• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • Login
  • Subscribe
  • Logout
  • My Profile

  • CORONAVIRUS
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • REGIONS
    • Asia Pacific
    • Canada
    • China
    • Europe
    • Latin America
    • Middle East/Africa
    • North America
  • THINK TANK
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » Turmoil in the Transpacific Container Trades: Is There Relief for Shippers?
EDITOR'S Q&A

Turmoil in the Transpacific Container Trades: Is There Relief for Shippers?

Shippers
Photo: Bloomberg
February 10, 2021
Robert J. Bowman, SupplyChainBrain

These are tumultuous times for the ocean container trades between Asia and the U.S. Freight rates are persistently high, port congestion is slowing the movement of goods, and shippers are complaining about cancelled sailings and a shortage of equipment. In this conversation with SupplyChainBrain Editor-in-Chief Bob Bowman, Sri Laxmana, Vice President of Ocean Services with C.H. Robinson, describes the picture in the run-up to Chinese New Year.

SCB: Are ocean carriers removing less capacity from the transpacific market this Chinese New Year than usual? If so, why?

Laxmana: It’s all about supply and demand. We know demand is up globally, not just on the transpacific eastbound. Given where the rates are today, there's little motivation for carriers to remove capacity as they normally would in the winter months. However, we do expect there to be schedule recoveries in the manner of port voids, blank sailings, or specific service-ring removals. All of that is being done to improve schedule reliability through Chinese New Year.

SCB: So will we see more or fewer blank [cancelled] sailings by ocean carriers?

Laxmana: You're going to see fewer blank sailings, but they're going to be done without much prior notice. They have to do this to improve some of the schedule reliabilities that we see rolling right now.

SCB: Shippers have quite a beef with ocean carriers on the issue of blank sailings, cancellations without much notice. They see it not as a way to improve service, but as evidence of service deteriorating, right?

Laxmana: Yes, but when you look at the schedule integrity right now, it's eroded so much. It used to be between 80% to 90%, but has now dipped down to anywhere between 10% and 20% on the transpacific.

SCB: So you're saying that the cancellation of some voyages will actually improve schedule integrity, leading to more on-time arrivals?

Laxmana: That is the goal, which is why they’re doing it at this period, during Chinese New Year, when historically demand is low.

SCB: With factories shutting down for Chinese New Year, I would assume that means fewer cargoes coming from China within that period of time. Are you saying that demand continues strong anyway, that the flow hasn't gone down, despite the fact we have the holiday?

Laxmana: In the period prior to Chinese New Year, we always see elevated demand. A lot of shippers are trying their level best to get as much product as they can out of China and Asia in general, because of the uncertainty of what's going to happen after Chinese New Year.

SCB: There have been a lot of complaints by shippers about a lack of equipment availability at inland points, in the form of containers, trailers, and chassis that can't be positioned properly for loading. Is that an issue right now? And if so, do you anticipate it being alleviated any time soon?

Laxmana: We’ve seen container shortages from Asia. We’ve also had issues in U.K. ports with Brexit, and are starting to see a lack of fluidity in U.S. ports, specifically at the ports of Los Angeles and Long Beach. We also know for a fact that some importers have long detention times in the U.S., and we’re starting to see an uptick in vessel accidents. All of that tends to result in containers being displaced very disproportionately. Certainly that’s fueling the lack of containers in Asia, when we see all of these things coming together.

SCB: Once they reach the West Coast, ocean carriers would rather turn their containers around at the port quickly, even if that means sending them back to Asia empty. Is that why shippers are having problems finding equipment at inland points?

Laxmana: From an export perspective, yes. When you look at specific agriculture seasonality, it's been very frustrating for some exporters who move freight from inland points. But we also have to consider the weight imbalance between transpacific imports and exports. Because agriculture products are typically very heavy, there's only so much these vessels can carry outbound. However, there’s a rate disparity between import and export as well, and the carriers have to consider that. Repositioning containers to Asia as empty gives them a lot more leverage to move inbound cargoes versus handling loaded backhauls. I know it sometimes doesn't address exporters’ needs, but that’s something we’re seeing right now.

SCB: How are shippers and forwarders coping with congestion at U.S. ports, particularly in Southern California? Are you looking at alternative gateways?

Laxmana: We’re doing a couple of things. We've published a global forwarding insight, to provide customers with information in advance and make sure they know where capacity issues are. Specific to L.A. and Long Beach, we’re ramping up communication with our customers, to provide as many options as possible for alternative gateways coming into the U.S., whether that's through the Pacific Northwest or U.S. East Coast. We’re doing everything we can to amortize the risk. It’s not only about moving freight out of China, but also ensuring that there's as much fluidity as possible as product approaches the U.S.

SCB: Do you expect this current state of affairs to continue through 2021, or do you see some relief coming?

Laxmana: Folks will be looking at whether this Chinese New Year is going to improve things, whether the flow of empty containers from the U.S. and other locations back to Asia is going to provide breathing room for carriers, and whether that will be enough to improve the sailing-schedule integrity of vessels coming in and out. Aside from that, we feel there are a lot of indicators out there that demand is going to continue to be strong through Q1 and maybe Q2. Beyond that, it's really hard to tell.

RELATED CONTENT

RELATED VIDEOS

Logistics Global Gateways Global Logistics Ocean Transportation Transportation & Distribution Asia Pacific China
  • Related Articles

    Turmoil in the Pacific: When is a Contract Not a Contract?

    Relief for U.S. Ag Shippers in Sight? Maybe, But They'll Still Take a Backseat to Importers.

    Recession Is Here, But What Will It Mean for Shippers and Carriers in the Coming Year?

Robert J. Bowman, SupplyChainBrain

Crafting a New Transportation Bill: The Battle Begins

More from this author

Wake up to Coronavirus Updates and the latest Supply Chain News!

Subscribe to our Daily Newsletter

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • Coronavirus-watch-Armada

    Virus Update: J&J Looks for Partners to Boost Supply; Google Prepares for Remote Work Future

    Coronavirus
  • Robotic automation

    Autonomous Supply Chains Are on the Horizon

    Coronavirus
  • Shipping Logjam

    U.S. Retailers See Millions in Sales Delays Amid Shipping Logjam

    Coronavirus
  • Amazon

    Podcast | Making It As an Amazon Seller: It’s No Picnic

    Logistics
  • How Can E-Commerce Retailers Compete?

    Smaller E-Tailers Weigh Pros and Cons of Fulfillment by Amazon

    Logistics

Digital Edition

Scb feb 2021 lg

2021 Supply Chain Management Resource Guide

VIEW THE LATEST ISSUE

Case Studies

  • Remote Implementation: A Dose of the Right Medicine for B2B Pharmacy

  • LSP Saves Customer $1.5 Million a Year With MPO Global Inbound Management

  • Auto Supplier Wows Key Client Using riskmethods Supply Chain Savvy

  • Integrating Shipping and Compliance Saves Conglomerate Millions

  • How a Consumer Goods Giant Upped Its On-Time Delivery Performance

Visit Our Sponsors

6 River Systems ArcBest Armada
aThingz BluJay Burris Logistics
DSC Logistics DCSA (Digital Container Shipping Association) DHL Resilience360
Genpact Geodis GEP
GreyOrange Honeywell Intelligrated Infor
Inmar Kibo Commerce Logility
Magnitude Software MPO Old Dominion
Oliver Wight OpenSky Paccurate
Ports America Purolator QAD Precision
Red Classic Riskmethods Snapfulfil
TGW Systems Transportation Insights Watson Land Company
Westfalia Technologies Workjam Yang Ming
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2021 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing