This week:

  • July sees improvements to global vessel reliability, with mixed results for domestic vessel reliability 

  • Trans-Pacific spot rates continue to drop each week due to tight US warehousing capacity 

  • Mediterranean Shipping Co. sailings for September will be pushed back by at least a week 

  • Shippers talk about onshoring or nearshoring suppliers to help reduce cost of supply chain disruptions 

  • US truck tonnage rates as a whole remain elevated 

  • US Customs to increase its merchandise processing fee 

Global Vessel Reliability for July Improves Over Previous Months  

The first four months of 2022 saw global vessel reliability hit record lows. However, July recorded the third consecutive month of improvements to vessel reliability, albeit an increase of just half a percentage to 40.5% from the previous month.  

On-time performance from Asia to the West Coast also rose 2.3% to 27.1% in July, 11.5% higher than in July 2021, while East Coast performance dropped 2.7% to 15.9%. The increase of 0.5% for global schedule reliability may appear minimal, but it is part of a larger upward trend that could indicate further improvements through the rest of the year. In January, vessel on-time performance to the West Coast was just 9.3% before shippers and retailers began rerouting vessels to the East and Gulf Coasts to avoid any complications caused by the Longshore labor contract negotiations.  

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Trans-Pacific Spot Rates Drop as US Warehouses Remain at Capacity  

US warehousing and distribution centers experienced a vacancy rate of just 3.7% in the second quarter. This indicates how stretched warehousing capacity remains after the large quantity of early retail and industrial shipments from earlier in the year.  

As a result, trans-pacific spot rates have continued to drop since the start of July, like the Hong Kong to Los Angeles FEU rate, which dropped 24%, or approximately $1,600, in that time. The final week of August is the first time this year when spot rates from Asia to the US West Coast fell below $5,000 on average, with rates expected to decrease further each week in the near future.  

Amidst dropping spot rates and full warehousing, US retailers predict that import rates for the second half of 2022 will fall 1.5% from the second half of 2021. And despite lower import volumes, shippers and retailers throughout the US should still prepare for inland supply chain bottlenecks caused by chassis shortages, port congestion, late vessel arrivals, and container backlogs at major rail hubs like Chicago.  

 

MSC’s North American Sailings Will Be At Least a Week Late for September

Mediterranean Shipping Co. has begun informing customers that its sailings in the beginning of September from Asia to the US and Western Canada will be delayed by a week on average, citing berth congestion and vessel backlogs at key North American ports as the main contributors.  

The carrier announced it has already adjusted departure dates for two East Coast, two Gulf Coast, and four West Coast services in September. The East Coast Elephant and America services, branded TP17 and TP11 by 2M partner Maersk, will leave one week and two weeks later than initially scheduled. Gulf Coast services Lone Star/TP18 and Pelican/TP88 will leave one week later, along with the West Coast Orient/TP8 and Sequoia/TP3 services.  

The port of New York/New Jersey is currently experiencing berth wait times of between one and three weeks, while the Port of Houston is experiencing delays of between two and eighteen days, leading to many vessels looking for other unloading points to avoid further delays next month.  

Shippers Consider the Pros and Cons of Supplier Nearshoring in Overcoming Disruptions

Mediterranean Shipping Co. has begun informing customers that its sailings in the beginning of September from Asia to the US and Western Canada will be delayed by a week on average, citing berth congestion and vessel backlogs at key North American ports as the main contributors.  

The carrier announced it has already adjusted departure dates for two East Coast, two Gulf Coast, and four West Coast services in September. The East Coast Elephant and America services, branded TP17 and TP11 by 2M partner Maersk, will leave one week and two weeks later than initially scheduled. Gulf Coast services Lone Star/TP18 and Pelican/TP88 will leave one week later, along with the West Coast Orient/TP8 and Sequoia/TP3 services.  

The port of New York/New Jersey is currently experiencing berth wait times of between one and three weeks, while the Port of Houston is experiencing delays of between two and eighteen days, leading to many vessels looking for other unloading points to avoid further delays next month.  

US Truck Tonnage Rates Remain Elevated Despite Economic Slowdown

Between June and July, US for-hire truck tonnage dipped by 1.1%. However, July’s truck tonnage still sat 5.1% higher than in July 2021, indicating a consistently strong trucking demand as the nation’s economy slows down. The data released by the American Trucking Association (ATA) challenges earlier reports that trucking demand would weaken before the fourth quarter and end-of-year holiday season.

Previous reports focused solely on the trucking spot market, which has remained flat with some recent drops. The ATA report and others from Michigan State University and the University of Tennessee indicate that overall trucking tonnage has continued at its elevated levels compared with last year.

US Customs Merchandise Processing Fee will Increase on October 1

US Customs and Border Protection Agency recently announced that its merchandise processing fee (MPF) will increase on October 1 due to inflation. The current MPF calculation rate will remain the same at 0.3464% of the value of declared cargo. However, the minimum fee will increase to $29.66, and the maximum fee will increase to $575.35. Informal entries with a value of less than $2,500 will have a fee set at $2.37.

Featured Photo Credit

Photo by Zetong Li on Unsplash

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