As we move into 2024, it seems we will be met with many of the challenges we encountered during the pandemic. We want to relay the below market information and partner with you to meet these issues as a team.
Most of you have seen the problems plaguing the Panama Canal, which have been creating delays of up to two weeks for vessels to transit the canal locks. To avoid these delays, ocean carriers adjusted their schedules from Asia and rerouted their services via the Suez Canal to the U.S. East Coast. Recently, the war in Israel and attacks from the Houthi rebels in Yemen have made the passage through the Red Sea and the Suez Canal extremely dangerous. Carriers have again changed their routes to move around South Africa and the Cape of Good Hope before crossing the Atlantic to the East Coast. The result is that vessels normally moving from Asia east to the East Coast are now headed west around South Africa increasing the transit times from Southeast Asia by 10 – 12 days and from Central and North China by 3 – 4 weeks. Moving forward, ocean carriers will continue to monitor the situations in both canals and will adjust and readjust their vessel schedules accordingly.
As you can imagine, major shipping lines’ fixed schedules have been completely disrupted so any published schedules or transit times are unreliable. In addition, the carrier’s practice of “blanking” sailings has further exacerbated the space situation. We are relying on our overseas partners to keep us posted on the constant schedule changes, departure dates, and changes to the U.S. ETAs. These information updates are extremely difficult because the carriers struggle to push out accurate and timely notices. We will do our best to keep you advised, but please bear with us if there are delays.
We are advising all our clients to push their overseas factories and suppliers to book shipments 4 – 6 weeks prior to the shipment ready date. As during the pandemic, the advanced booking time will allow our agents to work with our carriers to secure the best possible carrier space and availability for each shipment. We will be utilizing all carriers in our portfolio to move your product as quickly as possible, but suggest building in buffer time in your supply chain and purchasing. Most importantly, please advise your clients of the current shipping crisis and let them know to expect delays for receiving shipments.
Concerning the ocean rates, on January 1st the trans-pacific carriers pushed through the largest general rate increase (GRI) since 2022. The increases can range from $600 – $1000/container and we expect carriers to implement a Peak Season Charge (PSS) next month. These increases are in addition to the Panama Canal surcharges levied last month. In short, rates are dramatically spiking again. Due to the massive schedule changes and delays in transit, we expect that there will be empty equipment shortages in Asia as the vessels struggle to get back to their origins in the coming weeks. While importers are trying to rush goods from the suppliers before Chinese New Year, we anticipate there will be congestion issues as we head into February. Lastly, we are seeing ocean carriers reducing the amount of per diem free time in the U.S. so they can push importers to return the empty containers as quickly as possible.
Western Overseas understands this is not the news you want to see to start 2024, but it is our responsibility to ensure our clients are aware of what lies ahead. We encourage you to work closely with us and our teams overseas so we can navigate these difficult times together. Please reach out to us if you have any questions or feedback from what you might be experiencing. As always, thank you very much for your support of Western Overseas global logistics services.