Good Information, Unhealthy Information: Yantian Port Again to Full; Freight Charges Rise Even Larger

It’s a basic case of excellent news, unhealthy information.

After Tuesday’s unhealthy information weblog about Yantian Port’s partial shutdown lingering and making a “worse-than-Suez” stage of worldwide delivery disruption, it’s good to have some excellent news on the subject to report immediately.

Good Information: Yantian Port, one of many busiest ocean freight ports in China, is again to full operation immediately (Thursday, June twenty fourth). This, in keeping with Greg Knowler and Keith Wallis of the Journal of Commerce (JOC):

Shenzhen’s Yantian Worldwide Container Terminals (YICT) will resume full operations early Thursday, however the enormous backlog of bins stacked up throughout 4 weeks of extreme congestion will must be flushed out on prime of rising peak-season demand.

That’s proper, we couldn’t even make it by the primary sentence of Knowler and Wallis’s article earlier than attending to unhealthy information.

Unhealthy Information: Yantian’s congestion and backlog of delivery containers in addition to cluster of container ships ready at anchor will take a while to clear.

Good Information: Chinese language ports are extra environment friendly than U.S. ports, the place dockworker unions have successfully fought towards modernization and automation, permitting for faster clearing of congestion there than is feasible at ports like Los Angeles, Lengthy Seashore, and New York.

Unhealthy Information: Worldwide delivery’s peak season is in full swing. Rising demand on already higher-than-normal demand for items from China to the U.S. will make it more durable for Yantian Port to get well rapidly.

Good Information: Close by ports – just like the Ports of Hong Kong, Shekou, and Nansha – may help lighten the load for Yantian Port.

Unhealthy Information: Whereas sharing Yantian’s load, these different ports additionally share in struggling congestion. Knowler and Wallis report:

“Yantian is likely one of the most necessary gateway hubs globally, and the ripple impact of the partial closure of the port has led to port congestion in close by ports, akin to Nansha, Shekou, and Hong Kong,” [a Maersk China spokesperson] mentioned.

Good Information: Shippers are studying the lesson to diversify their product sourcing.

Common Cargo CEO Devin Burke went to Excessive Level Market earlier this month, the place these within the furnishings trade collect. It’s an opportunity to mingle with furnishings importers, various of whom are Common Cargo purchasers. Mr Burke instructed me about conversations he had with these within the furnishings trade who’ve diversified sourcing that beforehand leaned closely on China. Importing from Mexico, thanks in no small half to USMCA changing NAFTA, is a well-liked various. Sourcing and delivery furnishings domestically is one other alternative rising in reputation, as sky-high freight charges from China are dissolving import financial savings over U.S. manufacturing. Burke highlighted one dialog by which a furnishings importer mentioned he stopped delivery from China altogether.

Unhealthy Information: Port congestion in China will intensify and lengthen the height season because it takes weeks to clear.

Knowler and Wallis quote John Painter, CEO of Guangzhou Port America, as saying, “The backlog of containers will certainly trigger a extra intense peak season…” That was adopted instantly by Painter, too, speaking about shippers (and carriers) diversifying their provide chains: “… however I really imagine shippers in addition to carriers have realized a useful lesson — to diversify ports not solely at locations, however at origin ports as effectively, which helps stability out and defend the availability chain.”

Good Information (when you’re an ocean freight service): Freight charges are persevering with their meteoric rise.

Unhealthy Information (when you’re a shipper): Freight charges are persevering with their meteoric rise.

That is form of just like the outdated Good Concept, Unhealthy Concept sketch from the 90’s cartoon Animaniacs the place “enjoying catch along with your grandfather” was each the great and unhealthy concepts.

Sure, freight charges persevering with to rise is each good and unhealthy information. It simply depends upon your perspective. After all, for many of us, our perspective makes it unhealthy information. That’s as a result of most of us are shippers moderately than ocean freight carriers.

Freight Charges to the Moon

Greg Miller lays out the out-of-this-world freight charges we’re seeing proper now in an American Shipper article:

The trajectory of trans-Pacific spot charges brings to thoughts the retail-trader catchphrase “to the moon.” Index charges (which don’t embrace premium prices) have simply crossed the road into 5 figures per day.

Carriers applied common fee will increase (GRIs) on June 1. Spot charges rose. They enacted extra GRIs on June 15. Charges jumped once more. One other wave of GRIs is about for July 1 and extra have simply been introduced for July 15. Add fallout from China port congestion to the combo, and it’s a recipe for charges to maintain climbing.

Miller stories the indices on freight charges from Asia to the U.S., and, in fact, we’re seeing new heights:

Asia to U.S. East Coast

On June 15, the day service GRIs have been applied, the Freightos Baltic Index day by day evaluation for Asia-East Coast jumped 7%. It saved rising after that, reaching an all-time excessive of $10,104 per FEU by the top of the week — the primary time this route index breached $10,000. As of June 22, it was at $10,002 per FEU evaluation, up 205% 12 months on 12 months (y/y).

S&P World Platts gives day by day assessments of Freight All Varieties (FAK) charges. Its North Asia-East Coast FAK evaluation was $7,100 per FEU on June 22.

Drewry launched its newest weekly fee evaluation for the Shanghai-New York route on June 17: $8,017 per FEU, up 195% y/y.

Asia to U.S. West Coast

The Freightos Baltic Index day by day evaluation for Asia-West Coast additionally jumped after the newest spherical of GRIs. By June 22, it was at a brand new all-time excessive of $6,681 per FEU, up 160% y/y.

Drewry’s newest weekly fee for Shanghai-Los Angeles was $6,358 per FEU, up 197% y/y. S&P World Platts’ day by day North Asia-West Coast FAK evaluation for June 22 was $5,800 per FEU.

Common Cargo Is Right here to Assist

Common Cargo is all the time prepared that will help you along with your importing (and exporting). Whether or not you’re weathering the storm of excessive freight charges by continued importing from China or diversifying your sourcing, delivery from different nations and even going with home manufacturing and delivery, contact Common Cargo immediately.