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With a truce between Montreal waterfront employers and longshore workers expiring in approximately five weeks, importers have been diverting cargo away from Canada’s second-largest port rather than risk disruption similar to the 19 days of strike actions that crippled the port last summer. 

The Maritime Employers Association (MEA) and Canadian Union of Public Employees (CUPE) were back at the negotiating table this week, capping a 14-day “mediation blitz,” Kuehne + Nagle told customers in a Friday advisory. Negotiations deteriorated several weeks ago but have since restarted, according to two shipping executives close to the matter. 

A misconception about the August 2020 strike at Montreal was that it was settled; it wasn’t. Rather, what ended the 19-day series of work stoppages on Aug. 21 was a truce that left critical work rule issues unresolved. That leaves open the real possibility that after the temporary agreement expires on March 20, disruption could resume. It took eastern Canadian ports months to recover from disruption over the summer, as a shortage of railcars at Halifax and Saint John due to a surge of cargo at Vancouver and Prince Rupert delayed cargo diverted from Montreal, and Montreal terminals had to clear a 11,500-container backlog. 

At the time, Pierre Fitzgibbon, Quebec’s minister of economy and innovation, said the closure of the port had a greater economic impact on Canada than the COVID-19 pandemic itself. 

Now, with personal protective equipment (PPE) still critical amid a multi-month surge of Asian cargo into Canada and the United States, strike actions would be even more disruptive to cargo flows through eastern Canada and the country’s economy. 

Further disruption would also hurt Montreal’s competitiveness as it faces growing competition from existing and planned Eastern Canada ports for so-called discretionary shipments moving to and from inland regions. As has been seen on the US West Coast, shippers have long memories and will permanently redirect cargo through alternative gateways when they perceive a port to have elevated labor risk. 

Some major shippers have told the Montreal Port Authority that they’ve instructed container lines to divert cargo away from the port if no agreement was reached by mid-January, said Tony Boemi, vice president of growth and development for the port authority. Two Canada-based importers who asked not to be identified told JOC.com they began diverting cargo away from Montreal months ago, with one using the Canadian West Coast and other routing more goods through Halifax. 

In the truce announced Aug. 21, employers and labor agreed to not speak to the media, but both sides said they were confident they would reach a deal before the truce expires. The current MEA-CUPE labor contract expired at the end of 2018, with labor seeking higher wages through more days off per year and greater control of hiring, and employers resisting such demands.  Starting in early July, port longshore workers engaged in two four-day strikes before launching an indefinite strike on Aug. 10 that ended up lasting 12 days. 

In a Feb 4 interview with JOC.com, Jean-Jacques Ruest, president and CEO of Canadian National Railway, said the railroad is better prepared to handle potential diversions from Montreal to Saint John and Halifax than it was over the summer. When longshore workers issued the first 72-hour strike notice in late July, it was a surprising escalation of simmering tensions and there was plenty of inbound cargo already on the water headed to Montreal, he said.

Ruest said shippers should ready diversion strategies, whether moving through Halifax and Saint John or with the railroad’s joint service with CSX Transportation connecting to the Port of New York and New Jersey. Cargo destined for Montreal could also be trucked up from New York-New Jersey. Ruest warned that if Montreal-bound cargo is diverted, the railroad will prioritize cargo not bound for greater Montreal and imports for Montreal might not be transported to the region until labor actions end, as CN has limited capacity to handle all the potentially delivered volumes.

The Montreal strikes also spurred Canadian Pacific Railway to begin providing intermodal rail service to Saint John to handle three Hapag-Lloyd ships and one Maersk ship diverted from Montreal over the summer. In extending its agreement with CP, Hapag-Lloyd, which has the largest presence in serving Canada, said it would add Halifax to its new service network, which is generally announced in the spring.

With the ports of Los Angeles and Long Beach expected to be grappling with terminal congestion and vessel backlogs for at least the next two to three months, trans-Pacific carriers are boosting capacity to Oakland and Seattle-Tacoma. 

According to Wednesday’s issue of Alphaliner, ZIM Integrated Shipping Services will launch a service beginning Feb. 21 that will call in Southeast Asia, Los Angeles, Tacoma, and Vladivostok, Russia, before returning to Laem Chabang, Thailand. 

Alphaliner also reported that Wan Hai Lines in mid-March will double its current two trans-Pacific strings to four, which includes a new Pacific Northwest service from North Asia to Seattle and Oakland that will not call in Southern California. 

While these developments demonstrate the continued importance of Los Angeles-Long Beach to trans-Pacific services, the new Wan Hai service also highlights a move by carriers to increase their direct calls to the Northwest Seaport Alliance of Seattle and Tacoma, and to Oakland, to bypass congested Southern California ports. 

The executive directors of Oakland and the Northwest Seaport Alliance told JOC.com this week carriers are in advanced stages of planning additional services to their ports. Those services will be designed for intermodal shipments to the US interior that otherwise could have moved through Los Angeles-Long Beach, but more importantly, will serve distribution warehouses and e-commerce shipments in Northern California and the Pacific Northwest. 

Danny Wan, executive director of the Port of Oakland, said his pitch to carriers is not so much that Oakland is an alternative to Los Angeles-Long Beach, but rather that it is the closest port to the large consuming market in the San Francisco Bay area, and to import distribution hubs in Northern California, Reno, Salt Lake City, and Denver. 

“Yes, we may pick up some business diverted from Southern California, but once they come here they will stay here because Oakland is more convenient to these markets,” Wan said. 

Oakland and Seattle-Tacoma are assuring carriers that they have the terminal capacity to handle an influx of cargo, and that upon arrival their vessels will be able to proceed immediately to berth. 

“We have no vessels at anchor here,” said John Wolfe, executive director of the Northwest Seaport Alliance of Seattle and Tacoma. “Every terminal here has unused capacity.” 

Due to a sustained cargo surge that is now in its eighth month, and is projected to continue well into the spring, Los Angeles-Long Beach is experiencing vessel backlogs and congested marine terminals. Vessel delays in the port complex average about seven days, according to the Signal platform published daily by the Port of Los Angeles. Container dwell times at the terminals in December averaged five days, or twice what they were last spring, according to the Pacific Merchant Shipping Association. 

Terminal operators in Los Angeles-Long Beach told JOC.com that container volumes will remain much stronger than in past years this spring, and they said the ports will contend with congestion well into the second quarter. 

Carriers have already begun to circumvent Southern California with new services to Oakland and Seattle-Tacoma. In the past two months, carriers have announced two new trans-Pacific services to North America’s Pacific Coast that do not call Los Angeles-Long Beach first. CMA CGM launched its Golden Gate Bridge service (a restructuring of the former SeaPriority Express service) with a rotation of Yantian, Oakland, Seattle, Shanghai, and Yantian. 

Also, Mediterranean Shipping Co. in December started its Chinook service with a rotation of Yantian, Shanghai, Busan, Vancouver, and Yantian.

Oakland, Seattle-Tacoma advantages 

The port directors in Seattle-Tacoma and Oakland told JOC.com other announcements of direct services to their gateways could follow this spring, although they did not specify which carriers they are speaking with. They said their discussions with carriers begin with the logistics advantages their ports offer. 

Wolfe stressed the ability of vessels to proceed directly to berth in Seattle-Tacoma without having to wait at anchor. He said container discharges begin quickly upon berthing, and the first train with intermodal shipments destined for the Midwest leaves within 48 hours of container discharges from the vessel. Except for some sporadic equipment shortages, the railroads have provided the rail-car capacity the port complex requires, he said. 

When a vessel berths in Oakland, it is usually turned in one, two, or three eight-hour shifts, depending upon the container exchange, said Bryan Brandes, the port’s maritime director. Container moves to and from trains at the port’s on-dock rail yard are likewise rapid, he said. Also, the port offers transloading operations within its boundaries at the former Oakland Army Base, which has been redeveloped as a logistics hub for import and export operations, Brandes noted. 

Oakland, however, continues to grapple with lengthy truck turn times. In January, turn times averaged 96 minutes, higher than the 88-minute average in Los Angeles-Long Beach, according to the Harbor Trucking Association (HTA), which measures turn times in both gateways. Average truck turn times in Oakland the past year have been in the range of 82 to 98 minutes, while turn times in Los Angeles-Long Beach were in the 70 to 88-minute range, according to the HTA’s truck mobility data. 

Oakland International Container Terminal (OICT), which handles about 70 percent of the port’s volume, pushed up the port’s total average turn times last month as one of its four berths was out of commission for 16 days while OICT discharged three new ship-to-shore cranes, Brandes said. He expects turn times to improve now that the cranes have been installed at OICT. 

Wolfe and Brandes commended the longshore labor force, which continues to work through the COVID-19 pandemic conditions without serious disruption. According to the Pacific Maritime Association, which manages the coastwide waterfront contract with the International Longshore & Warehouse Union, only about 100 longshore workers combined in the northern ports of Oakland, Portland, and Seattle-Tacoma tested positive for COVID-19 in December. Los Angeles-Long Beach recorded 360 positive cases, which contributed to labor shortages in Southern California. 

Oakland and Seattle-Tacoma are not marketing themselves as temporary refuges for carriers to escape crowded conditions in Los Angeles-Long Beach, but rather as long-term investments in gateways that provide immediate access to rapidly growing distribution complexes, direct rail access to intermodal hubs in the US interior, and affluent consumers that generate a strong base of on-line shopping. 

“It’s because of that stickiness that Oakland warrants services of its own” Brandes said. 

While Oakland seeks to attract new trans-Pacific services, Larry Burns, president of Lawrence Burns Consulting and former senior vice president of trade and sales at HMM, said simply changing the rotation of a Pacific Southwest service to call first in Oakland and then in Southern California would allow a carrier to quickly discharge local and intermodal cargo in the Northern California gateway while not having to bypass Southern California altogether, which would offer certain advantages to carriers and their customers. 

Carriers could carry time-sensitive inbound loads for the regional market in Northern California without the schedule disruption that comes from calling first in Southern California. They would also take delivery of export loads in Oakland, which has consistently strong export volumes. The vessels would then call in Los Angeles-Long Beach to pick up empty containers for repositioning in Asia, where there are severe shortages of empty containers.

“The carrier keeps to its schedule and also picks up empties in LA. Suddenly the empties become more valuable,” Burns said.

CMA CGM’s newly restructured Asian service that makes Oakland its first US port call rather than Los Angeles allows e-commerce shippers and other importers to avoid Southern California port congestion and get their cargo loaded onto trains days faster. 

The Golden Gate Bridge service, formerly known as SeaPriority Express, offers a 12-day transit from Yantian and a 19-day transit from Shanghai. The service is the first Asian service with Oakland as its first call, a long sought-after designation that makes the port more attractive to time-sensitive shippers.  

After its first call at Oakland on Feb. 12, the restructured service will call on Seattle before looping back to Kaohsiung, Taiwan; Shanghai; and Yantian, mainland China. The ships will each have capacities in the ranges of 3,718 to 6,282 TEU. In its original form, the service called only Los Angeles and Yantian. 

“We had to find an alternative solution that allows supply chains to remain relatively intact and improve transit times so we made that bold move to Oakland,” Ed Aldridge, president of CMA CGM and APL, United States, said in an interview Monday. Aldridge said he does not expect congestion to clear up in Southern California until June at the earliest and the restructured service will be permanent. 

And while ocean reliability from Asia to the US West Coast has sunk — falling to 22.1 percent in December — the service will not be delayed by the harbor backlog at the Los Angeles and Long Beach port complex. As of Sunday, there were 29 container ships at berth and 36 at anchor, according to the Marine Exchange of Southern California, the agency that manages ship traffic. 

Through advance work with Union Pacific and BNSF railroads and SSA Marine’s Oakland International Container Terminal, CMA CGM aims to provide a rail dwell time — the time it takes for a container to be unloaded from a ship and loaded onto a train — of under one-and-half days, Aldridge said. Comparatively, average dwell times in Southern California during non-congestion times is roughly four days, he said. 

Aldridge said US importers that are tapping the newly restructured service include a mix of brick-and-mortar retailers pulling for e-commerce channels, strictly e-commerce apparel and garment shippers, and even some shippers looking to truck goods down to Southern California.

The newly restructured service, he said, shows how CMA CGM is boosting its ocean and landside capacity to help shippers amid a record rush of Asia imports that began in the second half of last year and has not relented. Between May and December, CMA CGM deployed 25 extra-loaders on the trans-Pacific, boosting capacity by 114,500 TEU, and upgraded the sizes of 13 ships on Asia-US services. Ultimately, CMA CGM increased total capacity on the trade by 39 percent between the first and second half of 2020.

The carrier is also doubling its dedicated chassis fleet serving Southern California to 3,600, and expanded the number of dray providers it works with.

With Hapag-Lloyd — and by extension its partners in THE Alliance — advising customers of 21 de facto canceled sailings in February in the eastbound trans-Pacific due to schedule disruptions, importers should anticipate even tighter capacity in the coming months. 

Unlike blank sailings made by carriers in response to weak cargo volumes, these missed voyages are structural in nature. When a vessel has been delayed for a week or longer at a given port, the carrier will then institute a “structural” blank for that ship’s next sailing to rectify the service schedule.

 “The sailings are sliding. Other alliances will also see sailings slide,” Uffe Ostergaard, Hapag-Lloyd’s Americas president, told JOC.com Monday. Hapag-Lloyd is a member of THE Alliance along with Ocean Network Express (ONE), Yang Ming, and HMM. 

Ostergaard said Hapag-Lloyd’s changes to its service schedule are necessitated by vessel bunching at congested ports due to near-record cargo volumes in the Asia-North America trade. Import volumes exploded when the North American economy began to recover last summer following the lifting of initial COVID-19 lockdowns. Eastbound liner reliability from Asia to both US coasts was under 30 percent for both coasts in December, according to Sea-Intelligence Maritime Analysis. 

The worst congestion in the US has been at the ports of Los Angeles and Long Beach, with numerous container ships delayed a week or longer, according to the Marine Exchange of Southern California. Ostergaard also cited Oakland and Vancouver as being West Coast gateways that have experienced late vessel arrivals and congestion.

Carriers may need further blank sailings 

The current round of de facto blank sailings could be the first of several “corrections” that Hapag-Lloyd, and possibly other carriers and vessel-sharing alliances, may have to make in the coming months. “This will be a recurring theme,” Ostergaard said. 

Lars Jensen, CEO of SeaIntelligence Consulting, told JOC.com Tuesday that although no other carrier or vessel-sharing alliance has announced structural blank sailings, he anticipates more will be coming. 

A spokesperson for ONE in Singapore told JOC.com that schedule delays have become so bad that the carrier is considering whether to void sailings during the Lunar New Year so it can reposition ships to restore schedule reliability. 

“Heavy schedule delays are being caused by global terminal congestion resulting from low productivity and lack of labor due to the COVID-19 pandemic,” she said. “Vessel schedules on each service are also heavily affected by the congestion and the schedule delay may result in a lack of vessels to meet a full service after Chinese New Year.” 

Christian Sur, executive vice president of sales and marketing at non-vessel-operating common carrier (NVO) Unique Logistics International, said he received Hapag-Lloyd’s customer advisory late last week, and he would not be surprised if the 2M and Ocean alliances issue advisories as well. 

“They have similar issues,” Sur said.

Import volumes may not slow appreciably 

Sur added that US imports from Asia remain exceptionally strong for this time of year, and with a backlog of merchandise building at Asian factories in the run-up to the Lunar New Year holidays beginning Feb. 12, vessels will likely continue to be overbooked at Asian load ports through the first quarter. 

Vessel disruptions due to blank sailings could lead to a situation that ports such as Los Angeles and Long Beach faced last March when empty containers congested the terminals, import distribution centers, and truck yards in Southern California, and carriers were not providing enough westbound trans-Pacific capacity to return the empties to Asia. 

Carriers at the time deployed “sweeper” ships to Los Angeles-Long Beach to vacate the empties, but Ostergaard said that strategy may not work this time. Carriers have few idle ships in the fleet, and even if they can secure some, the sweeper ships will face continued congestion at the ports. 

“Even the sweeper ships can’t run on schedule,” he said.

With reports from Asia indicating some factories are planning to remain open through the Lunar New Year, US import volumes may not drop significantly as they normally do during the holidays, so vessel space at Asian load ports is likely to remain tight for some time, Sur said.

Congestion at the already-clogged ports of Los Angeles and Long Beach has gotten worse in just the past month, demonstrated by rising truck turn and container dwell times, more ships waiting at berth, and anecdotal reports from individual terminal operators. Worsening delays came despite terminals working longer hours. 

The overriding problem, terminal operators say, is that six straight months of near-record cargo volumes have congested the entire Southern California supply chain beyond its capacity. Terminal operators can’t vacate laden import containers fast enough to keep up with the import surge and make room for the discharge of new arrivals. 

“There is no room on the terminals,” said Anthony Otto, president of Long Beach Container Terminal (LBCT). 

Key performance metrics for truck turn times, container dwell times at the terminals, vessels at anchor, and street dwell times for chassis at warehouses located as far as 60 miles from the Los Angeles-Long Beach port complex tell the story. 

Average truck turn times at the 12 container terminals that make up the LA-LB complex rose to 93 minutes in December, according to Harbor Trucking Association (HTA) truck mobility data, up from the record low of 58 minutes in June. The HTA began measuring turn times in 2013. 

The record low turn times came when US imports from Asia plunged during the COVID-19 lockdowns. The large increase in turn times over the past few months demonstrates how rapidly the terminals went from fluid conditions early in 2020 to virtual gridlock by the fall. 

While truck turn times reflect congestion at the terminal gates, increasing container dwell times highlight the congestion in the terminal yards. Otto noted that containers are sitting at the terminals for seven to eight days, compared with less than three days when import volumes were much lighter last spring and early summer. 

That is an indication container terminals are buckling under container exchanges from mega-ships that continue to discharge record imports week after week, said Weston LaBar, CEO of the Harbor Trucking Association. “It’s more volume than the terminals were designed to handle,” LaBar said. 

However, for historical perspective, December’s turn times are actually better than they were in the fall of 2014 and winter of 2015 when the average turn times were 100 minutes or greater for six consecutive months due to the labor disruptions during the West Coast longshore contract negotiations.

Also, LaBar noted that in December the HTA extended the geo-fence line at each terminal from which the turn times are measured to reflect the longer truck queues that formed last month. That move obviously was a source of concern from the terminal operators because it exaggerated somewhat the comparison of December’s numbers with previous months, but the HTA felt it was necessary to truly capture the time truckers were spending in long truck queues, LaBar said. 

And the ships keep arriving in port. There were 59 container ships in the Los Angeles-Long Beach port complex on Monday, with 25 of the vessels being worked and 34 at anchor awaiting berthing space, according to the Marine Exchange of Southern California. Another 15 container ships are scheduled to arrive in port through Thursday.

All terminals struggling, but for different reasons 

The truest indication of the impact six straight months of imports from Asia totaling about 800,000 TEU per month is having on the port complex is that all 12 of the container terminals are struggling to handle the volumes. That includes terminals that had consistently had the lowest truck turn times in the harbor. 

In December, the automated LBCT terminal, which for the past year had sub-40-minute average turn times, spiked to 94 minutes as import volumes surged. LBCT in the spring and summer months had been averaging 21,000 container lifts per week. In November and December, LBCT averaged 30,000 lifts per week, Otto said. 

“Our times used to be stellar. The fact is freight is not moving now,” he said. 

TraPac, the only other fully automated terminal in the port complex, had been registering sub-60-minute turn times last spring and summer. In December, it was the only terminal in the harbor to experience a lower turn time. Its 73-minute average was down from 80 minutes in November. Nevertheless, December’s turn times were higher than the 45- to 55-minute turn times last spring. 

The Matson-SSA terminal had likewise been consistently recording sub-40-minute turn times, but in December the average turn time increased to 46 minutes. “I’m not hearing complaints about Matson. It’s due to increased volume,” LaBar said. 

The three terminals SSA Marine operates in Long Beach — Matson-SSA, Pier A, and PCT — all outperformed the port-wide average in December. That’s in large part thanks to “dray-off” programs at the terminals, under which SSA moves inbound containers upon discharge from vessels to off-dock yards for overnight storage, thereby freeing up terminal space for more inbound loads. 

“The dray-off model really helps from an efficiency standpoint,” LaBar said. 

However, other terminal operators that may wish to duplicate SSA’s successful model are encountering pushback from some cities in Southern California that don’t want trucks in their communities. 

LaBar said the HTA has met “ad nauseam” with community leaders explaining how the increased tax revenue from container storage yards could help to replace revenues they are losing from reduced retail activity at local shopping malls due to the coronavirus disease 2019 (COVID-19), but to no avail.

The two largest container terminals in the harbor, APM Terminals in Los Angeles and Total Terminals International (TTI) in Long Beach, had the longest turn times in December, with APM at 137 minutes and TTI at 111.

Labor shortages rampant due to COVID-19 

LaBar said the busiest terminals have been especially challenged in getting sufficient workers during the COVID-19 pandemic because the allotment of longshore workers is rationed due to declining labor availability. “The labor shortages are COVID-related,” he said.

The Pacific Maritime Association (PMA), which represents West Coast employers, has steering committees in each region that assign labor based on the history of demand as well as the current demand for labor in each region, Jim McKenna, PMA president, told JOC.com. “So far these guys have been very accurate,” he said. 

However, the total labor force in Southern California has been reduced because of COVID-19, which means fewer longshore workers are being assigned to each terminal, McKenna said. “Today, 150 to 170 longshoremen are quarantined [in Southern California],” he said. That includes dockworkers who tested positive and others who have come in contact with someone who tested positive, he added. Workers in every area of the terminal, including the maintenance and repair longshore workers who repair chassis, have been affected. 

However, McKenna said, those longshore workers who are able to work are spending more time on the job. Each longshore worker in Los Angeles-Long Beach worked on average 5.2 shifts per week in December, up from 4.5 shifts in December 2019. In addition, the PMA and International Longshore and Warehouse Union have been adding 30 skilled equipment operators each month since last fall. “It’s an ongoing process,” McKenna said.

Chassis shortages continue 

Terminal operators say another critical element causing port congestion is a chassis shortage that has been ongoing since last summer. A spokesperson for APM Terminals said Pier 400 in Los Angeles opened on many days in December “with zero chassis.”

“This results in truck drivers sitting idle inside the terminal waiting for the next chassis to become available,” the spokesperson said. 

Key performance indicators on the website of the Pool of Pools, which is operated by DCLI, TRAC Intermodal, and Flexi-Van Leasing, show that street dwell times, which measure the time chassis sit at warehouses, averaged 7.8 days on Monday, or about twice the average of three to four days recorded in the first half of 2020. Out-of-service chassis at the 12 container terminals and four intermodal rail ramps totaled 3,835, according to the Pool of Pools website.

Ron Joseph, executive vice president and COO at DCLI, said the three intermodal equipment operators (IEPs) had reduced the out-of-service chassis to about 3,500 in early November by working extended hours and weekends. The terminals were closed for Christmas and New Year’s, so employers lost two workdays over the holidays. That affected all operations within the terminals, including the maintenance and repair dockworkers who fix out-of-service chassis. However, terminal hours and overtime work are being extended in the new year, so M&R work will increase and out-of-service chassis will be reduced, Joseph said. 

Also on a positive note, Otto said work continues on the final phase of an LBCT expansion project that will add much-needed terminal and berth capacity to the port complex. In addition to adding a third vessel berth, LBCT is enlarging its container yard, and installing ship-to-shore cranes. Capacity will be phased in beginning this spring, and when the work is completed by the end of 2021, the terminal’s annual capacity will be 3.3 million TEU 

However, carriers, non-vessel-operating common carriers (NVOs), and industry analysts project elevated import volumes well into the year, which means the largest US port complex could be grappling with congestion for some months to come.

“This December there was no rest, no time to recharge our batteries, because we were all so busy,” LaBar said, adding there is no relief in sight. “I’m being told to expect volumes to remain this strong at least through July.”

 

Another container ship has spilled up to 750 boxes into the sea, just weeks after the ONE Apus lost around 1,900.

Maersk Essen, enroute from Xiamen to Los Angeles and carrying up to 13,092 teu, reportedly during severe weather, lost a “very significant number of containers overboard in the Pacific Ocean on 16 January”, according to cargo casualty management company WK Webster.

According to FleetMon, up to 100 floating containers are drifting north-west of Honolulu. 

While it is thought up to 750 containers may have been lost overboard, and it is also likely that, like with the ONE Apus, others will be damaged in affected stacks. These boxes will need to be removed and repositioned, noted WK Webster.

But unlike the ONE Apus, the Maersk Essen is continuing to its destination of Los Angeles, where it is expected to arrive on Saturday. WK Webster is arranging for surveyors to investigate and carry out cargo surveys. 

It said the ship, set to go to Cai Mep, Vietnam next, would likely be delayed and anyone that had insured cargo onboard the ship should contact WK Webster as soon as possible. 

More on this story coming later.

US importers will continue to struggle to secure equipment and vessel space at Asian load ports through January, despite carriers continuing to deploy extra-loader vessels and launch new weekly services in the eastbound trans-Pacific trade, according to cargo interests.

That’s because US imports from Asia each month are increasing 20 to 30 percent year over year, and even the new capacity that is coming online will be stretched to the limit.

“If you’re trying to get a booking, and you don’t have a fixed deal in place, you’re probably booking three to four weeks out,” Christian Sur, executive vice president sales and marketing at Unique Logistics International, told JOC.com Wednesday.

West Coast ports handle about 60 percent of US imports from Asia, according to PIERS, a sister product of JOC.com within IHS Markit. In a recent issue of Sunday Spotlight published by Sea-Intelligence Maritime Analysis, CEO Alan Murphy said laden imports through West Coast ports would jump about 30 percent in both December and January year over year.

“There has been a surge in both imports into North America, and the capacity deployed on the Asia-North America trade,” Murphy said. “When we look at demand and supply, the argument is simple: Deployed capacity is dictated by demand.”

More extra-loaders are coming in January

Carriers deployed dozens of extra-loader vessels — i.e., those deployed on an ad hoc basis, rather than as part of a regularly scheduled liner service — from Asia to the United States in the past two months, mostly to the ports of Los Angeles and Long Beach, but also to East Coast ports, and are announcing additional extra-loaders for January.

The Southern California port complex handled 31 extra-loaders in December after 26 in November, according to the ports of Los Angeles and Long Beach. That’s on top of more than 35 extra-loaders deployed earlier in the fall. Carriers notified Long Beach of seven additional extra-loaders planned so far for January, and Los Angeles said it is expecting six extra-loaders, three of which were scheduled for December but have been pushed into January because of port congestion. That’s in addition to the regularly scheduled 27 weekly trans-Pacific services to Los Angeles-Long Beach.

East Coast ports also reported receiving extra-loaders over the past two months, with more scheduled for January. A Savannah spokesperson said the port handled seven extra-loaders in December and 14 in November, with seven scheduled so far for January. Charleston reported handling five extra-loaders in November-December. So far, none have been scheduled there for January. New York-New Jersey said it does not collect data on extra-loaders, although an industry source said the largest East Coast port complex has had “a few extra-loaders” the past two months.

Imports from Asia have been so strong in recent months that carriers have added some calls at secondary East Coast gateways. The Port of Baltimore, for example, told JOC.com it has had as many as 11 extra calls, including inducement calls, which are scheduled weekly strings to other ports that added Baltimore as a stop on the rotation.

The dozens of extra-loaders deployed so far to the East and West coasts have been filled mostly with imports by national retailers, large beneficial cargo owners (BCOs), and shippers of personal protective equipment (PPE), and medical supplies, non-vessl-operating common carriers (NVOs) said.

“It’s mostly reserved for the carriers’ main base customers,” Sur said. Smaller importers and NVOs are offered slots only after the core customers have been accommodated, “but it’s a last-minute thing,” he said.

New weekly strings launched in 2020

Carriers in the second half of 2020 launched several new weekly services from Asia to Los Angeles-Long Beach, including Mediterranean Shipping Company’s Santana service with 9,000 TEU vessels, and CMA CGM’s Seapriority Express premium service with 5,500 TEU ships. The first CMA CGM vessel is scheduled to arrive in early January. Also, Matson Navigation Co. added a second expedited service  with vessels of 2,800 to 4,500 TEU capacity.

THE Alliance earlier this month announced a new service from Asia to the US Gulf. The service will be launched in the spring of 2021 and will call in Houston, New Orleans, and Mobile.

The import surge began in late June in Los Angeles-Long Beach and picked up steam at East Coast ports later in the summer. Imports from Asia moving through the Southern California gateway totaled 4.1 million TEU in July through November, an increase of 20 percent from the same period in 2019, according to PIERS.

The ports of Los Angeles and Long Beach have borne the brunt of the import surge in terms of congestion throughout the supply chain, from vessel bunching to congested terminals and warehouses. Kip Louttit, executive director of the Marine Exchange of Southern California, said the relentless arrival of vessels and cargo are “choking the system.” The Marine Exchange reported Tuesday there were 58 container ships in the port complex, with 28 of the vessels at berth and 30 at anchor awaiting berthing space.

The Signal, published by the Port of Los Angeles, and the Wave, published by the Port of Long Beach, project the port complex will handle more than 230,000 TEU of laden imports in the week of Jan. 3, and a similar amount in the week of Jan. 10. According to PIERS, the port complex in January 2020 handled about 176,000 TEU of laden imports a week from Asia.

NVOs say vessels leaving ports in China and Southeast Asia are over-booked through January, and will likely remain so in early February until there is a brief respite when factories in Asia close on Feb. 12 for the Lunar New Year. Importers who have not already secured space for the coming month will struggle to do so.

“Getting space and equipment is a four-week endeavor,” said Jon Monroe, who serves as a consultant to NVOs.

The tight vessel space and equipment shortages in Asia have driven up spot rates to the West and East coasts to record levels. The spot rate from China to the West Coast on Dec. 25 was $4,080 per FEU, up 116.7 percent from the same week last year, while the East Coast rate was $4,876, up 62.6 percent year over year, according to the Shanghai Containerized Freight Index that is published in the JOC Shipping and Logistics Pricing Hub.