Continued Severe Impacts to Global Supply Chains in the United States
Record volumes, market challenges and high rates continue to plague sea logistics supply chains driving uncertainty, disruption, and ultimately higher costs.
Lack of equipment and chassis, continued exceptional volumes, record-breaking rates, and gridlock at our nation’s top ports are just some of the challenges that Kuehne + Nagel and our customers are facing in this ever changing market and we anticipate the turmoil to last into and possible through Q2 2021. In our latest advisory, we would like to call your attention to the following matters.
• Disruption Timeline. Our current prediction has the impacts lasting into or through Q2 2021.
• Cargo Bookings & Equipment. Customers should encourage origin bookings to be made at least 3 to 4 weeks in advance in order to reserve space. Nevertheless, we would like to advise that an early booking does not guarantee that equipment will be available due to the global shortage of containers.
• Vessel Reliability. Is at an all-time low and we do not expect this to improve. Please continue to expect vessel ETA’s to change multiple times over the course of the voyage. For customers looking to gain a more realistic transit time expectation when forecasting and planning shipments, we encourage the use of the Kuehne+Nagel Sea Explorer tool.
• Bunker Surcharges. With a 35% increase of low-Sulphur fuel costs, customers should expect an increase in their fuel surcharges in Q2 of 2021.
• US Port Situation West Coast. Vessels are experiencing approximately 8-10 day delays before berthing. As of January 14th, there were 32 container vessels at anchor outside of the Port of LAX/LGB. However, once the vessel actually berths, we are seeing additional delays in unloading due to the lack of labor. Congestion is expected to grow especially post Chinese New Year due to the anticipated continuation of very high volumes in part related to factories in China staying open during the Chinese New Year period.
• US Port Situation East Coast. Delays are not as significant as the West Coast, but still expect approximately 4-6 days of delays before vessel berthing. Congestion on the East Coast is expected to grow up to and through the Chinese New Year period.
• Inland Rail Situation. The record volumes are choking the rail system and there are significant delays for cargo being loaded on the rail from ports. Please expect approximately a 10-15 day delay for cargo being loaded in LAX/LGB and a 5-6 day delay for cargo being loaded on the East Coast. Also note that trains are operating at a slower speed year-over-year, which is impacting rail transit times.
• Chassis’. Most major markets are experiencing upwards of +5 days before chassis’ become available. Once chassis do become available, please expect draymen to have to wait in line for multiple hours in order to recover containers.
• Detention & Demurrage. The ocean carriers and terminals have advised that detention and demurrage fees will not be waived despite the onshore challenges. We strongly urge customers to budget for additional accessorial fees during this time.
• Congestion & Equipment Surcharges. We expect these fees, which range $250-350 per container continue until the market stabilizes.
Our Sea Logistics Sales Executives can be reached for additional information and clarification including the latest market updates. We also invite you to join our next Sea Logistics Market Update, which will take place at 3 PM EST on January 21st and will cover the various topics listed above and also include a Q&A section. Register here for this free webinar.
For more information & updates, please visit our dedicated web page.
