US east coast vessel volumes are up because of fears of a west coast dock strike, reports CNBC News
US east coast vessel volumes are up because of fears of a west coast dock strike, reports CNBC News. Accompanying the trend are port productivity problems for domestic supply chains as billions of dollars of products are at anchor or landlocked.
In the past three months, vessel capacity between the Far East and the US east coast has risen by 18.9 per cent year on year, according to ocean and air freight research firm Xeneta.
While the west coast continues to have the lead in market share of Far East containers at 59.8 per cent, it is continuing to lose more capacity to the east coast as logistic managers move away from the west coast out of fear of a labour strike.
In the last three months, container capacity also has dropped on the west coast, by 1.7 per cent. This has an impact on trucking and rail companies that serve the west coast because there is less container volume to move.
The BNSF and Union Pacific railways, serve west coast ports. On the flip side, it was a boom in rail and truck service on the east coast with the increase in volume.
Norfolk Southern and CSX railways serve east coast ports. Unlike railways, trucking companies have the ability to serve both coasts.
A truck picks up a shipping container at the Port of Savannah in Georgia. The supply chain crisis has created a backlog of nearly 80,000 shipping containers at this port, the third-largest container port in the United States, with around 20 ships anchored.
'As more vessels and cargo heads east, there's been an 11.9 per cent increase in volumes so far this year, with a 7.3 per cent year-on-year increase in May alone,' said Peter Sand, chief of shipping for Xeneta.
'This pressurises capacity, and there's a price to pay in terms of reliability. So, in a way, the east coast becomes a victim of its own success and the west has the breathing space to recover somewhat.'
According to Project44, the average transit time from China to the west coast pre-pandemic was under 20 days to 25 days on the west coast and 38 days on the east coast.
'For the west coast, travel time now has dropped back down to 24 days,' said Josh Brazil, vice president of supply chain insights for Project44.
'So we're in a good spot right now on the west coast, but again, switching to the east coast, those transit times have risen. The increased transit time tells us there are more delays at the port because of congestion. Unfortunately, with more vessels calling the east coast in the coming months, we expect bottlenecks to continue.'
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