Customer Advisory - Trans-Pacific Update

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

Key Notes:

Ports of Los Angeles and Long Beach congestion at historic high levels. As reported previously, the Nov. 16 queuing process change now assigns queues based on Last Port of Call departures and provides calculated Time of Arrival at LA/LB by which schedules are set. As such, latest reporting indicates that there are 133 vessels heading to San Pedro Bay with delays to proforma schedule stretching upwards of 41 days.

Further delays to container excess dwell fee. On Dec. 17, the Port Authority of Los Angeles announced a further delay until Dec. 27 of the introduction of the new container excess dwell fee. The continued delay is in response to noted material progress in the clearing of long-dwelling cargo. Gene Seroka of the Port of LA reported a 56% overall improvement on the number of containers dwelling more than nine days as compared to October data.

Easing fluidity in Savannah. Wait times have improved to 5.8 days, though anticipated to climb to 7-8 days over the holidays. Container yard volumes have dropped below 71,000 allowing for better yard fluidity and decreased vessels waiting at anchor. As of Dec. 15, there are about 10 container ships at anchor nearby. The Georgia Port Authority is allowing increased numbers of personnel to expedite vessel movement. Extended gates, rail segregation and transfer of long dwelling containers to rapid and 'pop-up' dispatch yards are also helping fluidity.

Vancouver sees improvements despite some weather impacts. Recovering from rainfall?induced slides earlier this month, CN’s mainline between Vancouver and Kamloops is now running smoothly and allowing resumption of multidirectional traffic. On dock containers have been reduced from a high of 125,000 earlier in December to 74,000.

Airfreight market space backlog persists. Omicron coronavirus developments continue to impact the number of passenger flight services out of Asia and is resulting in temporary cancellation of some freighter flights as well. In addition, demand has increased as Chinese factories impacted by previous power restrictions have resumed operations. An influx is expected in the run up to the Feb. 1 Lunar New Year. Advanced booking of at least 5-7 days is often required. Rates still at relatively high levels, though slightly dropped from previous peaks.

U.S. Federal Reserve officials raise forecasted GDP Growth estimates. In its Dec. 15 press conference, the Fed shared projections of 2021 U.S. GDP at 5.5% with next year’s projection increasing from 3.8 to 4%. Envisioning reduced disruption within the global supply chain, the Fed set 2022 inflation estimates at 2.6% and lowering to 2.2% in 2023. Though inflation estimates remained above the fed target rate of 2%, they fell short of the runaway inflation some analysts predict.

Trending Themes

Demand Outlook and Capacity Impact

Strong demand on the Transpacific Eastbound trade continues and will last through the Feb. 1 Lunar New Year at a minimum. Return of Vietnamese volumes are bolstering overall Transpacific demand. While vessel space remains scarce into North American coasts, the empty equipment availability picture is not as problematic as it has been in past months. Equipment availability not expected to be an issue up through Feb. 1 except for some specific Southeast Asia locations, most notably in Indonesia and some locations in Vietnam.

Congestion and delays throughout the Transpacific trade continue to rise week over week. As referenced in “Key Notes” section, we are seeing delays of up to 41 days at the port of Los Angeles/Long Beach. In the Northwest there are delays of about 10 days in Vancouver and over 17 days in Seattle. Weather-related service disruptions continue in Vancouver that previously washed out the rail service in and out of the terminal. Meanwhile in Asia we also continue to see wait times of up to three days in East China ports on top of the issues at destination. Year to date, the amount of market capacity lost to congestion remains at around 19% on the U.S. west coast. In Q1 we expect a similar impact with around 15% of total lost capacity for the Pacific network overall.

Below is our latest updated sailing schedule for the coming months.

Service 12/13-19 Week 50 12/20-26 Week 51 12/27-1/02 Week 52 1/03-09 Week 1 1/10-16 Week 2 1/17-23 Week 3 1/24-30 Week 4 1/31-2/6 Week 5 2/7-13 Week 6 2/14-20 Week 7
Asia To US West Coast                    
TP1 x x TBA x x x x Early x x
TP2 TBA TBA x Delay x TBA x x Early x
TP3 TBA Delay x TBA TBA x x TBA Delay x
TP6 x x TBA x x TBA x x TBA x
TP7* x Early x x TBA x Delay x Early x
TP8 x TBA x TBA Delay x TBA TBA Delay x
TP9 x x x x Delay x x x x x
TPX x Early x x x x x x x x
Asia to US East Coast                    
TP10 x x x x Delay x x Delay x x
TP11 x Early x x x Early TBA x x x
TP12 x x Delay x TBA x x x x x
TP16 x x TBA x Delay x Delay x Selay x
TP17 Delay x TBA TBA x x x x x x
TP18 x x TBA x x TBA x x x x
TP20 x TBA x x Delay x Delay x Delay x
TP23 x x x Delay x TBA TBA x x x
TP88 x x x x x x TBA x x x

*TPA service has shifted to TP7. The TP Alaska service is no longer available.

Predictive analytics deliver realistic transit time forecasts in a challenging environment Given the bottlenecks in today’s pandemic-impacted supply chain, actual vessel transit times are often delayed beyond what standardized proforma estimates predict. Even recognized industry leaders such as Hamburg Süd, A Maersk Company, with its top-rated schedule reliability ranking, face this challenge every day. Such uncertainty can make it a challenge for customers to effectively manage their end-to-end supply chains. In response, Maersk initiated a project earlier in 2021 to leverage the full power of data to predict more accurate transit times.

Moving beyond traditional proforma static planning estimates, Maersk is applying a new methodology where we are now updating schedules dynamically. Our new platform delivers predictions based on information from frontline operators and includes actual waiting time in ports, actual terminal productivity levels, weather data and other impacting changes in events happening at sea or within the supply chain. The result? The Maersk teams now deliver the best realistic expectation a full eight weeks before the start of each voyage.

As this is a newer practice, there may be occasions where customers see different schedules for the same ship on the respective websites of carriers who partner with us on Vessel Sharing Agreements.

At Hamburg Süd, A Maersk Company, we believe that industry digitalization is key to building a more resilient supply chain. Predictive analytics enable opportunities to react quicker to the market as well as new events and changes in the transport plan. Every day our predictions are getting better, which means that customers can put more trust in our service reliability as they improve their own ability to make better decisions for their businesses now and in the future.

Hamburg Süd’s continued focus on clearing the LA Basin

We are seeing increases in the number of empties returned in the Los Angeles/Long Beach port complex given the previously announced port congestion fees for longstanding import cargo. To assist in keeping the terminals as fluid as possible, Hamburg Süd has orchestrated a number of vessel inducements with several more planned for loading empties only. As a result, we expect reduced surplus levels across the port complex while shortages of empties in Asia will ultimately be moderated by this effort.

In other areas, timely empty returns in the U.S. East Coast have been allowing for vessels to depart full – a trend not seen in a while given the slow pace of container returns. Surplus stock levels are dropping due to our evacuation practices and we now see surplus in only a handful of locations: Greer, Charleston, and Philadelphia. We will continue to deliver customer equipment allocations and work to evacuate surplus to assist in terminal fluidity.

Backlog continues in Vancouver

Cargo traveling from/to Vancouver is still backlogged due to mudslides and heavy rain. Vancouver terminals will need to wait for in-bound trains to arrive to start loading import volume moving to Toronto and Montreal. Some ships have been diverted to discharge in Prince Rupert to avoid the Vancouver backlog. Vancouver truck power is tight and is leading to trucker chassis shortage.

Container volumes in the Northeast are leveling off post-Thanksgiving holiday spike, though chassis will continue to be a major concern. Appointments will be difficult to secure. In general, securing truck capacity requires upwards of 10-16 days lead time with no guarantees in place for overweight, hazardous or reefer cargo.

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