Industry Update – November 2021

Emergency Surcharge Fee – Los Angeles and Long Beach:

From 1^st November 2021, an Emergency Surcharge Fee will be applied on all long dwelling cargo at the ports of Los Angeles and Long Beach due to severe congestion at these hubs. The new surcharge has been implemented by a task force created by President Biden, in conjunction with the ports of Long Beach and Los Angeles.  The charge will be levied by the ports for containers that meet either of the following criteria:-

• All containers dwelling at the terminal for 9 days or more, to move by truck
• All multi-modal containers dwelling at the terminal for 3 days or more, to move inland by rail

For FCL, the cost is USD 100 per container on the first day past the set dwelling limit for terminal or rail, and will increase by USD 100 per container for each additional day. For example, an additional USD 200 for the second day, USD 300 on the third day and so on.

For LCL, the fee will increase at a minimum of USD 2 per cbm per day, starting at day 9 for cargo released at LA/LB terminals and starting at day 3 for inland intermodal moves by rail to inland CFS.

We understand this new surcharge will have a significant impact on all parties involved as truck, chassis and warehouse capacity are all extremely strained. However, this surcharge is imposed by port authorities, which we do not have any control over and therefore have no option but to pass this on.

 

Situation in USA and Canada:

• Port Congestion

Terminal congestion at west coast ports continues to reach historical levels with over 80 container ships currently at anchor off Los Angeles and Long Beach ports. There are simply too many vessels arriving with too much cargo that terminals, trucks, trains and warehouses do not have the capacity to handle. The imbalance between supply and demand has been escalating and deteriorating during the peak holiday season, which has created massive backlogs. For this reason, Los Angeles port is set to expand to 24/7 operations as part of an effort to relieve supply chain bottlenecks and move stranded container ships. The Port of Long Beach has been operating 24/7 for the last couple of weeks.

Due to the ongoing delays and significant port congestion across US ports, shipping lines have announced adjustments to their sailing schedules for Oceania bound cargo. There are extended omissions at Long Beach, Oakland and Seattle ports and fortnightly Sydney omission on some services.

Industry experts are forecasting that the supply chain crisis with soaring freight rates and ongoing congestion could persist throughout next year and last until 2023 (Source – American Shipper).

• Limited space and equipment

The unprecedented demand for container shipping in the US remains strong while space/equipment availability is extremely limited. We have been informed that all vessels on the east coast to Australia service of one major carrier are fully booked through the first week of December, and no new bookings are being processed at this time. Another carrier is completely booked out for the next 8 weeks. The situation is worse on the west coast, carriers do not have space until the new year at this stage.

In addition, the majority of shipping lines are currently unable to offer to/from door service due to the national shortage of trucking power, even to/from rail ramps are very limited.  Carriers can only offer port to port services at this stage.

• Airfreight market

There have been additional delays, lengthy transits and excessive wait times at all major US airports over the past several months due to increased airfreight volumes and labour shortages. At the Chicago hub, there is a 2 week backlog on Qantas services and one carrier has currently stopped accepting cargo until all backlogs are cleared. Freight rates from airlines are spot pricings, and rates have been very unstable and have been increasing within the week. Demand for air cargo is expected to surge in the upcoming weeks because of holiday orders while airports are heavily congested. This imbalance has driven airfreight rates on major trade lanes five times higher than normal (Source – American Shipper).

 

USA Airfreight Congestion Surcharge: 

We have been advised of a Congestion Surcharge to be implemented on all export and import air freight bookings in the US, effective 22^nd October 2021. The new surcharge will be passed on at cost and the current amount is:

USD 0.05 per kg

Minimum USD 20.

 

Situation in Europe:

The UK, is still facing huge demand for haulage due to a severe shortage of around 100,000 HGV drivers nationally. It is currently very challenging to secure bookings and arrange deliveries with carrier haulage providers. Therefore, it is expected that containers may go into demurrage before deliveries can be arranged due to these trucking issues (Source – The Load Star).

In addition, there are some delays with shipments moving to/from France due to strike actions by dockers and terminal workers. Multiple cargo loadings have been postponed as there were no empty containers available to load goods.

Other major ports in Europe are experiencing extreme congestion due to restricted capacity, serious labour and equipment shortages. Our options for shipping cargo out of Europe to Australia remain extremely limited, with many carriers having temporarily suspended their services for this trade lane.

 

Situation in Asia:

• China – Port congestion improved, power shortage crisis

Some good news with the port congestion situation in China as the number of ships at anchor off Shanghai/Ningbo ports reduced sharply by nearly 50% over the recent weeks. The delays are down to 1-3 days, export containers are moving faster and import containers are being handled efficiently.

However, factory power outages have started to affect the country’s export flows as the power crisis deepens in Asia. Factories in the Chinese provinces of Jiangsu, Zhejiang and Guangdong are operating under very tight power supply and emissions restrictions. Some manufacturers have halted production due to the lack of electricity supply. Consequently, these stoppages will further delay deliveries of all exports, slow down operations at the terminals and warehouses and will certainly impact the global supply chain.

• Limited space and equipment

We have been advised by multiple carriers that vessels out of South East Asia are the fullest they have ever experienced in history, many booking requests were declined or cancelled due to limited space/equipment availability. The situation is similar out of North East Asian areas as many shipping lines are fully booked out for the next couple of months. In particular, with shipments coming from Japan, there is no space available until January 2022.

Meanwhile, freight rates continue to inflate as the demand for container shipping out of the region remains strong.

 

Situation in New Zealand:

Port congestion is being experienced throughout major ports of New Zealand, especially at the ports of Auckland and Lyttleton.  There are several operational constraints and ongoing service disruptions. Services to New Zealand are extremely limited as many carriers have suspended their services to this destination.

Furthermore, delays are anticipated as the terminals are operating with restricted capacity.

 

Fuel Levy Increase in Melbourne and Brisbane: 

Fuel Levy in Melbourne and Brisbane will increase slightly, effective 1^st November 2021. The updated surcharge will be 17%.

Please note this is applicable for pickups and deliveries within metro areas only, fuel surcharge for regional and interstate areas will be higher and will vary depending on location.

We will keep you updated with any further information.