Ocean shippers trapped in house of pain

Ocean shipping issues have caused some to question whether Christmas will be cancelled. While that may be too soon to call, it’s clear that these are trying times for shippers and brokers that purchase ocean capacity.

While we are not in a global container shipping boom, we are in a U.S. import boom that has collided with far more impactful ocean capacity constraints. That has produced surging ocean spot rates and great frustration and nervousness from shippers as their containers get rescheduled or “rolled” to later sailings.

It’s clear from the data that we highlight in this report (which includes several data series that are not yet in SONAR) that the numerous factors that are delaying ocean shipments and causing ocean rates to surge are reinforcing one another.

Those interrelated, and reinforcing, factors include: (1) historically high U.S. import volume; (2) COVID-related terminal shutdowns in China; (3) ocean carriers accepting as much freight as possible in anticipation of additional shutdowns at Chinese ocean terminals; (4) high percentages of containers “rolling over” to subsequent sailings because there isn’t room on existing vessels; (5) surging ocean rates; (6) ocean capacity being redeployed to the China to U.S. West Coast routes and rising volumes of booked vessels from China to SoCal; and (7) severe congestion at U.S. ports, particularly the Ports of Los Angeles and Long Beach.

The data suggest that ocean congestion and service issues are not likely to be alleviated near-term. The number of vessels booked from China to Southern California continues to rise and the  National Retail Federation expects August to set a new record for U.S. imports.

Some of the impacts that the ocean shipping situation is having on U.S. domestic freight networks include: elevated imports keeping demand strong; congested intermodal terminals and poor service; and a heightened need for expedited and time-definite service to make up for ocean shipping delays.

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By increasing the number of loaded miles per day your drivers drive by 1% and your rate per mile by $0.03 you will make more per week #WithSONAR.

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#WithSonar you can add 1 more load per person each day and increase $5 margin per load, earning your company an extra per week.

Disclaimer: Every company’s circumstances are unique. Fixed and variable expenses, market conditions and operational factors vary. Unforeseen events may also affect results. Calculated potential results reflect the consensus expectation of FreightWaves’ experts. Actual results may vary.

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