LA & LB: Anchored 41 | Terminal 31
Oakland: Anchored (nil) | Terminal 5 | Drifting 1
NWSA: Anchored 10 | Terminal 7 | Drifting 3
Vessel Congestion Update
The shipping crisis is not easing and at one point this week a record high was reached with 47 container ships either at anchor or drifting off the port of Los Angeles-Long Beach, according to the Marine Exchange of Southern California. Anyone visiting the coast near Long Beach, Seal Beach, or Huntington Beach can visually spot the anchored lineup of vessels. As quoted in the American Shipper, “more ships are stuck at anchor than ever before.” It is difficult to realize that within a week, one U.S. port complex had close to 80 container vessels at a terminal, at anchor, or drifting. For years, one could see a gradual increase of anchored ships as the peak season would start. This year, the 2021 peak season is not anticipated to conclude for some time and is expected to last well into the first quarter of 2022.
This week, Gene Seroka, Executive Port Director of the Port of Los Angeles, was quoted in part: “and the story still has not been finished,” as he alluded to the current Chicago Midwest train congestion. The action by the rail companies to halt moving container rail cars from the port complex to the Midwest has resulted in a 13-day rail dwell time at the port complex. The American import system, which is stretched to its limit, may have to handle even higher volumes of cargo as container vessels continue to wait in anchorage to unload at the terminal.
Supply and Demand Shortages Continue
Company websites continue to post statements which indicate: “Due to worldwide shortages, we are out of stock on the majority of our imported items” and/or “Due to insane triple and quadruple freight rate costs, they are on an overseas Asian buying hold.” This week, two large paint makers, as well as prominent homebuilders, provided warnings of supply chain problems and material costs which may cause challenges that could lead to worse than expected 3rd quarter earnings.
A global shortage of semiconductors continues, as the global resurgence of COVID increases. This week’s supply shortages caused the layoff of U.S. auto employees for two weeks and resulted in the stoppage of auto manufacturing.
Vietnam Update
Ho Chi Minh officials continue COVID lockdowns which are scheduled until September 15, 2021. The impact of factory closures and a shortage of containers is projected to affect the delivery of orders by at least 30%. It is estimated that one-third of Vietnam’s textile and garment factories are closed. Footwear production has also been hit as production has suffered closures. The Wall Street Journal last week, indicated in part: “supply chain disruptions have been a long-running thread for apparel sellers and the snag of factory shutdowns arrived as retailers were stocking up for the holiday season.”
Activity of the Federal Maritime Commission
The Federal Maritime Commission (FMC) continues to receive complaints against global carriers. Commissioner Carl Bentzel continues to push the investigation to determine if container lines have been deliberately turning away U.S. exporters’ freight. Additionally, FMC commissioners Chairman Daniel Maffei and Rebecca Dye joined colleagues from the European Union and the People’s Republic of China for the fifth biennial meeting of the Global Regulatory Summit to discuss competition issues related to the shipping industry. The areas of interest and concern for regulators, legislators, and the public include the performance of ocean carriers to meet historic demand for their services coupled with the unusually excessive costs to move ocean containers. As the FMC continues to find definitive answers and hopeful resolutions to the current strain, nothing seems imminent to fix or relieve issues for the 2021 peak season.
U.S. Federal Reserve – U.S. Economy
A speech provided on August 27, 2021, by Jerome Powell, Chairman of the Federal Reserve, can be found online at the following link, entitled Monetary Policy in the time of COVID: https://www.federalreserve.gov/newsevents/speech/powell20210827a.htm
In part, Powell states: “The path of recovery has been a difficult one” and he addresses the recession and recovery to-date along with his comments regarding the inflation path ahead of us.
Please contact your Western Overseas representative with any questions.
