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Clogging of transpacific supply chains 'likely to persist for weeks'

CHINESE port congestion has increased as shippers rush to export cargo in the Chinese New Year period, compounding congestion at Los Angeles and Long Beach, reports IHS Media

16 February 2021 - 19:00
CHINESE port congestion has increased as shippers rush to export cargo in the Chinese New Year period, compounding congestion at Los Angeles and Long Beach, reports IHS Media.

Delivery times have gone to nine weeks from four or five, says Judah Levine, research lead at freight rate marketplace Freightos.



'While post-Chinese New Year February is normally the slowest month of the year, reports that many manufacturers in China will stay open over the holiday to keep up with demand suggests the surge could persist through February and even beyond,' said Mr Levine.



Shipping technology firm Ocean Insights also warned in a report this week that supply chains were in for several months of disruption as the Chinese New Year period intensifies a breakdown in intermodal connectivity between factories and ports.



'The shipping lines have said the backlog of cargo will be cleared after Chinese New Year, and that will likely occur as the levels of deliveries from factories drop off, but supply chains may take several more months to return to some semblance of normality as inventory, now trapped further up the supply chain, will need to be cleared,' said Josh Brazil, Ocean Insights' chief operations officer.



Jon Monroe, a consultant to non-vessel-operating common carriers (NVOs), said it was not clear which factories would be open over the holidays, and he agreed that trucking capacity was under pressure.



'The only certainty is that truck capacity is limited and factories may need to pay double, and in some cases triple, the normal cost to get a trucker's attention to pick up and deliver their container,' he wrote in a market update this week. 'The further south the factory is located, the more likely it will be open.'



Jens Lund, CFO for Danish forwarder DSV, said the supply chain was currently so 'clogged up' that it was difficult to move cargo.



'Carriers right now are so out of sync that they find it hard to honor most agreements,' said Mr Lund. 'Even if we buy millions of TEU, we can't force the carriers to take that volume.'


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