OCEAN MARKET UPDATE – January 10, 2019
Transparency, Optimization, Collaboration
TOC LOGISTICS INTERNATIONAL INC. would like to provide the following ocean market update regarding US PORT CONGESTION at the start of the new year:
The congestion created by the well-known push to get ahead of US Customs Tariffs at the end of 2018 has been further exacerbated by the 2018 Christmas and New Year holiday season.
For instance, US West Coast Port LA/LGB congestion is creating serious transit delays and additional detention/demurrage fees for the following reasons:
- Christmas and New Year’s Days were “no-work” days
- Christmas Eve and New Year’s Eve were both half-work days
- Tenured, or veteran longshoremen, take vacation days during the two weeks of the holidays; requiring an increase in less experienced part-time workers, which slows down any scheduled operations
- LA/LGB Port terminals are all running at full capacity (80%+ utilization), which is causing:
- Empty containers to be stored in non-designated storage areas
- Terminals to refuse to accept empty containers; meaning dray drivers attempting to drop empties and pick up loaded containers at the port are being turned away
- Not being able to make dual, or roundtrip, runs into and out of the port effectively cuts the driver capacity in half
- Reduction of available appointments to recover loaded import containers increases the number of days a container sits in the port; collecting storage fees
- Lastly, a chassis shortage is created because empties needing to be returned to the port are being refused at the port, so empties sit on chassis that cannot be used for loaded containers; and loaded containers are sitting on chassis at shippers’ doors and in yards unable to be delivered into the port
Volumes into the US East Coast Ports are also staying at full capacity, and similar conditions as described above are easily foreseeable in the coming weeks.
For supply chains that are affected by these conditions, TOC Logistics expects to receive an increase in AIR FREIGHT requests; as will all of our competitors, thus creating a market condition where space will be competed for at very high-rate levels. We suggest that any air freight requirements be filtered through the following expectations:
- Standard Air Service: space available only (potentially experiencing transit times of 10-20 days)
- Priority Air Service: Booked 1 week in advance (likely still 5-7 day transit times)
As the C in TOC stands for COLLABORATION, we highly recommend that our customers take a close look at their current in-transit product and reach out to their respective operations representative or account manager to review what parts/product could be affected and work on contingent plans to launch if a critical situation arises.