Due to various reasons of the ship, cargo, port and other aspects, the ship party increases expenses or suffers economic losses when transporting goods. In order to compensate for these expenses or losses, the ship party stipulates additional charges in addition to the basic rate. Call Surcharge or Additional.
There are many types of surcharges, and as some circumstances change, new surcharges may be removed or established. This article is to sort out the more commonly used shipping surcharges at present, hoping to help you better understand the shipping surcharges (so as not to be pitted).
emergency fuel surcharge
The last bunker-related line in this list of ocean surcharges is the emergency bunker surcharge. This fee is imposed by the carrier when fuel prices rise sharply. Because it makes it more expensive to run ships and move containers around the world.
This is another surcharge that you can't stop.
Comprehensive rate increase surcharge GRI
The full name of GRI is General Rate Increase. It is generally used on South American routes and American routes. Due to various reasons such as ports, ships, fuel oil, cargo or other aspects, the shipping company's transportation costs have increased significantly. In order to compensate for these increased expenses, the shipowners add a comprehensive rate increase surcharge.
Peak Season Surcharge PSS
The full name of PSS is Peak Season Surcharge. This fee is generally charged by many shipping companies for excuses when the freight is busy in the peak season, which is somewhat similar to the price increase in my country's "Spring Festival". April to November each year is generally the peak season for world freight.
Terminal handling fee THC
The full name of THC is Terminal Handling Charge. It can be further divided into OTHC-Origin Terminal Handling Charge, which is the terminal operation fee at the port of departure and DTHC-Destination Terminal Handling Charge, which is the terminal operation fee at the destination port.
Out of spec
If the cargo is oversized, it means that the cargo cannot fit into the hexagonal container due to its size. In this case, you'll have to pay an oversize fee because the cargo will take up more space, require extra material to secure, and mean less space to stack the containers.
Origin Receipt Charge ORC
The full name is Original Receiving Charge local receiving fee/origin receiving fee/origin receiving fee. This fee is more complicated, and it is both different and related to the terminal operating fee THC. ORC is only available in southern China, mainly in Guangdong ports, while THC is available in all ports (including those in Guangdong). There is only one charge for ORC and THC - if you charge ORC, you don't charge for THC. If you receive THC, you will not receive ORC again.
ORC is specially designed for shipping from various ports in southern China, and the destination ports are these ocean routes such as North America, Central and South America, Europe and North Africa. Ports in southern China to other destination ports, such as Southeast Asia, are the same as ports in other regions, and only collect THC.
Overload surcharge
There is no way to bypass the heavy load surcharge if you are shipping unusually heavy shipments. This is a charge because heavy cargo is more difficult to load and unload than light cargo. However, these types of cargo also require specialized equipment such as cranes. A surcharge helps make up for this.
Port Congestion Surcharge PCS
The full name is Port Congestion Surcharge. When the port is crowded or particularly busy, the waiting time and schedule of the ship will be extended, and the port berthing fees such as tugboat fees may also increase, which will cause a substantial increase in transportation costs. In order to make up for this cost loss, the shipping company will charge the shipper. Port congestion surcharge.
Container Imbalance Surcharge CIC
The full name of CIC is Container Imbalance Charge, sometimes called Container Imbalance Surcharge. This fee is a surcharge imposed by the shipping company in order to make up for the cost of shipping empty containers due to the imbalance of trade volume or seasonal changes resulting in the imbalance of cargo flow and containers.
Freight rates for very large crude oil tankers (VLCCs) on major routes have been unusually weak, again recording their worst trading ever, with owners willing to accept only four-digit daily rates.
Under such circumstances, according to data from the Baltic Exchange (Baltic Exchange), the VLCC equivalent time charter equivalent rates (TCE) assessed by the agency continued to fall by $800 this Friday to -28354 USD/day! Obviously, this figure is lower than the record low of 27,893/day set on March 10.
Shipping brokerage firm Howe Robinson said in this week's market report that the Middle East VLCC route has directly "kneeled", and we have seen a large number of charters hitting new lows.
In addition, the fall in rent levels contrasted sharply with the rise in fuel prices. The rise in fuel oil prices has kept shipowners' earnings in a negative range.
According to Tankers International data, 7 VLCCs were booked on Thursday, and one of the 299,999dwt Ascona was the highest lease level, but the TCE was only US$8,342 per day. The charterer was Unipec UNIPEC, from West Africa to China. , the expected loading date is mid-April.
The lowest was - $5738/day for the 320,475 dwt Maran Canopus (built 2007) owned by Maran Tankers, scheduled to be loaded for Vietnam's NSRP in the Middle East Gulf in early April. The round is about to be docked for the third time this year and should be repaired.
However, figures from Tankers International show that all of those leases are ultimately expected to face losses.
Ascona was the only one successfully leased on the same day for the West Africa route. The other two 303,120-dwt Front Empire and 318,440-dwt Astro Chloe were not concluded.
"A charter that doesn't close will also end up causing more trouble for owners," Howe Robinson said. "However, as more and more owners refuse to execute long voyages at such low prices, we are seeing Owners are trying to get higher prices.”
Overall, the Baltic Dirty Tanker Index, the BDTI index rose 19 points to 1112 at the end of the week. The rise was mainly due to the TCE of Aframax vessels rising by $1,934 to $28,672/day, although suezmax vessels also fell by $1,530/day to $34,401/day.
The rise of aframax was mainly due to the increase of $16,710 on the TD17 Baltic-UK/Continental route, which closed at $133,657/day this week. This route, as well as the TD6 Black Sea to Mediterranean suezmax route, continues to rise, mainly because both routes involve Russian deals.
As the Russian-Ukrainian conflict continued, many countries imposed international sanctions on Russia and Crimea during the Russian-Ukrainian war. The Japanese government also decided to expand sanctions against Russia and included a number of Russian shipping companies on the list of prohibited exports. The purpose is to harmonize with Europe and the United States, and strike at Russia's shipbuilding and military fields.
According to the announcement of the Japanese Ministry of Foreign Affairs, the sanctioned Russian shipping companies include:
Amur Shipbuilding,
AO Center of Shipbuilding and Ship Repairing,
Dalzavod Ship-Repair Center,
JSC Shipyard Vympel,
Nerpa Shipyard,
Novorossiysk Shipyard,
Rybinsk Shipyard Engineering,
Severnaya Verf Shipbuilding Factory,
Ship Maintenance Center Zvezdochka;
And the 35th shipyard belonging to the Russian United Shipbuilding Group (USC),
Astrakhan Shipyard,
Aysberg Central Design Building,
Baltic Shipbuilding Factory,
Krasnoye Sormovo Plant OJSC,
Zvyozdochka,
Pribaltic Shipbuilding Factory,
Onega Scientific Research Design and Technology Bureau and Sredne-Nevsky Shipyard;
In addition there is the Yaroslavl Shipbuilding Factory.
On March 25, the Japanese Ministry of Foreign Affairs announced that, as additional sanctions against Russia, it would freeze the personal assets of 25 Russians and ban exports to 81 entities. If the previously announced 49 entities are added, the total export ban will increase to 130 entities. The new sanctions also include a ban on the export of luxury goods to Russia.
The prosperous situation of the container shipping market will continue for a longer period of time. The profit of the shipping company in the first quarter of this year is expected to increase to several times that of the fourth quarter of last year, and the profit in the second quarter will be equal to or higher than that of the first quarter.
After the Spring Festival, the congestion problem of European and American ports has not been relieved as expected. Instead, it has spread everywhere. Major international ports such as Los Angeles, Oakland, Rotterdam, Hamburg, Felice Du, Liverpool, and Le Havre continued to be congested. Singapore is not immune. Although the current shortage of containers has improved, it is estimated that as the volume begins to increase at the end of March, it will return to the original situation in April.
Jeremy Nixon, CEO of ONE, pointed out that Asian terminals currently operate 24 hours a day, while berths on the west coast of the United States work 112 hours a week, container terminals work 88-90 hours a week, and land operations are limited to daytime. Therefore, the current situation of the trans-Pacific route is unlikely to improve in the short term.
On the whole, the off-season of the shipping market after the Spring Festival this year is not weak. The number of days for seasonal correction of freight rates before and after New Year's Eve is between 50 and 64 days. The rate of freight rate decline is between 17% and 27%. After the festival, only 3.8% is revised, which is still obvious. Less than historical convention.
Looking forward to the market outlook, analysis institutions are optimistic about the market performance this year. Drewry predicts that the global container shipping demand growth rate will reach 10.9% in 2021, which is much higher than the 4.5% growth rate of supply.
The Danish shipping consulting agency Sea-Intelligence also estimates that the surge in freight rates may continue until the spring of 2022, and the freight rates for the US line may increase by another 25%.
Sea-Intelligence's research report pointed out that the current US retail industry inventory is still at a historical low, and the relative inventory level has been the lowest in 28 years. This is undoubtedly good news for the shipping company. As long as the sales situation is normal, the US retail industry needs to be in Continue to replenish inventory in the next few months.
Executives of CH Robinson, the world's leading third-party logistics service provider, pointed out that global road, sea and air cargo congestion is likely to continue into next year and continue to increase transportation costs.
Although there is still room for increase in freight rates, the various operating costs of container shipping companies are also increasing significantly. Port congestion has reduced ship turnover by 20% to 30%, and container ship rents have soared, which has doubled in the past year. In addition, the price of marine fuel oil has increased by 60% since November last year, and the difficulty in crew dispatch caused by the epidemic has also increased labor costs by about 20%.
Consolidation company believes that starting from May this year, the long-term freight rate of the western US route has started from US$3,000, which is several times higher than that of last year’s US$1,400. Therefore, as long as the freight rates of the European and Southeast Asian routes are stable, the company’s profit in the second quarter may be The first quarter is equivalent. If it is a consolidator that starts to substantially increase US flights in mid-March, there is still a chance that the second quarter will make more profits than the first quarter.
The spot freight rates for containers from Asia to Europe and from Asia to the United States fell further from record highs last week. However, it is expected to remain high for a period of time.
There has been a sharp drop during the Chinese Lunar New Year holiday, but the rate is expected to remain high
Jeremy Nixon, CEO of Japanese liner company Ocean Network Express (ONE), believes that the freight market will not stabilize before the middle of this year.
The Lowe's Daily said that in the absence of a sharp decline in traditional freight volumes after the Chinese New Year, the spot freight rates for Asia-Europe and Trans-Pacific trade are still at historical highs; the spot exchange rate flexibility during the Spring Festival shows that the factors that support price increases are still Need to be alleviated. Cargo backlogs, port congestion, equipment shortages and continued high throughput mean shippers are still being charged premiums on the main trade routes.
The Drewry Composite Index shows that although it has fallen 2.2% in the past week, it is still 232.6% higher than a year ago. The year-to-date WCI average composite index assessed by Drewry is US$5,231 per 40-foot container, which is US$3539 higher than the five-year average of US$1,692 per 40-foot container.
The Drewry Composite Container Index fell 2.2% (US$117) to US$5121.04 per 40-foot container.
The freight from Shanghai to Rotterdam dropped by US$286, reaching US$8188/FEU;
The freight from Shanghai to Los Angeles dropped by 130 USD, reaching 4,261 USD/FEU;
The freight rate of the 40-foot container from Shanghai to Genoa fell by US$106 to US$8,505;
The freight from Shanghai to New York rose by 23 dollars to reach 6,651 dollars/FEU.
Drewry expects rates to stabilize relatively this week.
The Ningbo Export Container Freight Index (NCFI) released by the Ningbo Shipping Exchange closed at 2152.91 points, down 4.1% from 2245.32 points last week. Among the 21 routes, the freight index of 5 routes increased, and the freight index of 16 routes decreased. Among the major ports along the "Maritime Silk Road", the freight index of 17 ports fell.
The freight rate of the European-German route dropped as a whole, 3.9% lower than the previous week's European route; the eastern route dropped 4.2%; and the western route dropped 4.9%. While the North American route remained high, the US East route rose 2.5% from last week; the US West route rose 0.2% from last week.
European-German route: In view of the fact that the transportation demand is still recovering after the holiday, the goods hoarded before the holiday have basically been shipped, and the booking price of the European-German route has dropped overall. According to Freightos' recent Baltic Index (FBX), the price of 40-foot containers from Asia to Northern Europe fell 4% a week to US$8004; according to FBX data, in the Far East to Europe transaction, the spot freight rate was as high as US$8,306. /FEU, but fell by US$432 over the weekend to US$7,874/FEU (daily index).
But for Mediterranean ports , the average price dropped by only US$37 last week to US$7,926 per 40 feet.
Moreover, many shippers are still obliged to pay additional fees to ensure the availability of containers, and for British ports, a "port fee" of US$2,000 is usually added. A year ago, the FBX index showed that the freight rates per 40 feet in the Nordic and Mediterranean regions were US$1,533 and US$2,130 respectively.
Lory Cheung, an overseas marketing expert at China-based MRF International Forwarding, said that shipping companies must “do everything they can to seize every opportunity” because the shipping market will eventually return to normal. He pointed out: "At present, carriers seem to be more willing to sign long-term contracts with BCO rather than freight forwarders," which shows that shipping companies are working hard to lock the contract price at the highest possible level to avoid the impact of spot market fluctuations.
In fact, the high inflation rate in current transactions is forcing shippers to cancel orders for low-value products. A British non-vessel carrier (NVOCC) stated that he has noticed that a garden furniture importer’s bookings from China have dropped by a third this year.
North American routes: The market's freight volume has recovered faster than in previous years, and the route's loading rate remains high. According to the Freeghtos Baltic Index, since the end of February, freight rates outside of Asia have decreased, and the spot freight rate for Pacific Eastbound transactions has dropped from a high of US$4922/FEU on February 26 to US$4197 on March 4. /FEU. However, by March 5, the spot freight rate soared again to US$4,709/FEU. At the same time, in the Trans-Pacific region, the West Coast portion of FBX in the United States fell 11% last week to $4,369 per 40 feet. Freightos expects this decline to be temporary, given the strong demand for trade.
The FBX index for US East Coast ports fell 3% to $5659/FEU.
Freightos research director Judah Levine said: "Although the rates are falling, they may remain very high for a period of time." "As the US retail inventory level is still very low, it may take until the end of this year to restore normal inventory."
According to the latest data from the signal platform of the Port of Los Angeles, the volume of inbound containers this week reached 175,300 TEU, an increase of 505.56% over the same period last year. There are 17 container ships berthing at anchorages, and 10 container ships waiting to be anchored outside the port, with an average waiting time of 7.5 days.
Last week, even if the freight rates of the two major trade routes from China to the United States and Europe fell, at least 35 to 40 ships were anchored on the west coast of the United States due to congestion in US ports continuing to spread to ports outside North America. More than twenty container ships waited for two weeks to berth. These container ships were loaded with exercise bikes, electronics and other highly sought-after imported goods. Los Angeles Port Director Gene Seroka said at a recent board meeting: "The backlog is expected to continue until midsummer."
Congestion in Southern California, dozens of container ships waiting to berth
Jon Monroe of Worldwide Logistics said that the traffic congestion in the Los Angeles/Long Beach area was mainly caused by the layoff of more than 700 skilled dock workers due to Covid-19 infection. "Due to the complexity of the operating models of multiple terminals in Southern California ports, this situation is more difficult to resolve quickly. Of course, in addition to this, 45% to 50% of imported goods in the United States are transported through the ports of Los Angeles and Long Beach." He added , The shipping terminal has insufficient storage space, the truck queue at the terminal is also very long, and the chassis continues to be short.
At the same time, Jon Monroe of Jon Monroe Consulting in Washington State suggested that there is evidence that the strong momentum of trade may be maintained until the Chinese New Year in 2022.
The market is unprecedentedly strong, which is bad news for shippers who are struggling to sign new annual contracts from Asia to the United States. "Many people I have spoken to have stated that this will be a fast negotiation," Jon Monroe said. "The question this year is more about'how to ship the product?' rather than'how much is the cost?'"
At present, there is a 40% unbalanced gap in containers in North America. This means that for every 10 containers that arrive, only 4 return, and 6 remain at the arrival port. The average monthly trade between China and the United States is 900,000 TEU, and there is indeed a huge absolute imbalance in containers. In addition, according to the data of consulting company Descartes Datamyne, the current shipment volume is at the highest level in history. In the first quarter of this year, sales increased by 23.3% over the same period last year.
The container shipping crisis has affected various business areas in different ways. For example, the transportation of high-value commodities such as mechanical engineering products, electronic products and computer equipment will be less affected. But for other types of goods, especially the textile industry in Asia, the increase in transportation costs has brought more serious consequences. Exporters claim that the sharp increase in freight rates has led to the closure of many low-profit textile mills. Delays and container shortages are pushing up freight rates. In Asia, delivery delays can be up to several weeks, forcing many companies to negotiate price increases with buyers.
1. Sea freight is available for FCL (full container load), LCL (less than container load). The United States is divided into ports for the West Coast, East Coast and Gulf Coast.
East Coast: NEW YORK,SAVANNAH,MIAMI,HOUSTON,etc.
West Coast: OAKLAND, LONG BEACH, SEATTLE, WA, LOS ANGELES, etc.
Gulf Coast: TEXAS, LOUISIANA, MISSISSIPPI, ALABAMA, and FLORIDA.
2. Air freight comprises a program of scheduled and deferred services from China with coverage via all major airports. Shipping from airports of Hongkong, Shenzhen, Guangzhou, Shanghai, Beijing, Xiamen to all international airports in the USA.
3. Air Express/Couriers services will ship your cargo from China to your US office or home address. And package forwarding service is actually FREE for you. We can get more than 50% discount prices from DHL, UPS, TNT, FedEx, EMS, but better than their services.
4. The Dedicated Shipping Line. Door-to-door services from China to the USA which is DDP shipping. But this shipping channel only receives carton packages. Not accept Anti Dumping products and Sensitive products. Amazon businessmen like this shipping way: Easy-Cost-Effective.
How Long To Ship From China To The USA?
1.Sea Shipping to the West coast is about 13-15 days, to the East coast is generally 23-25 days. 2. Air Shipping to US AirPort is generally 2-5 days, depending on which airline company your choose. 3. Courier services is about 3-5 days. 4. The Dedicated Line is about 8 working days.
How To Get Shipping Freight From China To The US?
Be sure to get the info below from your China supplier, which is very important for our customer services in order to give you the accurate quotation price: 1. Name of commodity and HS CODE 2. Estimated Shipping time 3. Place of delivery 4. Weight, Volume and packages way 5. Trade mode: FOB or EXW 6. Value for the commodity 7. To Door or to Port
What Special Considerations You Need To Know?
1. Full Container Shipping
20GP: Not more than 17 Tons.
40GP/HQ: Not more than 19 Tons.
2. Less than Container Shipping
Chargeable Weight:1CBM=363KG (Special in the United States)
If Weight/Volume > 363kg/m3,use weight number as the chargeable data
If Weight/Volume < 363kg/m3,use volume number as the chargeable data
3. DDP Shipping-How to calculate tariff in America?
HS Code of product.
Government Website: http://hts.usitc.gov/
Other tariff: HMF(0.125%) and MPF(0.3464%) of value
4. Customs Bond
If you don't have Customs Bond in the US you can ask customs brokers to purchase. Two types:
Single Entry Bonds: Only for one shipment
Continuous Entry Bonds: Over a whole year
If you want us to handle that we can use our bond to help do clear in the US.
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BIMCO's data shows that the global container traffic volume in 2020 will only drop by 1.2% compared with 2019, far exceeding previous expectations. Among them, the container volume in the first six months fell by 6.8%, while the container volume rebounded sharply in the second half of the year, an increase of 4.2% over 2019.
The Far East to North America route has the largest increase. In the second half of 2020, the container volume of this route increased by 3.6 million TEU compared with the first half of the year, and 2.1 million TEU compared with the second half of 2019, achieving a positive growth for the whole year (+1.4 million TEU) . Among the three major routes, the Far East to North America was the only route that achieved growth in container volume throughout the year. The Far East to Europe route decreased by 1.1 million TEU in the first half of 2020, and only increased by 200,000 TEU in the second half of the year. The annual container volume of this route decreased by 5.2% compared with 2019. In the first half of the year, the volume of the Asian regional routes dropped by 4.0%, and only increased by 2.2% in the second half.
The increase in freight volume has pushed up freight rates. In recent months, although the upward trend of spot freight rates on trans-Pacific routes has ceased, the freight rates remain high due to still strong demand.
The surge in demand is not only reflected in the spot market, but also in charter rates. Since June 2020, charter rates have seen a V-shaped recovery, and the rates of all container ship types have been much higher than their pre-epidemic levels. At present, the 1700 TEU feeder ship charter for 6 to 12 months is USD 13,700/day, the 3500 TEU ship type is USD 23,000/day, and the 8500 TEU ship type is USD 42,000/day. Faced with high charter rates, carriers are still trying to obtain more capacity to ensure shipping schedules.
The high demand for shipping capacity means that the volume of ship scrapping will drop sharply in 2020, and a total of 188,800 TEUs of shipping capacity will be scrapped throughout the year. In the fourth quarter of 2020, only 7,448 TEU of capacity was scrapped, and all of them came from feeder vessels, a decrease of 70.9% from the same period in 2019.
At the same time, orders for new ships have picked up, with 65 new ships ordered for a total of 751057 TEU. In 2020, the container fleet capacity increased by 2.9%, adding 857,616 TEU.
Peter Sand, chief shipping analyst at BIMCO, believes that the increase in freight rates in recent months does not mean that the fundamentals of the container shipping market have improved. In the long run, the industry will have to face the problem of overcapacity in the market before the epidemic, and the emergence of new orders in recent months will make this situation worse. But even so, BIMCO predicts that the consolidation market in 2021 will be better than in 2020.
Aerial photography of Southern California full of container ships! Terminal operators expect to get rid of the dilemma by the end of spring
Recently, a cold wave swept the United States and quickly plunged the southern state of Texas into disaster. In this unprecedented cold wave, more than 4 million people in the United States have suffered power outages, countless power plants have been destroyed, and electricity and natural gas prices have skyrocketed. ; At present, the price of electricity in Texas has increased by more than 100 times, up to 9,000 US dollars per megawatt, and the price of natural gas has skyrocketed by more than 160 times, reaching US$500, compared with only US$3 in the past; it is jaw-dropping.
Except for Texas, which is in a serious disaster, other states in the United States are not doing well. There are about 168 million people in the United States under the threat of this cold wave. Numerous airports have been suspended. According to data from the flight monitoring website "flightaware", Dallas and Houston , Austin area airports have cancelled more than 2,000 inbound and outbound flights on the 15th . Coupled with the new crown pneumonia crisis that is still raging across the United States, the United States is really miserable.
In terms of shipping, the Southern California anchorage is full of container ships, and the congestion continues to worsen ! The latest video released by the U.S. Coast Guard provides intuitive evidence of the congestion levels in Los Angeles and the Port of Long Beach. From the picture, a large number of container ships are moored at the anchorage in San Pedro Bay, California.
U.S. Coast Guard aerial scene
Data shows that the historic container ship congestion in California ports has not really eased. There are currently 63 container ships in Los Angeles and Long Beach, and 32 container ships are waiting for berths at anchorages. (On February 1st, the highest record of 40 container ships anchored at anchorage)
The Port of Los Angeles announced the number of berth days for a particular container ship through its Signal platform last week. Data shows that some ships stay at anchorage and wait for almost as long as they sail across the Pacific Ocean . For example, as of last Thursday, the 6332TEU container ship "Ever Envoy" has been parked for 11 days. As of Tuesday, the 9,400TEU "MSC Romane" has been parked for 12 days. And the three container ships of 11356TEU "CMA CGM Andromeda", 8452 TEU "Ever Liven" and 4888TEU "NYK Nebula" also berthed for 11 days as of last week.
As of the end of 2020, the number of container ships at anchor has increased to 30; since then, it has remained between 20 and 40. At the same time, the number of vessels at berths in Los Angeles and Long Beach remained at around 20 and 30. Kip Louttit, executive director of the Southern California Shipping Exchange, said: "We seem to have adapted to the new normal of about 30 container ships waiting in line every day. I don't know if this situation will continue."
As of Tuesday, the average time for ships docking in Los Angeles was 8 days , up from 7.3 days at the beginning of last week. From the information on the waiting time of ships provided by the platform from January 27th, the waiting time for ships to berth has been maintained for about one week, and the data for the last two periods has been extended to 8 days.
The latest data from the Signal platform: 20 ships at anchor, with an average anchoring time of 8.0 days. There are 14 ships waiting to be pre-anchored.
What caused the blockage? The extended berthing time of ships forced some shipping companies to cancel multiple voyages this month. This is not due to lack of cargo demand, but due to lack of available vessels to handle these services. Delays on land have also caused congestion at sea: extremely high inbound volumes and complex logistics inside and outside the port have caused delays on land. One of the challenges facing the port is the new crown virus infection of dockers and a serious shortage of labor.
Despite productivity gains last month, terminal operators at the Ports of Los Angeles and Long Beach said the ports may have to wait until the end of spring to get rid of the ship backlog and congestion that have plagued them in the past six months . The near-record number of containers will continue into the spring of this year, but the backlog of ships at the port and the fully loaded inbound containers at the terminal should disappear sometime between April and June.
The managers of SSA Marine, Yusen Terminals and Fenix Marine stated that in order to alleviate the congestion in the port, two projects to be developed are necessary. First, the COVID-19 vaccine must be widely distributed among dock workers to alleviate the recent labor shortage. During the Lunar New Year holiday this month, container traffic has declined moderately, which should also enable shipping terminals to remove the backlog of fully loaded imported containers from their facilities.
"The terminals are full and there is no place to put these containers. We deliver 35% less cargo (to truck drivers) than usual," said Ed Dannick, president of SSA Containers.
According to data from the HarborTrucking Association, the average truck stay at the terminal in January improved from 93 minutes in December to 88 minutes, but it was still much higher than the record low of 58 minutes in June. Imports peaked during the recovery period after the first wave of COVID-19 lockdown.
The backlog of ships in Long Beach, Los Angeles, is increasing unabated. According to statistics from the Marine Exchange of Southern California, there are currently 63 container ships in the Port of Long Beach in Los Angeles, of which 32 are at anchor waiting for berths and 31 are at berths.
The latest data released by the Pacific Merchant Shipping Association (PMSA) shows that in December last year, the average container stay time at the 12 terminals of the Port of Long Beach in Los Angeles was 4.99 days. This is twice the average length of stay (approximately 2.5 days) recorded by PMSA in the first half of 2020.
“The longer the container stays at the terminal, the more serious the congestion will be. When the container piles up like a mountain, the congestion creates additional and inefficient handling requirements,” said PMSA’s government affairs manager jessicaalvarenga.
The new crown epidemic hits labor in the port
According to the Pacific Maritime Association (PMA), the West Coast port employers' Association and the International Terminal and Warehouse Union (ILWU), the new crown epidemic has severely affected the labor force along the Los Angeles-Long Beach Port. As of January 17, The International Terminal and Warehouse Union (ILWU) reported that 694 of its members tested positive. By January 25, this number jumped to 803.
PMA stated that there is a particular shortage of skilled equipment operators, who need to remove containers from trucks, and then move them into and out of the container yard, which is critical to the operation of the terminal. As a result, the joint committee of PMA and ILWU, which is responsible for allocating workers to the docks on a daily basis, cut the allocation share.
"It boils down to the labor issue at the terminal," said Scott Weiss, vice president of business development at Port Logistics Group, which has a large number of truck and warehouse operations throughout Southern California. "Containers still have bottlenecks in and out of the terminal."
The latest information released by the Signal platform of the Port of Los Angeles shows that due to the new crown epidemic, the productivity of coastal labor has decreased, which has caused ship delays and the average delay of port facilities is 8.0 days .
These ports are working with trans-Pacific shipping companies to reduce Southern California's load until the volume returns to normal. Gene Seroka, executive director of the Port of Los Angeles, said that he is working with shipping companies and terminal operators to "measure" imports until the port catches up. Hapag-Lloyd (Hapag-Lloyd) has announced the opening of a structured route to Southern California in February, and CMA CGM will remove Los Angeles from the trans-Pacific route and use Oakland as the first port of call from Asia. , Followed by Seattle-Tacoma.
The terminal operator said that when workers throughout the supply chain are vaccinated and imports drop, the congestion in Long Beach, Los Angeles, will disappear.
Spring recovery?
Alan McCorkle, President and Chief Executive Officer of Yusen Terminals in Los Angeles, said that in the past six months, the container throughput of these terminals was close to record levels, but there was no overall congestion. This fact shows that if the peak season does not last for six consecutive months, they will have Ability to handle peak season cargo volume. He expects to return to normal in May or June.
Scott Schoenfeld, general manager of Fenix Marine Services in Los Angeles, said that Fenix is showing signs of improvement, so he is optimistic that congestion may be eased as early as April . The density of containers in the yard is not as high as late last year, and more truck drivers are able to transport containers every day.
However, container traffic is still rising, and as overloaded ships continue to arrive in Southern California, this trend will continue until at least next month. NVOCC consultant Jon Monroe said that the eastbound transpacific shipping company has deployed or will add 10 additional loading vessels in February, all deployed at the Port of Los Angeles-Long Beach. Judging from the latest data from the Los Angeles Signal platform, there was another peak in the surge in volume in the eighth week.
Volume surged in the eighth week
Jon Monroe pointed out that although more Chinese factories will continue to maintain at least part of their business this month to clear the backlog of merchandise orders compared to previous years, the total volume of the East Pacific trans-Pacific region should be greater than the previous six months. Months are less.
Scott Weiss, vice president of business development at Port Logistics Group, said that the 1.8 billion square feet of industrial and distribution space throughout Southern California is not fully loaded, just like last fall before the holiday season merchandise was transferred to stores across the country. However, the availability of space in warehouses and distribution facilities has been mixed. "Some warehouses are in a mess now, others are working well. I think the ratio is about 50-50,"
Scott Weiss said that productivity has generally declined, and warehouses across the region are experiencing labor shortages due to the new crown epidemic, but at the same time, freight volumes are still exceptionally strong. "Everyone I contacted is experiencing record sales and growth, but everyone is working hard to cope."
Weston LaBar, CEO of the Port Transportation Association, said that the current truck capacity is tight, and the availability of workers at both ends of the truck driver's route, the terminal and the distribution warehouse, has been challenged . However, when workers feel safe, they return in large numbers. LaBar said: "The most effective thing we can do right now is to vaccinate."
Flexport, a freight forwarding company based in the United States, said that it is now necessary to produce 500,000 new 20-foot containers to alleviate the current disruption to the global container supply chain due to lack of container equipment.
Nerijus Poskus, Flexport's vice president of global shipping, estimated in an interview with Bloomberg that hundreds of thousands of new containers will be needed to meet current market demand.
Nerijus Poskus told Bloomberg, “In order to alleviate the current container supply chain dilemma, at least 500,000 new containers need to be built around the world, which is equivalent to the number of 25 largest container ships in the world.”
The vice president of Flexport also said that the surge in demand has also caused the spot freight rate for a standard container across the Pacific to quadruple. This figure does not include additional costs related to equipment and insurance premiums to guarantee loading.
Due to the tight container supply chain, Volkswagen AG was forced to cut its production plan for the world’s largest car factory in Germany, and warned that the tight supply may spread to the world; Honda Motor Co. is also cutting five times. The output of the North American plant is difficult to purchase automotive chips.
Rob Subbaraman, global head of macro research at Nomura Holdings in Singapore, said, "Supply bottlenecks seem to be more pronounced in the United States and Europe, as their supply delivery time has recently slowed down again." "This is not good for Western industrial production and should lead to inventories. A steeper decline and put upward pressure on output prices."
"Anyone who pays for shipping in 2020 knows that the true cost of shipping is even much higher than the recent increase in shipping. We expect this number to only increase in 2021."
Maersk: Congestion in the container supply chain will not improve in the near future
A Maersk executive said that in the reality of strong demand, there is almost no excess capacity in container ships , and the congested supply chain can hardly be alleviated.
Maersk Line’s parent company AP Moller-Maersk A/S Latin America and the Caribbean Senior Vice President Fan Chuyan Robbert van Trooijen recently stated that the demand for container shipping services may still remain at an unusually high level in the near future. With almost no remaining container capacity, carriers and shippers will have to continue to adapt to the tight situation of the container supply chain caused by the pandemic.
Fan Chuyan also said that factories in China and other parts of Asia have increased production because their customers in other parts of the world are rebuilding inventory that was depleted due to the suspension of production at Chinese factories early last year.
He also introduced that at the same time, the current idle capacity of the container shipping industry is at a historical low of about 1.5% , so there will be almost no additional capacity to be used in the market in the short term.
In fact, according to the latest data provided by Alphaliner, as of December 21, 2020, the global proportion of inactive containers is only about 1% , taking into account that it includes ship docking maintenance, installation of desulfurization equipment and ballast water systems, etc. Situation, this is already the lowest level in history.
He said: "In the foreseeable future, the current supply and demand situation will not change significantly, because there is not enough new ship order capacity." "This (tight supply chain) situation may continue for some time."
The executive said that compared with the existing fleet, the current capacity ratio of new container ship orders is at the lowest level in history.
Due to the imbalance between supply and demand, we have also seen a sharp increase in container freight rates recently. Fan Chuyan refused to disclose his views on recent freight rates.
With the arrival of the Chinese Lunar New Year, workers need to return to their hometowns to visit relatives. After the Spring Festival holiday in February, the flow of Chinese manufactured goods to other parts of the world may temporarily stagnate. But he also emphasized that demand may remain high.
For example, Xinde Maritime.com has placed an order for 18 ships of 24000TEU! Will the shipping fee be reduced? According to the article, due to the relatively sluggish state of the container shipping industry in recent years and the uncertainty about future fuel selection, container shipping companies and shipowners have previously maintained a more cautious attitude towards ordering new ships.
According to data provided by Alphaliner, Maersk, the world's largest container shipping company, has been busy in business transformation in recent years, and currently does not have many new ship orders.
Fan Chuyan said that Maersk will not have a significant new capacity put into operation in the future , but will focus on opening up various nodes and improving the flow of goods on land and sea.
He also revealed that Maersk hopes to expand its logistics business in the region through organic and acquisition. He declined to say which acquisition method the company will consider. In the past few years, Maersk has made investments and acquisitions in areas such as customs declaration and inland logistics.
Brazil is a major exporter of commodities, and China's demand for these commodities is very strong, the most famous of which are soybeans and iron ore. These commodities are usually transported by dry bulk carriers, and Maersk does not use dry bulk carriers in its fleet. But Brazil is also a big buyer of Chinese manufactured goods shipped in containers.
Fan Chuyan introduced that the current supply of containers on this route is severely short, and the strategies adopted by some customers to bypass congested nodes have exacerbated this situation. He said that "some customers book two or three different" carriers to make sure they can move goods into or out of the country. "
He said that the company is working closely with some major customers to make operations smooth, including implementing a new system that will ensure that they have space and prevent overbooking.
Super congested Port of Los Angeles
Satellite AIS ship tracking data shows that currently about 30 container ships are parked at two ports near Los Angeles waiting for berths, and there are about 20 before Christmas. Los Angeles is the busiest gateway for American goods trade.
Logistics media American Shipper recently interviewed Kip Louttit, executive director of the Southern California Shipping Exchange, to understand the latest situation of ship congestion in San Pedro Bay.
He said that as of noon on Wednesday, 91 ships were in the port, of which 46 were at berths and 45 were at anchorages. Among them, 56 are container ships, 24 are at berth and 32 are at anchor.
It also introduced that several container ships will be anchored at the port on Friday, and the total number of anchorages will reach 37. But Louttit said, "From January 1 to today, there has been no significant change."
Louttit confirmed that the ship has actually filled up all available anchorages near Los Angeles and Long Beach. Ships also occupied 6 of 10 emergency anchorages near Huntington, south of San Pedro. If all the emergency anchorages are also occupied, then the newly arrived ships will have to go deeper offshore for drifting.
Yesterday, the captain of a container ship about to go to the Port of Los Angeles said that our ship had just left the Port of Busan and received news that it was expected to wait at least 4-5 days at the anchorage.
The fact that so many ships are anchored in the waters of the Los Angeles port also reflects the degree of congestion in the container supply chain. The last time so many ships anchored there was between 2014 and 2015, when the workers of the Port of Long Beach in Los Angeles went on strike for a period of time.
"On March 14, 2015, there were 28 container ships at anchor on the highest peak at that time. Looking at it now, this record has been broken," Loutitt said.
In a warning letter issued to customers this week, Germany’s largest container shipping company Hapag-Lloyd reported: “Due to the surge in imports, all terminals in (Los Angeles/Long Beach) continue to be crowded. (This) is expected to continue until February. ."
Hapag-Lloyd also stated that “the staff at the terminal is limited” and claimed that this is related to COVID-19. "This labor shortage affects a series of operations such as TAT (turnaround time) truck drivers at all terminals and transfers between terminals."
Hapag-Lloyd also confirmed that the congestion problem has spread beyond California ports. The company reported that “serious congestion” has also occurred in Canadian ports. “The berth congestion at Maher Wharf and APM Wharf (New York and New Jersey Ports) also affected all routes, and ships had to face several days of delay after arrival.”
ld economy is picking up, but its speed and strength are not as good as expected, making the market as a whole cautious.
Summary
The various uncertainties brought about by the new crown pneumonia epidemic, the trade war and oil price fluctuations are factors that everyone is still paying attention to.
Although there has been an increase in new orders for ships, especially in the field of container ships and tankers, the overall global order volume is declining, and the order volume is likely to bottom out by the end of 2021.
With the increase in newbuilding orders, the utilization rate of shipyards has risen sharply. Supporting this phenomenon is the liberalized financial support of central governments around the world to ensure the operation of economic activities and the demand for shipping after the epidemic.
Dry bulk carrier
The rental of Cape dry bulk carriers climbed to a quarterly peak of nearly USD 34,000/day in October 2020, and then fell to a low level of around USD 10,000/day in mid-December.
Due to the uncertainty of regulatory policies, the newbuilding activities of dry bulk carriers have slowed down significantly in the past few years. We expect that the number of new ship orders will not rebound until early 2022.
The current newbuilding order to fleet ratio is close to 6%, which is the lowest level since the beginning of 2002.
The gradual phase-out of retrofitted VLOCs has affected the recent ship recycling market, but as the market shrinks, the ship recycling business is expected to decline.
It is expected that the IMO greenhouse gas emission reduction target that will take effect in 2023 may have a significant impact on capacity supply.
We infer that the rent of the Cape of Good Hope will increase. By 2023, the average rent for Capesize bulk carriers will reach US$30,000/day.
Tanker
Oil-producing countries still face the challenge of low oil prices, especially the impact of low demand caused by the COVID-19 pandemic.
Transportation and industrial demand in Eastern countries are approaching their pre-epidemic levels, while Western countries are being affected by the escalation of anti-epidemic measures, which may continue into the new year.
Oil tanker earnings have been sluggish in the second half of 2020. We expect rents to increase in 2021 , but rents in the first half of the year may still face some challenges; in 2022 and 2023, tanker rents will continue to strengthen.
It is expected that the IMO greenhouse gas emission reduction target that will take effect in 2023 may have a significant impact on capacity supply.
Our calculation of ton nautical miles shows that in 2020, the tanker market has declined. However, strong growth should resume in 2021 and 2022 . The rebound in this market is the result of the return of logistics to normal after the new crown pneumonia epidemic and the consequent increase in demand for transportation fuel.
The return of growth in industrial activity and consumer demand is the cornerstone of active economic development. Oil inventories at sea and on land have fallen from high levels, and the threat to import demand has also decreased accordingly.
Container Ship
The freight rate of container ships is currently at the highest level since 2015.
It is expected that in 2021 the European Union’s 750 billion euro recovery fund will boost the economy, and the implementation of vaccines will be another layer of guarantee to support the European economic recovery.
In 2021, the container shipping market will usher in a recovery. The demand for container nautical miles is expected to increase by about 6.5%, and it is expected to increase by 4% in 2022.
The recent increase in new ship orders will bring the delivery of ultra-large container ships (ULCV) to nearly 600,000 TEUs in 2023.
In 2020, the total amount of container ship dismantling will account for about 0.5% of the fleet, but as revenue increases, it is expected that ship dismantling activities will decrease in 2021-2022. We expect that in 2023, as the new IMO greenhouse gas emission reduction regulations come into effect, the amount of ship dismantlement will increase slightly.
After the economic crisis in 2008, many old container ships were optimized to adapt to low-speed navigation. These ships have already met the requirements of IMO.
It is expected that the supply of container ship capacity will increase in the next two years, but the capacity growth will be lower than in 2020.
The revenue of container ships is expected to weaken in 2021 and will resume rapid growth in 2022-2023.
Liquefied petroleum gas ship
Rising crude oil prices once again make LPG a more attractive petrochemical feedstock supply. Driven by approximately 10.5% growth in U.S. exports (mainly to Asia), very large liquefied petroleum gas carriers (VLGC) will have a huge profit in the fourth quarter of 2020, reaching up to 2.5 million US dollars. The increased delays in the navigation of the Panama Canal have also provided support for revenue.
In addition, the increase in ammonia production in Algeria and Trinidad has also increased the demand for ammonia transportation by gas ships.
Due to increased industrial activity in Europe, butadiene exports from Europe are weak. The revenue of handy type ships is maintained at about 650,000 US dollars per month, while the revenue of 10,000 cubic meters of liquefied petroleum gas/ethylene ships (LPG/E) is about 425,000 US dollars per month.
The main engine that uses propane as fuel is becoming the "new favorite" for new-built ships of very large liquefied gas ships (VLGC) and medium-sized liquefied gas ships (MGC).
With the global recovery from the epidemic in 2021 and the increase in oil production in the Middle East, it is expected that more LPG exports will be exported. U.S. exports of liquefied petroleum gas in 2021 are expected to be the same as in 2020, and will rise again in 2022 and 2023.
In 2021, the volume growth of VLGC seems to be somewhat weak, but it is likely to increase with the steady increase in capacity.
In addition to liquefied petroleum gas, large liquid gas carriers (LGC) and MGC ships may provide more support for the expanding ammonia trade. Rising crude oil prices will stimulate the use of liquefied petroleum gas as a raw material for ethylene production in Europe and Asia.
As the United States continues to export ethylene (mainly to Asia), and the recovery of propylene trade (which may also come from the Atlantic market), the demand for petrochemical gas transportation is expected to remain high.
Shipbreaking activities are expected to slow down in the near future, and new ship construction activities are expected to pick up from 2022.
