Tight Space and High Rates Likely to Persist into 2022

The combination of the Golden Week holiday in China coupled with the impact of power restrictions on industrial output resulted in some relaxation of the space situation in the month of October. Industry-wide, there was more space available in October than what had been typically available in previous months. This phenomenon put some downwind pressure on rates, in particular those offered by newcomers like BAL, CU line and on charter operators.

Recent developments indicate that this has been much more of a “blip” than a trend. The main problem continues to be congestion at USA ports, in particular Los Angeles/Long Beach. Berthing delays of two weeks have become the norm, and, for newcomers like BAL, those delays have been much longer with up to 30-day delays now being reported. This has resulted in BAL announcing that their late October sailing will omit Los Angeles and discharge cargo at Manzanillo, Mexico. Similarly, MSC has announced that their scheduled sailing from Shanghai on October 22nd will omit the US West Coast altogether and sail directly to the USEC via the Panama Canal. Even more concerning is the fact that so many vessels are tied up in LA/LB that carriers have been forced to cancel many scheduled sailings from Asia in the month of November.

As a result, shippers and importers should expect a return to an extremely tight space situation in November and likely through the end of 2021. It’s possible that space shortages could be even more acute than what has been experienced since late 2020 when the world economy began to recover from COVID-related shutdowns.

It is hoped that a reduction in the number of sailings in November along with 24-hour operations being implemented at Los Angeles/Long Beach ports will offer some relief to the heavy congestion.  Regardless, demand for space continues to far outstrip supply, so forecasters almost unanimously warn that tight space and high rates are likely to persist well into 2022.