News & Notice2020-05-04T22:28:01+09:00

News & Notice

[American Logistics Status] Intensifying delay in port logistics and increasing transportation costs

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Date
2020-10-16 14:38
1. (Overview) Since the second half of the year, delays in logistics have been intensifying due to the congestion of ports in the western United States, lack of Chassis, and lack of TRUCK CAPACITY. Currently, for cargo arriving at LGB/LAX Port, CNTR pick-up takes about a week (issuance of Chassis and Truck arrangements). Accordingly, additional costs such as DET/DEM and Extras Charges occur, and shipping compliance increases due to delay in delivery. Special attention and preparation are required for the logistics trends of ports in the Americas.

2. (Transport volume trend) LGB/LAX Port is updating the import volume record every month since June. In the first half of the year, the U.S. economy, which suffered from a sharp drop in demand due to COVID, was particularly optimistic after the third quarter, especially for PPE demand, e-commerce consumer goods, Home Office Furnishing demand from telecommuting, and unprecedented “Unexpected Surge” was demonstrated by the rapid increase in income from Computers and Exercise EQ due to changes in life-work PATTERN. Last September recorded a 10.1% increase in volume compared to July-August, which was the strongest in history, and demand surged by +22% compared to the previous year (2019).

3. (Demand outlook) Experts initially predicted that the increase in the volume of goods will be sharply broken from September after the early strength of July-August, but for now, the forecast is revised to continue to be strong until the end of the year at least (An increasing number of organizations predict this strong import demand until early next year). In particular, concerns about LOCKDOWN related to COVID volatility this winter have led to the trend of securing maximum demand for PPE, all consumer goods, and Home-Improvement for inventory storage. As a result of the demand survey of shippers, the trend of early order orders, which traditionally imports in the Spring Season, is brought in within the fourth quarter of this year.

4. (Port Logistics Status) The congestion of LAX/LGB PORT is very serious due to an unexpected surge in import volume. With all transport performance indexes showing severe SVC Deterioration level 1) Port dwell time increase: 2.8 Days -> 3.3 Days; +16% delay 2) Truck Turn Time increase: Drayage truck takes 1 trip time +21% increase 3) Chassis Dwelling Time increase: Chassis seating time rises to 6.9 Days, but still insufficient Chassis shortage worsens 4) Rail Car shortage Red Light is shown in the import logistics sector.

The most serious problem is the lack of Chassis, and Chassis Availability is currently appearing as Zero in many terminals. Therefore, pickup is delayed until the Chassis is secured. Due to this trend, the Drayage Truck is seriously stagnant, so a week's Leadtime is required for D/O Acceptance.

5. (Delay in transportation logistics) Lack of Truck Capacity, which is the basis of logistics, continues to increase and freight rates continue to increase. It is analyzed that about 100,000 Jobs/Drivers were fired due to COVID in the first half of the year, but about half of the drivers who have returned so far (related to unemployment benefits), so there is an absolute lack of truck drivers. Since the second half of the year, the volume of cargo has increased by +20% compared to the previous year, which is a rapid increase in Truck freight rates based on supply and demand. The Truckload spot market index, used as an indicator of truck freight rates, is recording record high for 13 consecutive weeks as of October.

According to INDEX, it has risen to an average of 2.46 in the third quarter of this year from 1.60 on a regular year (recorded to a record high of 3.37 in September). Above all, there is a considerable difficulty in securing Long Haul Team Trucks due to supply shortages (fares surged more than twice compared to the previous year)

6. (Congestion surcharge is charged) Although there are differences depending on the service provider, there are increasing companies that charge Port Congestion Surcharge ($85~$100) and Chassis Handling Charge due to the lack of Chassis, which is the most important issue, and increase in Truck Turn Time. In addition, it is a significant headache as Argues for CNTR Pick Up Delay (DEM) due to port delay and CNTR Return Delay (DET) costs due to CMEE WH congestion continue to increase.

7. (Future concern with COVID19) Every year in the United States, flu alone kills 50,000 to 100,000 people every year. When it is winter and the COVID pandemic hits, we don't know what kind of effect will be in the overall logistics. There are concerns about further containment measures than Shelter-In-Place in March –Hope for the best, but this is the point where wisdom and preparation for the worst situation are needed (Hope for the Best, Be ready for the Worst)

DASAN ART hope that the logistics status will be helpful and if you need additional information on specific issues, please contact us.