At this point in time, the number of container ships stuck at anchor off Los Angeles and Long Beach is down to around 20 per day. That number was about 30 a few months ago. However, this does not mean the capacity crunch in the trans-Pacific market is finally easing, says Nerijus Poskus, vice president of global ocean at freight forwarder Flexport.
“It’s not getting better. It’s getting worse. What I’m seeing is unprecedented. We are seeing a tsunami of freight,” he reported. “For the month of May, everything on the trans-Pacific is basically sold out. We had one client who needed something loaded in May that was extremely urgent and who was ready to pay $15,000 per container. I couldn’t get it loaded — and we are a growing company that ships a lot of TEUs [twenty-foot equivalent units]. Price doesn’t always even matter anymore.”
Restocking drives up volumes
Poskus said that trans-Pacific import volumes are still rising. He noted that January trans-Pacific imports were up 10% versus 2019 (comparisons to 2020 numbers are affected by COVID) and 13.5% in February. They then went up 51% in March. “So, we’re now at 1.5 times pre-pandemic levels.”
With imports far outpacing retail sales growth, he attributed volumes to inventory restocking. “The restocking is actually affecting the trade even more than growth in demand. That tells me that this will last even longer. Let’s say U.S. consumer demand slows down in Q3 and Q4. That’s not expected, but even if it does, [capacity availability and rates] shouldn’t improve quickly, simply because of the huge restocking demand.”
Poskus also believes the situation is about to get even worse. “Buckle up. The month of May will be the worst people have ever seen,” he predicted. Because some shippers will have to wait in line behind the growing backlog in Asia, he expects “what’s going to happen soon is that some importers won’t even be able to get on the boat. For them, it will almost feel like trade is coming to a halt.”