeply depressed compared with global carrier performance.

Carrier schedule reliability from Asia improved 12.9 percentage points in March over February, to 51.6 percent to the West Coast, and by 5 percentage points to 36.4 percent to the East Coast. But carrier performance in the trade continues to significantly lag global schedule reliability, which was 74.2 percent in March, as carriers and terminal operators respond to uncertainties in the international supply chain caused by the US-China trade war.

Furthermore, on a year-over-year basis, schedule integrity in the eastbound trans-Pacific in March was almost flat, improving 0.9 percentage points to the West Coast and 0.1 percent to the East Coast from March 2018, according to the April Global Liner Performance Report published by SeaIntelligence Maritime Analysis. By contrast, global container vessel on-time performance in March improved 8.6 points from March 2018, indicating that carriers in most trade lanes improved performance in the post-Lunar New Year period, while the Asia-North America trade has yet to recover from the volatile trade conditions that marked much of last year.

More than seasonal shifts

Reliability in the eastbound trans-Pacific was especially poor this past year as US importers responded to tariffs — and the threat of more tariffs — in the US-China trade war. More often than not, schedule disruptions in the trade in recent years have resulted from late vessel departures from Asia. Ports throughout the continent continue to deal with typhoons and fog, as well as ever-larger container ships.

The volatility was compounded last summer, when carriers suspended three services to the West Coast and one to the East Coast. Then, when imports surged in July and August due to 10 percent tariffs on US imports from China, and again in November and December in response to the threat of 25 percent tariffs on Jan. 1, 2019, carriers added a total of about 34 extra-loader vessels to the trade to handle the increased volume. Marine terminals and import distribution warehouses in Southern California, the largest US import gateway, operated beyond capacity, causing delays in the international supply chain. Carriers in the first quarter of 2019 canceled, or blanked, another three-dozen sailings as imports softened.

According to a CargoSmart analysis of schedule reliability across five east-west port pairs, transit times on eastbound routes to the West Coast increased 2-2.5 days compared with the first three months of 2018. The port pairs were Shanghai-Rotterdam, Hamburg-Shanghai, Shanghai-Los Angeles, Los Angeles-Shanghai, and the Busan-Shanghai-Oakland transshipment route.

On-time reliability in the eastbound trans-Pacific, at 40.3 percent, was lower than the 65.8 percent on-time performance globally in the first quarter of 2019, according to CargoSmart. Global schedule reliability varied only a few points from month to month, decreasing from 66.1 percent in January to 63.6 percent in February before improving to 67.6 percent in March. Overall schedule reliability was nearly 7 percent higher in the first quarter from the first three months of 2018, according to the analysis.

SeaIntelligence also measured vessel schedule reliability in the major east-west trade lanes (trans-Pacific, trans-Atlantic, and Asia-Europe) for the three large vessel-sharing alliances. The 2M Alliance of Maersk Line and Mediterranean Shipping plus HMM was the most reliable across all three trades, at 68.8 percent on-time performance; it was followed by the Ocean Alliance of CMA CGM, Cosco, OOCL, and Evergreen at 67.1 percent; and THE Alliance of Ocean Network Express, Hapag-Lloyd, and Yang Ming at 60.3 percent.

On the Asia-North America West Coast route, THE Alliance had the best on-time performance of 47.8 percent. The Ocean Alliance was second at 45.9 percent, and the 2M was third at 41.4 percent. From Asia to the East Coast, the 2M members came out on top at 46.8 percent, followed by the Ocean Alliance at 34.9 percent and THE Alliance at a dismal 26.4 percent on-time performance.

Terminal operators addressing JOC’s TPM conference in Long Beach in March noted that Los Angeles-Long Beach bore the brunt of the extra-loaders and other schedule interruptions, which continued through much of the first quarter. In addition to late vessel arrivals, the terminals struggled to move imported containers to local warehouses, which were operating at greater than 100 percent capacity, as well as with late intermodal train arrivals and departures and a flood of empty containers that had to be returned to Asia even as carriers reduced capacity via blank sailings.

“Most terminals have a template,” said Sean Pierce, CEO of Fenix Marine Services. However, when terminals are operating at 80-100 percent utilization, operators must put the template aside and respond to day-to-day volatility in the international supply chain, he said.   

Contact Bill Mongelluzzo at bill.mongelluzzo@ihsmarkit.com and follow him on Twitter: @billmongelluzzo.