Transpacific Capacity Crunch Weighing on Shippers – Hear Our Best Practices For Managing It

The situation on the transpacific trade lane, both eastbound and westbound, is a fluid one which currently poses the most challenges to customs brokers, freight forwarders, NVOCC’s and shippers. A quarter-century ago (which is now only the mid-1990’s), there were more than twenty carriers operating on the transpacific. Today that figure is down to ten and the current market condition is not in the favor of shipper customers or the consumers whose cost of goods continues to escalate. Those ten control eighty-five percent of the market.

The situation of blanked sailings which began with regular post-Chinese New Year cancellations extended into the early days of the pandemic. It is now widely agreed too little capacity was brought back too late and by the time schedules resumed, persistent, unclearable backlogs began to appear.

Rates and demand began to surge last summer and have continued unabated for a solid year.

There has been little to no government intervention to this point and until a hearing on Capitol Hill on June 15th, the issue hadn’t garnered the attention of lawmakers who can make a difference. Yes, the Federal Maritime Commission has been collecting evidence and testimony, but government agencies respond to pressure from lawmakers.

Today, though, the challenge remains: How to move cargo on a backlogged, congested trade lane where exports are being refused so empty containers can be shipped back to move cargo at rates four and five times the westbound price and clear terminal and rail backlogs?

Industry stakeholders across the board are in agreement and have highlighted a number of the deficiencies and challenges including:

• Congestion in and around terminals.
• Ports not operating 24/7 like their foreign counterparts.
• Terminals so full they cannot accept empty returns or loaded exports.
• Lack of sufficient labor and automation to increase throughput and efficiency.
• Failure to provide accurate advanced arrival and departure information.

Things have gotten so bad that a major retailer chartered its own containership.

One of the largest neutral NVOCC’s in Hong Kong advises that there are more than 5,000 TEU’s of bookings pending, including 1,000 TEU’s to Los Angeles / Long Beach with no space available. This is from a master loader moving hundreds of thousands of containers annually.

Alba is counseling our clients to keep these three things in mind when looking to the balance of 2021 and, realistically, into 2022.

1. Be transparent, accurate and early in your forecasting. We can protect space in the future if we know far in advance it is required. We are not hearing of tremendous delays in production unless raw materials and components are delayed getting to factories.
2. Accept alternate routings. Maybe cargo has to go all-water. Maybe it has to go into another port on the West Coast and be warehoused elsewhere or transferred to the final destination. The most important thing is getting to market, and we will work with you to make this happen.
3. Don’t forget air freight. Yes, IATA says air freight volumes have returned – in fact12% higher than the pre-pandemic April, 2019. Alba has access to freighters operating between conventional and unconventional points that can close urgent supply chain gaps.

Our goal at Alba is to work with our clients to protect space, control costs as best we can and get cargo to the US and into the hands of the ultimate buyers, consumer or commercial. To learn more about Alba’s solutions in this challenging time, contact your Alba representative or send us a message.