Full container terminals in Northern Europe and the US East Coast, constantly shifting vessel schedules, and persistently low on-time performance continue to undermine stability on the trans-Atlantic trade.
Those dynamics are creating bottlenecks that will make the US East Coast “the next hot spot for terribly high congestion,” said Peter Sand, chief analyst at rate benchmarking platform Xeneta.
US consumer demand continues to drive record import volumes as a much-heralded shift in spending from goods to services has failed to materialize. Data show US retail sales in January increased 4.9 percent year over year, while retail inventories in December, the latest available data, rose 3.7 percent year over year, according to data provider Trading Economics.
US imports from North Europe in February grew 11.4 percent year over year to 141,482 TEU in February after rising 9 percent for the full year in 2021, according to data from PIERS, a sister company of JOC.com within IHS Markit.
On top of the sustained import demand, almost two years of disruption at choked West Coast ports has led to shippers shifting calls to the East Coast, adding to the mounting congestion.
Congestion has been further compounded in recent weeks by unpredictable COVID-19 lockdowns in China that delay vessels at origin and destroy their on-time performance at destination. This creates surges in vessel arrivals that overwhelm container terminals.
Following a seven-day Shenzhen lockdown that ended March 20, Shanghai imposed a 10-day lockdown starting this week to allow the testing all 26 million residents of the city in a process that is expected to create weeks of disruption for shippers and carriers.
Port delays dragged schedule reliability on the westbound trans-Atlantic down to a record low of 14.7 percent in February, a decrease of 9 percentage points compared with the already poor 23.8 percent on-time performance recorded in the same month last year, according to Sea-Intelligence Maritime Analysis.
Asbjorn Kops, head of network and market for Atlantic and Mediterranean at Maersk said Russia’s invasion of Ukraine has also complicated matters for ports on both sides of the Atlantic, but the war in Europe was just one of many factors contributing to disruption.
“You see terminal efficiency impacted by the many Russia boxes waiting in Northern Europe yards but even without that we would have problems,” he told JOC.com earlier this week. “Things are increasingly complicated on the US East Coast and in Europe, but it is not that different compared to 2021.”
“Last year, it was Savannah that was the most troubled port,” he said. “Now it is Charleston that is very difficult, and Savannah is one of the best-performing ports.”
Maersk took several ports out of each of its trans-Atlantic strings in anticipation that the situation would deteriorate during winter, and Kops said that in fact improved the carrier’s reliability compared with the first half of 2021.
Maersk is not alone in making unplanned cuts to port rotations on the trans-Atlantic trade. A host of carrier services have shifted port calls in an ongoing struggle to stay ahead of the disruption and to recover schedules missed because of the delays. Most of the skipped calls are currently at Charleston, where 15 ships were at anchor earlier this week waiting to enter the port, according to AIS Live, a product within IHS Markit. Five ships were waiting outside the Port of New York and New Jersey and two outside Savannah as of March 31.
With average delays on the westbound trans-Atlantic lane of just over 10 days in February, much of the capacity in the trade is being absorbed by the congestion. In the first 11 weeks of the year, carriers made 730,000 TEU available on the trans-Atlantic, an almost 6 percent decrease compared with the first 11 weeks of 2021, according to Xeneta.
But Sand said a solid rise in US retail sales was recorded in January and February, which was reflected in the rising February volume.
“Moreover, Xeneta data shows that spot rates went up from January to February, and in March they have held tight,” he told JOC.com.
Average trans-Atlantic westbound spot rates reached $4,927 per TEU this week, more than three times the rate in the same week last year, according to Xeneta. And at the higher end of the market, shippers requiring urgent transport are paying more than $8,000 per TEU.
Trans-Atlantic contract rates valid for at least 90 days have followed the spot market upwards over the past few months and are now less than $500 behind the short-term rates at $4,479 per TEU.
“The difference between short- and long-term rates has reduced to half compared to when it peaked at over $2,000 per FEU in September 2021,” Xeneta noted in a market update Thursday. “This reduction can be attributed to a jump in long-term rates rather than falling short-term rates.”