Shipping lines made a fortune last year, and despite lower rates today, so will 2022. Maersk leads the long-winded race as they continue to post lower values ​​on their online portal, notes maritime port and logistics industry analyst Jon monroe, who also points out that the rate of US$3.500/FEU from Chinese base ports to Los Angeles – Long Beach (LA-LB) three years ago could have been considered high, but not currently, because “unfortunately, the congestion created by the many black swan events has required investments that have increased the cost of doing business”, he indicates, recalling the current context.

Vessels, fuel, containers and storage space, not to mention land freight rates, have increased. “While some of these costs can be adjusted downward, they cannot be expected to return to pre-Covid-19 rates without incurring losses,” he notes.

According to the analyst, this second half of 2022 will be a very different moment from the first half of the year. Demand is slowing down (at the height of the northern hemisphere high season and volumes are not what they used to be). In addition, he states that consumers are tired of spending and inflation is a real bite to the wallet. “Many BCOs (cargo beneficiaries) have their warehouses full and have reduced or stopped importing for a period to absorb their inventory. This is reflected, he describes, in the less than 1% vacancy rate in Southern California. "If you're looking for storage space, don't bother," he warns.

Power reversal?

Monroe He further explains that there is some speculation and concern that the new vessels that will be introduced in the next 18 months will return bargaining power to cargo beneficiaries. “To some extent, this is already happening. Space is no longer scarce and rates are going down,” he indicates. The situation was addressed in early August by the president of Evergreen, who noted that “the phasing out of older vessels will alleviate concerns about the bloated order book.”

In detail, it indicates that the Top Ten shipping lines have construction orders equivalent to 5,2 million TEUs.

He adds that there are some concerns that need to be addressed that go beyond the largest vessels: “Given the size of the vessels requested and the fact that most shipping lines will be replacing their current fleet with larger vessels, the terminals (not the ports) will become the key problem and potential bottleneck for future ship calls. As the size of a container ship increases, the likelihood of longer unloading times and containers being positioned in closed lanes remains high.”

The above would mean 5 to 7 days to pick up a container.

According to Jon monroe “The problems we face today cannot be corrected by a single stakeholder to work independently”, emphasizing that “by stakeholder I am referring to shipping lines, terminals, chassis suppliers, storage centers and railways.”

port situation

According to Monroe Port congestion is not over, even though ship queues are down to almost nothing at the USWC. Rather, it has moved to inland rail ramps and USEC ports as companies try to head off a possible strike at the USWC with the agreement of ILWU longshoremen still in limbo. "Particularly in the ports of Southern California, congestion is growing due to the accumulation of intermodal containers," he says, adding that the situation "is nowhere worse than in the LA-LB port complex." The big culprit? rail providers.

As he explains, the train cuts have contributed to tens of thousands of containers being left in terminals with nowhere to go and having to wait three to four weeks for a railway. "This inhibits the operating efficiencies of the terminals on the ship side of the operation," she argues.

To all this, one more factor is added, Christmas 2023 is already beginning to be seen on the calendar.

What about the ILWU bargain?

In this regard, the analyst states that there seem to be two problems. The first is the issue of jurisdiction over the operation or M&R (maintenance and repair) in the terminal T-5 in Seattle. The labor relations board turned over the contract to the International Association of Machinists and Aerospace Workers. The ILWU, on the other hand, believes that this contract belongs to them.

The other sticking point is automation. In this regard, an alarm sounded recently when workers were suddenly walked off the job citing safety concerns at APM Terminals in Los Angeles, one of the port's three automated terminals. “A slowdown in disguise?” he asks. Monroe.