As per stats released by the U.S. Census Bureau and the U.S. Bureau of Economic Analysis, the American trade deficit on goods and services went up 4.2%, rising from $70.3 billion in July to $73.3 billion in August this year. The data indicates that export volumes are going down month on month and import volumes are increasing, making it detrimental to the US economy and concerns have been raised by several quarters in the media.
There have been several complaints from US exporters that exports were being compromised in favour of empty container repositioning.
However, port information from San Pedro Bay ports, which handles 40% of US trade, shows that this trend of empty container outbound movement has been going on for a few years and is not a new phenomenon.
As per the stats, empty container outbound movement overtook full container outbound movement as early as 2014, increasing 62% between 2011 and 2021, whereas exports decreased by 49% between 2011 and 2021.
There have been reports about global shipping container shortages especially in China, since the middle of 2020, which has worsened in recent months, leading to severe hikes in freight rates. Based on inputs of vessels piling up in Los Angeles and Long Beach on a regular basis, congestion at the San Pedro Bay ports could have contributed to this as well.
According to data from leading container visibility platform project44, as of the 19th of Nov, there were 78 container ships in LA/LB, sitting outside these ports and waiting for a berth. “These ships could be carrying approximately 330,000+ TEUs and the delay in the berthing of these ships means that these full containers will be out of circulation and cannot be sent back to China as empty or as full to bring back more import cargo into the USA,” said Josh Brazil, VP Data Insights at project44.
“Berthing delays have been inconsistent across the year and in some extreme cases, some ships have waited upto 33 days to secure a berth. This could of course include some of the ships that are not part of the liner service and could have been ships chartered by some of the major retailers, which had to follow the queue and be gapped in when space was available,” said Shabsie Levy, CEO and Founder of Shifl.com, a digital freight forwarder who has been tracking this information for customers.
The theory is that as long as the demand for import goods continues, there will be no let up on import volumes, which keeps the inbound freight rates into the US at high levels. It has been estimated that an import container pays as much as 30 times more than an export container for the carrier and therefore, naturally, all carriers are looking to maximise their empty repositioning back to FE/SEA to take advantage of this.
As per data from Shifl.com, the import rates did come down slightly at the end of October but seems to be rising slightly again. “We think the rates may have peaked. There may be a small uptick in rates leading upto the Lunar New Year in Feb 2022, but I doubt the rates will go back to previous peak levels of August, post Lunar New Year,” said Levy.
As long as the import freight rate remains massively disproportionate to the export rates, there will be no let up on empty containers moving out of the country. While some of the lines have arranged sweeper vessels to maximise empty container movement out of the US, container ship charter is also at an all-time high, preventing lines from being able to afford such charters to move empties as this does not provide any revenue for them.
About the Author : Priyanka Ann Saini is the Managing Director of CHARLIE PESTI, a Logistics and Supply Chain, Media & PR Company. CHARLIE PESTI is the world’s best publicist of logistics technologies, with a strong team of experts specializing in content creation, industry and mainstream PR and media relations, lead generation, and events.
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