Shipageddon Continues, Possibly Thru CNY 2021

Firsd Tea continues to receive reports of ocean freight delays, disruptions, and price increases. We urge our clients to make necessary preparations for shipping delays and out-of-stock inventory conditions that may extend until at least February 2021. Firsd Tea is preparing for these contingencies, including new containers of tea on the water arriving as early as late December. US inventory will be offered on a first-come, first serve basis. Please plan ahead by providing inventory projections and advance orders to avoid tea supply disruptions.

We urge our clients to make necessary preparations for shipping delays and out-of-stock inventory conditions that may extend until at least February 2021.

News reports have been coming in since October 2020 of delays, disruptions, and record-high shipping costs for ocean fright between the US and China. Firsd Tea has reported HERE, HERE, and HERE on those problems and their impact throughout the China-US logistics systems. More recent updates indicate the problem may continue through at least February 2021, due to shipping costs (up to 2x regular rates), insufficient shipping container availability, and congestion at ports.

DEARTH OF CONTAINERS

In general, there is insufficient supply of empty, available shipping containers in China. This has led to price increases for the remaining, available containers.

Key highlights include:

• On average, trade volumes to/from China result in 3 containers of goods leaving China, but only 1 container's worth of goods is carried back to China
• November 2020 exports leaving China increased 21% over same period last year
• Container turnaround times, usually around 60 days, have increased to 100 days in some US and European ports
• The Port of Los Angeles, America's largest container port by volume, imported 3.5 containers for every one it exported in October, and shipped a record 326,000 empty containers that month, according to shipping organization BIMCO

PORT CONGESTION

Several major US ports are experiencing unusually higher volumes of container traffic, leaving ships waiting days for open berths to unload, and trucks waiting hours/days to receive unloaded containers.

Details include:

• The Pacific Merchant Shipping Association reported October containers remained at terminals at ports of LA and Long Beach for nearly five days, the most prolonged average period since reporting began in 2016
• Federal Maritime Commissioner Carl Bentzel supports the launch of a fact-finding investigation into ongoing congestion issues at the Ports of Long Beach and Los Angeles. He also expressed concerns over growing problems at the Port Authority of New York and New Jersey

PLAN AHEAD

Firsd Tea continues to monitor the situation, and will provide relevant updates as available. Our North American office is preparing for contingencies, including new containers of tea on the water arriving as early as late December. As usual, US inventory will be offered on a first-come, first serve basis. Please plan ahead by providing inventory projections and advance orders to avoid tea supply issues created by unprecedented logistics uncertainties.

See more:

https://www.reuters.com/article/global-shipping-container/boxed-out-chinas-exports-pinched-by-global-run-on-shipping-containers-idINKBN28K2C2

https://shippingwatch.com/carriers/Container/article12626541.ece

https://www.ttnews.com/articles/congestion-slowdown-ports-cause-growing-concern

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