Delayed shipments: increased delivery times for ocean carriers in tighter supply chain

Cargo ships delivered their cargoes later than ever this year, adding to supply chain issues that are undermining efforts by retailers and manufacturers to capitalize on resurgent economic demand.

According to an analysis by Denmark-based Sea-Intelligence ApS, only around 40% of the world’s container ships arrived at ports on time in March, with average delays of up to more than six days. Slowdowns improved from February, but remained far behind reliability levels of the previous two years, when more than 70% of ships arrived on time.

Delays around the world, the result of large-scale resupply by companies as consumer demand improves, are blocking vessel capacity, adding to a shortage of sea containers needed to move goods and resulting in soaring shipping costs as container freight rates increase at a rapid rate. historical rhythm.

For companies shipping goods, the delays are part of a series of headaches disrupting supply chains as the U.S., European and Asian economies rebound from last year’s sharp downsizing caused by the Covid-19 pandemic. Rising raw material costs, shortages of finished products and components such as semiconductors and lumber, labor shortages and reductions in capacity in transportation networks have thrown markets off balance. companies as demand in a range of sectors has recovered.

Shipping delays that began to accumulate at the end of last year worsened during a normally low period of shipping demand at the start of the year. In some cases, they have tied up their stocks for weeks as ships wait to reach the docks while unloaded containers sit for long periods in crowded cargo terminals.

Shipping officials say the biggest delays have been at nearby ports of Los Angeles and Long Beach in southern California. Strong demand from U.S. importers to replenish stocks depleted during last year’s Covid-19 restrictions has overwhelmed America’s largest trade gateway and triggered heavy ship congestion off the coast.

“He [normally] takes 14 days to sail from Shanghai to Los Angeles; today it takes 33 days, ”said Vincent Clerc, Managing Director of Ocean and Logistics at AP Moller Maersk A / S in Denmark, the world’s largest container operator in terms of capacity. “The sailing time is the same, but you spend twice as long waiting to disembark in San Pedro Bay.”

“We have invested millions of dollars in additional capacity, but a lot of that capacity is tied up due to congestion on the west coast of the United States,” said Mr. Clerc.

Delays appear to be the longest at California ports, but Sea-Intelligence said ships moving from Asia to Europe were also delayed after their scheduled arrivals.

Congestion has resulted in delays of up to six days at sites such as Port Klang in Malaysia, Rotterdam in the Netherlands, Piraeus in Greece, Southampton in the UK and the port of Kao-hsiung in Taiwan.

Delays in delivering goods have spanned from docks to train stations, truck terminals and distribution centers, leaving everyone from giant retailers and auto makers to mom-and-dad stores, running out of supplies. and paying several times more than last year to move their merchandise.

The cost of transporting a 40-foot sea container from China to ports on the west coast of the United States was valued this week at $ 5,650, according to the Freightos Baltic Index, up 34.5% since the start of the year and 228% more than the same period last year. .

Delays at Southern California ports eased over the past month. The Marine Exchange of Southern California reported that fewer than 20 container ships were waiting at the moorings at berths for several days over the past week. This was well below the peak of about 40 vessels at anchor in the first quarter and represented the lowest levels since last November. Still, the group, which monitors ship traffic in the area, said there was normally no delay for ships seeking a slot at the Los Angeles and Long Beach docks.

Yeti Holdings Inc., an Austin, Texas-based outdoor recreation equipment maker, said on its first quarter earnings conference call last week that it was facing pressure to put in places materials in order to meet the growing demand for its equipment and which it expects at a high level. freight costs this year.

“The higher freight assumption is largely consistent with what we are seeing in the wider market, as Covid continues to impact global logistics,” said CFO Paul Carbone. “And we now expect those high shipping rates to persist for the rest of the year.”

The higher costs and delays are especially difficult for small businesses, which have less inventory on hand to act as a buffer against supply disruptions.

“Oil and parts prices have risen by at least 15% in the past two months,” said Hector Martinez, who heads Rye Auto Care in Rye, NY. release date. The tires are also delayed, sometimes by several days. “

Executives at the container line expect the market to remain tight for much of the year, although German boxing operator Hapag-Lloyd AG said in its first quarter earnings report that ‘he expects a “gradual normalization in the second half of the year”.

More logistics report

Rising fares have been a financial boon for shipping lines, even as transport congestion has made operations difficult. Maersk earlier this month reported a record first quarter net profit of $ 2.7 billion, up from $ 197 million in the first quarter of last year.

Several other carriers also reported profits exceeding $ 1 billion in the first quarter.

“Right now, we are completely outside the conditions in our ocean operations and are making a windfall of profits from bottlenecks and infrastructure congestion,” Clerc said. “I’d much rather have a more normalized profit than feel their supply chains are cracking and bursting.”

Hapag-Lloyd, which made $ 1.45 billion in net income in the first quarter from $ 27 million in the quarter last year, said it was diverting ships to less congested ports when possible and had purchased 450,000 additional containers since last year to add capacity. But the carrier said “congested supply chains present a huge challenge for all players in the market.”

On average, 30 container ships a day are stranded outside the ports of Los Angeles and Long Beach, just waiting to deliver their goods. The backlog is part of a global supply chain mess caused by the pandemic, which means consumers could see delivery delays for weeks. Composite photo: Adam Falk / The Wall Street Journal

Write to Costas Paris at [email protected]

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