2022 Preview – Sea Freight

The unanimous consensus among all stakeholders in the logistics chain is that 2022 will be characterized by continued increases in demand for carriers and extremely high costs for shippers. Shipping companies are generally announcing significantly higher contract rates in 2022 (already 163% higher in December 2021 than in December 2020). Spot rates will increase even more sharply (already by well over 300% compared to the same period).

Situation in the USA:

The congestion at US ports and delays in land transport within the USA are not expected to ease in the near future. Attempts to find alternative routes bypassing the most congested ports are leading to increased workloads for truckers and further delays. Continued growth in US import demand will exacerbate the situation. Additionally, the COVID infection rate among dockworkers and office workers is rising dramatically in Los Angeles and Long Beach, for example. Last Tuesday, ports reported an infection rate of 67%, leading to further delays in processing due to sick leave and quarantine periods.

Trucking from the ports

In addition to the general shortage of transport capacity in the US, a bizarre effect is causing further delays: Because truckers earned very well in 2021 due to the extremely high spot rates, they are now taking longer vacations, further reducing capacity.

Situation in China:

Due to congestion off Shanghai, ships are being rerouted to Ningbo, where three terminals at the port near Beilun are closed again due to another COVID-19 case. Since many truckers live in Beilun, container deliveries and pickups are being delayed due to the strict COVID-19 restrictions. LCL shipments are particularly affected, and port authorities are recommending rebooking to other ports. Since many feeder services are also affected by the problem, rerouting to smaller ports is causing further delays. The approaching Chinese New Year and increased quarantines will exacerbate the situation.

We will keep you updated on further developments.

Your Skyline Team

Outlook 2022 – Sea Freight

The overwhelming consensus is that this year will remain extremely challenging for ocean carriers and extremely expensive for cargo shippers. General carriers are announcing significant increases in contract rates for 2022 (the level in December 2021 was already 163% compared to December 2020). Spot rates will rise much more (already well over 300% in the same period).

Situation in the USA:

All experts expect that congestion at US ports and trucking delays will not ease in the short term. Attempting to reroute from the most affected ports to other ports is leading to surplus trucking loads and additional delays. Still increasing demand for imports to USA also sharpens the situation. E.g. in LA and Long Beach ports Covid infections are rising dramatically among longshore workers and marine clarks. Last Tuesday ports reported a rate of 67% infected personnel which will result in more delays and congestions caused by numbers of staff ill and quarantines.

Trucking out of ports

Apart from general lack of trucking capacity another delay causing effect of bizarre reason occurs: As the extremely high spot-market rates 2021 brought truckers a not anticipated amount of income they were taking extra time off over the holidays, so capacities run shorter additionally.

Situation in China:

Due to congestions at Shanghai port ships are routed to Ningbo, while even there 3 terminals are closed in the Beilun part because of actual Covid infections. Many truckers live in Beilun and there are complicated Covid-19 control policies there, so it’s extremely difficult to bring containers in or out. Especially LCL deliveries are affected and port authorities recommend cancellation of booking and routing to other ports. Many feeder services are suspended and therefore feeder capacity is severely limited. Upcoming Chinese New Year holiday as well as more quarantines again will burden the situation, too.

We will keep you updated.

Your Skyline Team