Tight box and exorbitant sea freight may comeback

Exporters have been puzzled by tight container since the second half of 2020 within China although many witnessed moderate export orders. Situation eased slightly this year, while surging sea freight and short box is likely to appear again affected by the earlier congestion of Suez Canal. Mar-Apr and even May will be busy season for some exporters, especially in manufacturing industry. Some enterprises in China have failed to book shipping space for Apr orders. The container ship Ever Given has been refloated on Mar 29 and by Apr 3 at most, all 422 delayed ships would have crossed the Suez Canal.

Although the Suez Canal has resumed navigation, many enterprises worried sea freight to boost on the block. Actually, the spread of COVID-19 pandemic and the congestion of Suez Canal has long-term effect on the mindset among traders and customers, which is hard to predict as no one knows when it will ease or whether it will deteriorate.

Reflected by the PIC of one big logistic company in Ningbo, some shipping companies have raised price, including the route to US.

North America route

According to the latest data from FBX on Apr 2, the freight rate from China/East Asia to North America West Coast was at $5,156 per forty feet equivalent units, up by 5% compared with last period and that to North America East Coast was at $5,814 per forty feet equivalent units, up by 1% compared with earlier period, up by 240% and 110% respectively on the year.

February cargo volume at the San Pedro Bay port complex was off the charts compared to dismal stats from the same period of 2020 as imports jumped 53% at the Port of Los Angeles and 50.3% at the Port of Long Beach. Even taking into consideration Covid-related shutdowns in China at the onset of the pandemic and dismissing 2020 as a one-off occurrence, cargo volume for the month still broke all-time records at both ports.

The Port of Los Angeles churned out 799,315 TEUs of cargo in February, a year-over-year increase of 47%, and 10% above the monthly record set in February 2018. The Port of L.A. was expected to handle some 830,000 TEUs in March. April cargo volume is expected be about the same as in March and 20% higher than the same month in 2020. Based on the data from the port of Los Angeles SIGNAl platform released on Apr 5, the import volume increased by 20.39% from previous week to 129,238 TEUs on Apr 4-10, keeping rising in recent 2 weeks instead of falling and likely to rise by 15.24% week-on-week during Apr 11-17.

Los Angeles and Long Beach are one of the biggest import ports in US for China-made goods, which saw intensified congestion. The waiting time for unloading containers has been extended to 8 days. Normal operation may be hard to emerge completely before Aug. Mar was supposed to see slow import by convention, while the influx of containers did not show signals to mitigate year to date, which cast a shadow on the approaching peak import season.

Europe and Mediterranean routes

Source: NCFI

Transportation demand continued recovering, and the space of the European-to-land routes remained tight. The carriers collectively pushed up the freight rates for the European routes to open in April, and the Mediterranean routes rose slightly. Gloomy outlook is held toward demand amid intensified pandemic in some European nations.

Mideast route

Source: NCFI

In addition, as Ramadan is approaching, transportation demand of the Mideast route was growing rapidly, the loading rate of the route had rebounded significantly compared with the previous period, and freight rates rallied sharply. Exports of goods made in China such as the polyester filament yarn may be impacted by the Ramadan holiday in Apr.

Tight containers and high sea freight will remain and hard to change in short run as Mar-Apr and even May will be busy season for exporters within China. US market will see peak import season too. The block of Suez Canal deteriorates dilemma rather than a key cause. Actually, the spread of COVID-19 pandemic and the congestion of Suez Canal affects the mindset among traders and customers, with long-term influence.