Trans-Pacific Faces Challenges Impacting all of Supply Chain

(Florham Park, NJ) … Your supply chain well-being is our top priority. With this advisory, Hamburg Süd aims to provide you as our valued customer with the most relevant and up to date information to help you navigate this period of heightened volatility.

Key Notes:

  • Yantian Terminal -Overall yard utilization is at 67%, with productivity showing steady improvements, up from the low 30’s to now sit at 58% to pre-incident levels. There are currently 14 vessels awaiting berth.
  • Slide or missed sailings,now exacerbated by the Yantian situation, are causing additional delays across the network. While the average vessel wait time stands at 4 days in Yantian, positively this is down from 14 days just a week ago.
  • Ports of Los Angeles and Long Beachwhich currently average 15-20 vessels at anchorage awaiting berth, have wait times upwards of 5 days. Adding to that, labor shortages continue to impact all terminals with resource allocation wait times now averaging 6 days. Due to the shortage, all large vessels are limited to 4 gangs and therefore are experiencing extended port stays of 3-4 days.
  • Port of Oakland congestion and labor challenges persist with other carriers, now starting to omit the port due to the increasing delays. Terminals are still limited to 2 gangs per vessel which has increased wait times upwards of 15-20 days.
  • Port of Savannah will take 1 berth out of service over the next 12-20 days for deep berth dredging. During this time, the Georgia Port Authority will be working with only 5 berths while the typical proforma schedules require 6 berths. Average wait times are currently at 24-48 hours, and as a result of the dredging period, it is expected that the wait times will double.
  • Yard Utilization at the Port of Seattle remains at full capacity (120%) due to continued high volumes. The terminal has now moved to restrict labor, to ensure discharge does not outpace truck and rail gate-out. Yard utilization at the Ports of Vancouver and Prince Rupert both also remain elevated at 90+%.

Trending Themes:

Impact of the Yantian Port Disruption Expected to Exceed that of the Suez Blockage

To compare, the port of Yantian had an average weekly throughput of around 250,000 TEU in 2020. For the better part of 3 weeks now, operational productivity has been limited to 50% or less. While the focal point of this supply chain disruption is limited to a single port, the volume impact of the same, has far exceeded that of the recent Suez Canal incident. Both the extended duration of the disruption and the sheer number of sailings that have had to omit calling Yantian, will take weeks if not months to recover. The expectation is that this issue will not be resolved inside of June.

Once the terminal is fully operational again, there will be a significant backlog of cargo sitting at customers facilities, warehouses and factories that will need to be cleared out. With that in mind, as the terminal productivity improves, we are actively working to secure additional capacity to facilitate, as quick and seamless, a recovery as possible. What should not be understated however, is the sheer magnitude of the task ahead as peak season volumes continue to ramp up and global supply chains remain stretched.

As a direct result of these continued network disruptions, below is our latest updated sailing schedule for the coming months. Note sailings labeled ‘at risk’ may be subject to a slide should port delays persist, and we are unable to secure an extra loader in its place.

Excess Equipment Stock Improving Across North America

Three factors are currently influencing our push to reposition as many containers as possible: the Yantian disruption, the current surplus empty equipment stock here in North America, and the severe shortages across parts of Asia. Though worth highlighting, when a vessel does call the port of Yantian, they will likely be delayed and that will result in an overall loss of capacity on the network which does continue to hamper our efforts.

In response, we will now deploy additional Extra loaders and Gap loaders, which will bring in an influx of additional equipment into North America that will be turned around quickly. US East Coast terminal yard utilization is at its highest it’s ever been. While US West Coast terminals are still seeing vessels depart light in capacity, as customers continue to struggle with port congestion, a lack of truck power, or warehouse constraints that have resulted in increasing container dwell times. This is a delicate balancing act, if not perfectly managed, which will inevitably result in severe equipment shortages across key ports in Asia once again.

Truck, Rail and Chassis Capacity Tightens Further

We continue to see delays at all major ports and are working hard to find alternative solutions. In Houston late arriving vessels continue to negatively impact both truck capacity and chassis availability. We are closely working with some providers to increase the chassis pool size in Houston. Chicago rail yards remain severely congested, largely influenced by a lack of chassis availability. Our rail operations team is engaged across ramp locations to support finding solutions. Exports with a Chicago rail ramp return remain extremely difficult to fulfill. In Cincinnati, Cleveland and Columbus , truck capacity and chassis availability are equally in short supply as is in Atlanta and Memphis; where in Atlanta, the deficit is now estimated to be around 1200 chassis. Customers are requested, where possible, to return chassis to rail ramps as quickly as possible in the strained locations outline above.

While we are avidly pursuing solutions to improve the current conditions, the above challenges for now cannot be completely mitigated. As such, we will continue to update you on further impacts and any potential relief in the coming months.

Please contact your Hamburg Süd representative with any questions that you may have.