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World - World Shipping Council: Assessing the COVID Cargo Crunch

To say that current trade conditions are challenging would be an understatement, particularly in North America, which is experiencing an unprecedented surge in imports from Asia. This COVID-19 related cargo surge was not expected, it is not clear how long it will last, and we must manage our way through it in the short term.

No one could have planned for the type of surges that are stressing the container transportation network today, because the demand swings are unlike anything ever seen. The Port of Los Angeles reported a 27.3% increase in October 2020 imports versus October 2019, with October 2020 volume now being the highest ever in the port’s 114-year history. Similarly, the Port of Long Beach registered a 19.4% increase in imports in October year over year, and in Houston imports rose 22.2% for the same period. It should be expected that import volumes will remain at unprecedented levels through January, particularly since China has announced that its shipments to the U.S. increased 46% in November 2020 over November 2019.

Since the two most critical assets needed to move cargo – container ships and containers – are largely owned and/or operated by ocean carriers, there is a natural tendency to look to the ocean carriers to solve imbalance-related problems. The solution suggested by some is for the ocean carrier to provide more assets – ships and containers – to handle the cargo surges. That would be the simplest approach if indeed it were possible, but it isn’t, at least not in the near term.

Vessel capacity is fully utilized, and little excess is available. Weekly liner services require multiple ships of a similar size, and additional vessels to support these services are not available. Equally important, additional vessel capacity without additional containers, which currently do not exist, will only make the situation worse.

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