Author Archives: just2bruce

New teu waiting days indicator highlights the severity of global container congestion

Posted on January 20, 2022 | 1 comment

Kuehne + Nagel has developed a new measure of container congestion. Its digital platform seaexplorer now features the Global Disruption Index.

The index seems to total the cumulative TEU waiting time in days, based on container ship capacity in certain disrupted hot spots. Many US ports are included in the index. some Chinese and Korean ports and European ports are also included.

The graph below is an example of the information available. It clearly shows the rise in the index from 1- December to 19-January. North American ports are also clearly the largest contributors; however it is not clear from the article whether more ports from the US and North America are included in the analysis. The patterns are clearly similar.

Source: Graph from seaexplorer via Daily Splash article.

Now quite a few marine reporting services have developed congestion measures.

Is there a best one? I have not seen a study comparing the indices as to accuracy or the ability to provide insight.

For instance this Bloomberg article talks about another one, from RBC Capital Markets.

And this article from the Washington Post gives a good picture of the problems in the US.

Splash247 has also reported on the index created by the New York Federal Reserve here.

But the congestion cannot be denied. How to measure it and how to fix it are the questions to answer, for we get what we measure.

Sam Chambers January 20, 2022

New teu waiting days indicator highlights the severity of global container congestion – Splash247
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Another innovation to move China exports

Posted on January 18, 2022 | 1 comment

FedEx Freight has chartered some small ships and arranged with a few shippers to ship full 53-foot containers manufactured in China to the US Port Hueneme, CA. Port Hueneme is a small facility jointly used with the US military. Cargo use is allowed when there is no overriding military activity.

Doing this will allow FedEx Freight to bypass the logjams at the Port of Los Angeles and the Port of Long Beach. It also allows FedEx Freight to put the containers on its rail network for long-distance transport to inland locations. FedEx Freight is mostly an LTL service; ultimately most of the containers will be unloaded at a FedEx depot for the last mile of transport.

Other firms have been following similar strategies recently. It’s one way of getting past the bottlenecks in the LA/LB area. That should help FedEx customers. But the ships are small, and the volume will not be large. It will also produce more empty containers here in the US, and FedEx will need to figure out where to put them and how to get them back to China or elsewhere for another trip.

To the extent the bottleneck is due to surplus empty containers and a shortage of chassis, and irrational appointment behavior for delivery of empties, all this does is route a bit of cargo by another path. But no one should be criticized for examining and using alternate strategies in these hectic times.

Eric Kulisch, Air Cargo Editor Friday, January 14, 2022

FedEx Logistics charters vessels to move China exports, rail containers – FreightWaves
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US importers using box ships to store cargo

Posted on January 13, 2022 | 1 comment

US importers are not so worried about cargo waiting offshore to be unloaded. As long as they have enough for their sales or manufacturing, the cargo can sit on a container ship and the principal cost to the shipper is the interest cost. With interest rates at historic lows, that isn’t much.

The graph below from project44, a Chicago, I- based visibility platform, shows the number of TEUs at anchor by month from January through November 2020, on the left. The rise starting in August is significant. Using data from HSBC, which show a 3.2% annual interest rate, using an average container value of $40,000, they calculate almost $50M per month in new delay costs, and cumulative inventory interest costs over $850 million.

The point is that these costs are a lot lower than inventory costs at warehouses. While the cargo is held at sea under riskier conditions, in the warehouse other costs kick in, not the least of which is space required. Insurance charges on the financed inventory also accumulate. And there’s the work, both labor and mechanical, of shuffling the inventory around; it’s very variable given the specific warehouse layout, but can be significant also.

So shippers are using the offshore jam-up rather than wishing it away. Only when the demand for products ratchets up so that the offshore inventory is needed will the stakes change. While we have significant COVID likelihood today, that isn’t likely to change much.

It’s always interesting to look at the overall question of inventory cost in the supply chain. Advantages to shippers can come from unlikely places.

By Nick Savvides 12/01/2022

US importers using box ships to store cargo – cheaper than warehouses – The Loadstar
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