SPRING 2022

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THE DISTRIBUTOR’S LINK
CHRIS DONNELL 2022 TRANSPORTATION AND SUPPLY CHAIN OUTLOOK from page 12
International Carrier Information
[a] Ocean freight rates from the Pacific Rim, South
East Asia and the Indian Subcontinent will continue to
hold steady for most of the year as equipment shortages,
blank sailings and port bottlenecks continue. Importers
can expect rates to slightly dip and rebound quite often
and this should be the case of the next 2-3 months. As
we enter the new shipping season, (May 1st) importers
should anticipate a spike in ocean costs and those
costs remain elevated until mid to late September due
increased demand from big box retailers gearing up for the
holidays. Going into the winter months importers should
see a gradual rate reduction, some anticipate rates much
lower than where we are today but in discussions with the
ocean carriers, they have little to no intension to reduce
rates to pre-pandemic levels any time soon.
[b] Ocean rates from Europe, the Middle East and
Africa are holding but are still running around a third less
than what we are all seeing from China. With Europe, the
issues are more of a lack of equipment and truckers which
is due in large part to Covid related trade restrictions and
other mandates. For Cargo originating from the Far East to
Europe, we’re seeing pricing that resembles that of cargo
to the United States.
[c] USA exports are surging but they are struggling
to get loaded as ocean carriers are more focused on
imports, emptying vessels, and moving onto the next
port of call, often leaving exports and empty return
containers behind. In some ports, the port authority is
now imposing surcharges on ocean carriers for empty
containers sitting.
[d] Blank or Void sailings continue. For those who
aren’t familiar with blank sailings, it is where the ocean
carriers decide to park a vessel for a week or so before it’s
loaded. The carriers say this is due to congestion issues
on the west coast and the average number of vessels
they have allocated to their specific service schedule.
In short, there are too many vessels sitting outside our
ports and the carriers aren’t willing to load more vessels
until those at our ports disembark and head back to the
origin. However, what I see is equipment congestion at the
origin which allows carriers to create a stronger demand
for future sailings, thus allowing the carriers to hold their
rates at the elevated costs seen today.
[e] Air Import rates from the Far East remain strong
and will continue in their current range until the summer
months at least. The reasoning behind the elevated rates
is due in large part to the surge in demand as importers
switch from ocean freight to air, as well as the travel
restrictions at the origin due to Covid. Something to keep
in mind - many carriers are still only utilizing a quarter of
their true capacity to the United States and back. Once
the restrictions are lifted, we should see capacity open
and rates start to decline.
[f] Air Import rates from Europe are stable and
trending in the right direction; importers are seeing rates
at about the half the price of those coming from the Far
East to the United States.
[g] Ports in the US continue to struggle. Ports like
Los Angeles and Long Beach have about 100 vessels
sitting off the coast waiting to be berthed. Savannah
and Charleston on the East Coast are seeing their total
number of vessels awaiting to be berthed increase;
Savannah now has more than 30 vessels in queue.
[h] Ocean terminals (where containers are picked
up and returned – portside) in places like Los Angeles,
Long Beach and Seattle have run out of room which has
resulted in their not accepting empty container returns.
Many importers feel this is not their problem; they have
their cargo, it’s empty and out of their hands. While the
ocean carriers have been known to mitigate or remove
the storage charges as long as there is proof the trucker
tried to return the container but was refused, they are still
moving forward in invoicing it; make sure your forwarder,
logistics provider is fighting the carriers for you. What
importers need to understand though is that these
containers, although undeliverable are on a chassis and
until they are able to return that container the chassis is
still racking up costs daily, this falls on the hands of the
importer.
[i] Ocean terminals announce Empty Container
Dwell fees which coincides with the Emergency Container
Excess fees. However, the Empty Container Dwell
fees focuses on the empty containers the carriers are
harboring at the terminals without moving. While the
Container Excess Fees never really took off, the terminals
are now demanding that carriers take responsibility
or face stiff penalties for empty containers taking up
valuable dock space. As of the date of this article the
ocean carriers haven’t announced how they will proceed,
but it wouldn’t surprise me if they pass along the fees to
their customers
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