West to East Cargo Shift Causing Most Ships to Arrive Late at East Coast Ports

Lower than one in 5 containerships are arriving on time on the U.S. East Coast because the West to East coast cargo shift hits schedule reliability, in response to market intelligence platform Xeneta.

East Coast ports have gained this yr on account of a seamless shift in container transport capability away the West Coast within the Far East to the USA commerce. Sadly, this shift has precipitated congestion for East Coast ports as West Coast ports improves relative to their peak in late 2021 and early 2022. In actual fact, the state of affairs on the East Coast has now deteriorated to the purpose the place lower than one in 5 container ships, or 18.7%, presently arrive on time, in response to Xeneta.

“We’ve seen a stretched provide chain on the US West coast for a protracted interval,” mentioned Peter Sand, Chief Analyst at Xeneta. “This has been irritating for each the carriers and cargo house owners, with, at peaks instances, vessels having to attend for 3 weeks, or extra, for a berth at Los Angeles and Lengthy Seaside. That congestion has offered impetus for carriers to regulate capability and attempt to side-step bottlenecks, trying East as a substitute.”

East Coast ports have seen cargo volumes enhance almost 12% this yr and Sand notes that, up to now three months, capability between the Far East and the US East Coast has risen by 18.9% year-on-year—translating to a median capability of 210,000 TEU, the equal of carriers including 4 8,750 TEU ships, per week in opposition to 2021 ranges, in response to Xeneta.

“This can be a main shift, however sadly it additionally comes with main repercussions,” mentioned Sand. “As extra vessels and cargo heads East – there’s been a 11.9% enhance in volumes to date this yr, with a 7.3% year-on-year enhance in Might alone – the chain on this facet of the nation is pressurized, and there’s a worth to pay when it comes to reliability. So, in a means, the East Coast turns into a sufferer of its personal success and the West has the respiration house to get better considerably.”

Present figures from the Port of New Yok and New Jersey confirmed 19 ships at anchor, whereas on the Port of Savannah the variety of ships at anchor has exploded to greater than 40. The 2 ports are the most important and second largest ports on the East Coast, respectively.

“This begs the query; what do carriers do now? Shift again once more, or maintain out for enhancements?,” Sand asks.

Whereas West Coast ports nonetheless benefit from the “lion’s share” of capability from the Far East, yr up to now cargo volumes are down 8% , with Might 2022 registering a big 12.8% year-on-year decline, in response to Xeneta. Consequently, West Coast ports’ share of inbound cargo volumes from the Far East has fallen from over 66% in July 2021 to somewhat underneath 60% presently.

“Regardless of ongoing considerations portside, with the continued menace of business motion from dockworkers, amongst different components, these transport to the West Coast may have loved easing congestion of late. Fewer ships imply much less strain, and schedule reliability has now reached its highest degree in over a yr,” mentioned Sand.

“However, solely 24.8% of ships are arriving on time – with a median delay of 9.9 days (in opposition to a median of 9 days on the East Coast) – so there’s nonetheless numerous work to be finished. It’ll be very attention-grabbing to see how this develops, in addition to, after all, how charges are impacted by the capability adjustment and altering demand image going forwards,” Sand added.

About these charges… Drewry’s composite World Container Index (WCI) for spot charges decreased by one other 2% this week, marking the index’s twenty third consecutive weekly lower and 29% under the identical week final yr. Taking a look at spot freight charges by main route, Shanghai-Los Angeles charges fell 3% on the week, to $7,280 per 40ft container, and are down 32% in comparison with final yr. Shanghai-New York charges fell 1% weekly, to $9,842, and at the moment are down 29% year-on-year. Nonetheless, the Drewry WCI composite index for spot charges stays 84% greater than the 5-year common.

In the meantime, a report from Xeneta final week mentioned long-term container transport charges, which ocean carriers financial institution on, are displaying indicators of peaking.