The Port of Yantian – responsible for about 25 percent of US-bound, Chinese origin ocean volumes – has been operating at only 30 percent capacity for two weeks now following a coronavirus outbreak. This has created a queue of ships that could wait 16 days to dock, according to freight marketplace Freightos.
With the nearby ports of Shekou and Nansha unable to handle all the impacted containers, some carriers are skipping not only Yantian but also Shekou to avoid days of delays.
Robert Khachatryan, COO of Freight Right Global Logistics, a freight forwarder that offers services on Freightos.com explained that the latest crisis is also overwhelming other modes as some shipments “are being trucked to other ports at significant cost.”
And the slowdown could impact ocean logistics even more significantly than the Suez including an eventual surge of volumes at US and European destinations.
The impact of this latest crisis will be amplified because the industry is already spread so thin: Though improved, delays at LA/Long Beach persist; some carriers are now avoiding alternative ports like Oakland because they are no better, and smaller disruptions like those in Taiwan and Hamburg are also causing delays and tying up capacity. All in, an estimated 5.5 percent of all ocean capacity is currently waiting outside a port.
And all this means that already sky-high spot rates were pushed even higher this week: Asia-US container rates spiked to new highs with a 25 percent climb to the East Coast, now at more than $9k/FEU, and a 15 percent increase to the West Coast which crossed the $6k/FEU mark, and backhaul rates increased by more than 25 percent as well. Prices from Asia to North Europe and the Mediterranean both increased by more than 5 percent and passed $11K/FEU.
And of course, surcharges and premiums often mean that actual logistics can be thousands more.
And with peak season on its way, it once again looks like things will continue to get worse before they get better.