Spotlight on Los Angeles amid surging container freight rate market

By Alex Wood

December 17, 2020


Business is booming at the port of Los Angeles - but dockworkers have had that sinking feeling.

Earlier this month, 20 cargo ships sat anchored south of the city amid chaotic scenes at the San Pedro Bay complex.

Containers were stacked to the hilt as labourers wrestled to manage a lack of warehouse space. And while all this was going on, supply chains began to feel the strain.

A perfect storm had been brewing for some time. As the pandemic swept across the globe, cargo volumes dipped. But when the global economy sluggishly began to recover, a backlog started building up.

'This is the season for turbo-charged consumerism - and retail behemoths like Walmart and Amazon have needed to restock their warehouses ahead of a festive frenzy.

This, mixed with illness-related staffing shortages across the State and bankrupt storage companies taking up warehouse space, has resulted in a logistical nightmare for Port of LA Executive Director Gene Seroka.

November container volume at the port was up 22 per cent year-over-year to more than 889,000 twenty-foot equivalent units (TEUs).

“It’s worth noting that there were 12 ships at anchor on November 30 awaiting berthing rights here in Los Angeles with an estimated 100,000 TEUs on board. Those vessels were delayed by about two days and thus shifted into our December data,” Seroka explained earlier this week.

There were 15 container ships at berth at the Port of LA on Tuesday 15 December.

However, 23 more were anchored in San Pedro Bay. Out of the total, 14 were heading to LA and nine to the Port of Long Beach. Make sure you track all the current anchored ships using Marinetraffic data.

Seroka admitted it's not been an ideal situation.

“Anchorage remains a true concern for all of us," he added.

"Many vessels are stopping first in a holding pattern before coming to berth.

“In November, 50 of the 88 vessels coming to Los Angeles first went to anchor and averaged two and a half days there. So far in the month of December, about 80 per cent of arriving vessels are going to anchor first. The wait time now is increased to four days.”

Related: Signs that your shipment is going to be delayed

It's good news for some, though. Container freight rates from Asia are continuing to surge.

Lars Jensen, CEO of SeaIntelligence Consulting, believes the situation isn't clear cut.

"If the demand abates, the problem gets resolved almost immediately," he told the Baltic Exchange.

"However, the carriers will likely show their resolve and yet again reduce vessel capacity matching the decline which means that the very high spot rates now will come down somewhat and the new surcharges for equipment availability will disappear. But rates are unlikely to collapse.

"If demand continues, the acute problem with the equipment is likely to be resolved within a couple of months, setting an end of the current situation to coincide with the lull after Chinese New Year 2021."

Seroka, meanwhile, isn't expecting any imminent lull once Christmas is out of the way.

“Our first look at January volume indicates approximately 850,000 TEUs, which would be about 5 per cent more than a very busy January 2020,” he said.

“We’ll see a little bit of a volume dip following Lunar New Year, which falls in mid-February, at a time when manufacturing traditionally slows in China. That means our throughput here at the Port of Los Angeles should be strong through at least the first week of March."

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Alex Wood

Alex Wood

Account Manager at London based public relations agency, Navigate PR

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