Based on China’s large role in global trade, ongoing COVID outbreaks, and their zero-COVID strategy, there appears to be a perfect storm in play. This is according to the head of global shipping and ports equity research at HSBC. He’s calling the current state of the Asia supply chain “lean”– and not in a good way. That’s because it allows for “little margin of error.” And as we all know, what happens in China can have ripple effects that are felt globally.
Meanwhile, like a virus, port congestion is spreading across the US. While congestion has been most problematic along the west coast, the east coast is now seeing much of the same—indicating things are getting worse, not better.
Things are definitely getting worse for intermodal rail services along the West Coast, as service in Vancouver deteriorates further. Canada’s largest port is facing a double whammy—excessive dwell times for rail containers and a surge in imports. This is on top of an already strained system thanks to severe storms that severed British Columbian rail networks in November. Storms and floods are further disrupting over-the-road trucking.
Speaking of a surge in imports, the numbers are in for the volume that moved through the Ports of Los Angeles and Long Beach. Collectively, the two ports handle about 40% of all inbound US imports. It shouldn’t come as any surprise that both set new annual records. The Port of Los Angeles saw an increase of 13% over 2020 and broke the previous record set in 2018. The Port of Long Beach reported a 15.7% increase over 2020.
Finally, reliability in the liner schedule—sank. From a reliability score of just under 80% in 2019, it dropped to the low 60s in 2020, hit about 35% in 2021. Unfortunately, it doesn’t seem that there will be any sort of bounce back in the near future. According to a Sea-Intelligence report, “schedule reliability will likely remain poor into 2022 as well.” Ironically, rate prices soar as reliability dives.
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