TPEB TRADE OUTLOOK
Date: October 22, 2021
We expect to see the market demand to be stronger for Trans-Pacific eastbound market toward the end of this quarter due to below reasons. Space and equipment continue to be scarce. We’ve summarized some of the current TPEB market updates as below for your information so that you can prepare your shipment as early as possible to make sure your supply chain smooth.
1. LAX/LGB ports are still seriously congested.
The Port of Los Angeles (POLA) has reported its busiest September ever recorded in its 114-year history, with more than 903,800TEU handled through its terminals, reflecting a growth of 2.3% above last September’s previous record of 883,625TEU. California ports have hit another record, more than 100 ships were waiting to unload thousands of containers outside the ports of Los Angeles and Long Beach on this Tuesday, Oct/19, despite Biden’s plan to extends their working hours to 24/7 in order to ease the backlog and relieve supply chain bottlenecks. 97 of these ships are container ships and they carry cargo that will likely miss holiday shopping season. Due to the backlog, the ships often wait several weeks before berthing, adding time to a transportation turnaround for goods coming from Asia. Biden’s plan doesn’t really address the trucker and warehouse worker shortages if these workers aren’t also extending their hours, there’s nowhere for the cargos to go. The Biden administration says the backlog is likely to continue next year.
2. Short of Inventory will push another cargo rush before CNY, price will not go low.
Many US importers have low inventory for their holiday products and some of them have started to ship their cargo early starting from this November, as it is expected the vessels will be easily full and the ocean freight will go up again since the Chinese New Year will come a bit early next year; the 2022 CNY holidays will start from February 1st for a week, but some factories might close early from the last week of January, which makes the shipping window in next January to be shortened. We strongly suggest you plan your cargo as early as possible and start to arrange it sooner than later.
3. Consistent lifting is necessary to keep the allocation with carriers during peak
Maintaining a stable weekly volume is very important. This could help show good record with carriers that both USPTI and our customers have regular support and see the carriers as the long-term partner to work with. When peak season comes and vessels gets full, there is bigger chance to secure more space. If there is no stable record during slack time, it will be harder to secure the space with carrier during peak. Hence, we suggest our customers to maintain a minimum weekly volume with USPTI now in order to be prepared for the peak season, including the cargo rush before CNY.
4. ILWU contract will be expired on July 1st, 2022
Labor contract negotiations at West Coast ports between the Pacific Maritime Association (PMA) and the International Longshore & Warehouse Union (ILWU) are looming. The current dockworkers contract will be expired on July 1st, 2022, and that poses a danger to shippers. Contentious contract negotiations between the ILWU and PMA in 2014-15 led to major port congestion, supply chain disruption, and heavy costs to U.S. shippers and the economy. We’re hoping that contract negotiations in 2022 ends up going smoothly and nothing is disrupted but don’t find that likely unfortunately. As a result, it’s expected that there will be cargo rush before the contract expires; in order to avoid from cargos stuck at terminal or on the water. Take current average 2-3 months cargo turnaround from Asia to final destination, importers are encouraged to ship your cargos much more earlier so that cargos could arrive right before the expiration. That’s to say, there might be another cargo surge in next April and May. We recommend our customers to pay attention to the possible issue and be prepared in advance.
We are pursuing all options to minimize the impact to your supply chain. In order to assist you with your imports, it is crucial you confirm the bookings immediately when sent, so we can work on locking space/equipment as needed for you. Should you have any question, please contact your in-charge sales representative or operations PIC.
Thank you for your continue support and we will keep doing all we can do for your cargo smooth moving as always.