Carriers have informed the shipping industry that container space on ships is sold out through the month of November. Space is sold out even though capacity is up 20% year-on-year. The surge in imports is unprecedented. A similar space shortage happened in 2018 but 2020 is turning out to be much worse for US importers.

The carriers claim there is nothing else they can do to ease the pain for shippers. All ships that can be deployed are already on the water. The major reason for the surge can be attributed to retailers trying to keep up with e-commerce demand. The coronavirus is causing many consumers to stay away from the brick and mortar stores. They are opting to shop online requiring retailers to have sufficient inventory on hand to meet the demand. Retailers recognize that COVID will impact the traditional “Black Friday” sales. Some retailers are promoting “Black Friday” sales for both e-commerce and in stores for the entire month of November.

The surge in demand is starting to cause problems in all facets of the supply chain. Carriers are struggling to provide sufficient equipment to meet demand in Asia. Some carriers are moving empty containers back to Asia to help ease the deficit. This is causing issues for US exporters who are unable to move their goods. Even though spot rates are at an all-time high, carriers are struggling to provide consistent service levels. Ships sailing from Asia to the US West Coast only arrived on-time 46% in September. This is down significantly from June when ships arrived on-time 87%. Once the container arrives at a US port, finding a chassis and navigating through port congestion are the next hurdles shippers must face.

When is the Asia to US market going to return to normal? Unfortunately, carriers are telling their customers to expect a highly volatile market through the 2021 Chinese New Year. Spot rates from Asia to US West ports are 180% higher than this time last year. Yet, shippers are faced with late arrival of ships, equipment shortages, space issues, lack of chassis and port congestion. All stakeholders must work together to figure this out. Shippers cannot nor should they be forced to experience another peak season like the current one.

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