The previous week, CMA CGM's decision to freeze spot rates was widely publicized. Before the news, Jon monroe, expresses two things. The first thing is that after the imposition of 9 successive general rate increases (GRIs) in a period of 5 months "it was about time" and the second is a question "What will be the impact of this measure on shippers?". He then replies that “it's too soon to tell”, while the scenario continues with the lack of capacity and containers and the certainty that rates will remain high, right now when the season of contract fixing is approaching. “How far can $20.000 tariffs go to the (US) West Coast? he questions and then notes that if shipping lines were to maintain current rates, they would still be able to ensure that the third quarter is a record period and that the fourth exceeds it. “More than US$100.000 billion [of profits for the shipping companies], here we go,” he projects.

Monroe speaks of rumors indicating that "Hapag Lloyd could follow CMA CGM with a rate cap. Will other shipping lines follow suit? It's almost like they have no other choice. However, I would have been more impressed if they had improved their service, if they had created some help desks or if they had lowered the rates, ”he says.

He further claims that the shipping lines lost control of their schedules. “There are so many ships calling at the ports of Los Angeles and Long Beach (LA-LB) this month that there is no room at anchorage (…). With waits of weeks instead of days, shipping lines watch their ships pile up in San Pedro Bay waiting for a berth. How long? It depends, it can be 12 to 15 days to wait to dock and another 7 days at the docking site”.

According to Monroe, the problem is that "there are not enough crews to service the ships" and in other cases "the terminals are so congested that they cannot unload a ship for a day or two until the containers are picked up [from the yards]. ]. In these cases, the terminals cancel the crews [assigned to the vessels],” she explains.

Another problem that, according to the analyst, shippers suffer is the so-called "minimum quantity commitment" (MQC), which, due to the eagerness of shipping lines to reserve premium spot rates, has become "maximum quantity commitments". “This means that, once the contract has been fulfilled, no further reservations can be made. There is nothing left to do anymore ”, he mentions.

Global port situation

Jon monroe realizes that Vietnam is now in its third month of blockade. As he relates, this implies that “if the factories have labor that lives in the place, it is not so bad. As per the government mandate, workers are not allowed to leave the factory. This is a problem for factories that do not have facilities to house their workers and many of them have returned to their hometowns”.

It details that the ports of Cat Lai and Cai Mep continue to operate with some congestion problems, due to the lack of labor and trucks to collect the containers from the terminals. He explains that there is no certainty how long these conditions will be maintained and states that "the massive effort to relocate from China to Vietnam does not seem to be working."

“The terminals are not just congested, they are in a permanent jam situation. This will last until the end of the year. There are more ships calling at ports than ever," he says. Monroe, according to whom all the shipping lines are incorporating additional ships. He indicates that the previous week he received messages indicating that some have no idea where they are going to dock once the ships have set sail. This is crazy, he points out, “Get a ship, fill it up and direct it to the United States, we will find a mooring somewhere”, the analyst graphs when referring to how the new shipping companies on the route offer their charter service to their potential clients. “Hey, I can get a 4.200 TEU vessel for $200.000/day. If you think this hasn't gotten out of hand, think again," Monroe says.

About 50 ships remain on tour off the ports of Los Angeles and Long Beach (LA-LB), Monroe points out in this regard that the berth is only one of the causes of this congestion, others are the following:

• There are too many ships. Record number of ships calling at ports, especially in southern California.
• Too many containers in the terminal: With the huge volume of containers being unloaded, there is little space to unload incoming ships.
• Labor shortage to work on ships: There are not enough crews to work on the record number of ships.
• Containers on closed lanes: Containers don't come out fast enough to free up space for more containers, which is the # 1 problem today, container flow.