Truck shipping

West Coast Ports Reduce Idle Vessels as Container Supply Grows

The queue of ships waiting to unload cargo at the Port of Los Angeles, North America’s busiest container port, has shrunk 80% since the start of the year as global prices for containers continue to decline, indicating an easing of supply chain disruptions.

The backlog of vessels waiting outside Los Angeles fell from a record high of 109 to 20 and the port moved 876,611 twenty-foot equivalent units (TEUs) in June, its best record in more than 100 years .

“We are going box for box with the record we set for the first half last year. Thus, the cargo continues to move forward. And the efficiency of moving that cargo from ship to shore by rail and truck continues to improve,” Port of Los Angeles Executive Director Gene Seroka told “Squawk Box Asia” on Friday. from CNBC.

“We’ve reduced that backlog of ships since the start of the year… now we want to get that number down to zero.”

The increased efficiency contrasts with the delays caused by the pandemic in 2020 and 2021.

At the height of the supply chain crisis, those 100-odd ships sat idle outside Los Angeles and Long Beach, waiting to unload. Before Covid-19, there was little waiting time for a berth. The pandemic has also hurt domestic transportation due to shortages of truckers due to Covid-19 infections.

Although they have improved, conditions have not returned to pre-Covid levels and further improvements are needed, particularly the delivery of goods inland after unloading from ships, Seroka said.

“We need to get cargo picked up at inland rail facilities by our importers much faster than they have done so far,” he said.

“This will help the western railroads get the engine power out of the equipment and get back here in Los Angeles and continue to get this cargo out at a faster rate than what we’ve seen so far. here.”

Seroka said the truckers’ strike to protest California’s new “gig worker” law at the Port of Oakland shouldn’t affect the improved pace set so far.

The easing of bottlenecks on the West Coast comes as container prices continue to fall from their pandemic highs.

Port closures and a shortage of containers in 2020 and 2021 have contributed to skyrocketing rental costs. But now there is an oversupply of containers and prices have been falling since September.

“The current container oversupply situation is the result of a series of reactionary market disruptions that began shortly after the pandemic hit in early 2020,” the managing director of logistics platform Container said this week. xChange, Christian Roeloffs, in a new analysis.

“As demand increased, congestion at ports increased and container capacity was tied up for a very long period. This led to panic orders for new boxes at record highs,” he said. -he declares.

“Over time, as markets reopen and demand weakens, excess supply is the natural result of supply and demand forces balancing at new levels.”

According to Drewry’s recently released container leasing report, the global shipping container pool grew by 13% to nearly 50 million TEUs in 2021. There is now a surplus of 6 million TEUs worldwide .

While more containers bring welcome relief to those paying freight, Roeloffs said freight prices will not come down quickly as disruptions, while easing, remain acute.

Economic shifts such as slowing demand in response to monetary policy and inflation will also contribute to further supply chain disruptions.

“The main factor that drove up [freight] prices have been a supply-side crisis for the past couple of years due to longer container lead times… that is still true,” Roeloffs said.
Source: CNBC