Until recently, major volume shifts and spikes in rates were issues primarily affecting east-west trade. Trans-Atlantic demand is now growing fast; however, container imbalances and poor service reliability have caused backlogs in the supply chain globally.
Container Imbalance
When trade between China and the U.S. picked up in the second half of last year, the container imbalance began to worsen. Now, approximately 4 containers are sent back to China for every 10 containers that arrive in North America.
The impact of equipment not being available in the locations it is needed to load new bookings has created severe bottlenecks in Trans-Atlantic shipping. The high demand for containers has resulted in rate increases across the globe as countries compete for any empty equipment that becomes available. Recent increases in Europe to North America spot rates are also frustrating shippers who are not accustomed to seeing the substantial jumps that have been announced over the past six weeks.
Vessel Schedule Reliability
Trans-Atlantic westbound schedule reliability is another significant issue; ocean carrier reliability dropped 32% year-over-year in January. Carriers have been using schedule recovery measures, such as structural blank sailings, to correct service schedules. Structured blank sailings are used when there is no vessel available, or if a vessel is delayed for more than a week at another port. While this may serve to reconcile carrier schedules, it ultimately removes high-demand capacity from the market.
GERMANY
Vessel space and available containers are both limited at German ports. To book space on a vessel, shippers need to plan 2 to 4 weeks in advance and empty container availability is only slowly improving.
At the ports in Hamburg and Bremerhaven, terminal operators are turning away export containers if they are delivered more than 72 hours in advance of vessel arrival. This is done to minimize the heavy port congestion taking place at these terminals so that operations can run more smoothly.
Cargo shipments appear to be shifting to the port of Houston as an alternative entry into the U.S. to avoid the congestion in Southern California. This, however, has resulted in overbookings to the U.S. Gulf.
Airfreight space leaving Germany is also limited and may not be the best alternative for U.S.-based shippers looking to move their products out of Germany.
TURKEY
Space available on vessels leaving most Turkish locations is nearly full for the remainder of the month, and is also suffering from extreme container shortages.
The ports of Asyaport, Istanbul and Izmit, however, do appear to have vessels arriving with slightly more available space for exports. Because securing space has been an ongoing issue, many exporters and forwarders are open to shifting cargo to these less congested locations in hopes to expedite their shipments.
UNITED KINGDOM
On March 5, 2021, the Office of the United States Trade Representative issued a joint statement with the European Union announcing a mutual, temporary four-month suspension on all tariffs, both aircraft, and non-aircraft products, related to the World Trade Organization (WTO) Large Civil Aircraft dispute.
Ports in Felixstowe, Southampton and Liverpool have seen an increase in excess containers as shippers and terminal operators learn to manage new complex trading regulations post Brexit. This leaves other UK ports struggling to access empty containers in key locations where demand is high.
Additionally, blank sailings are taking place to maintain or return vessels to schedule, which has further limited capacity into the U.S. driving both demand and prices up.
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