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Hello, it’s IINO.
In this video, I bring you the logistics news for January 2022.
I would like to talk about what’s new in the logistics industry including North America and China, ocean freight rate trends, corona and logistics technology.
So, let’s get started!
Corona Omicron Variant Expands in LA and LB Ports, Dockworkers Miss Work in Large Numbers
In early January, about 800 dockworkers were absent from work at the ports of Los Angeles and Long Beach for Corona-related reasons.
This is approximately 1 in 10 workers per day.
The following people are among the absentees at the port this time.
・Who tested positive, for the virus
・Who in quarantine, awaiting test results
・Who are not feeling well
Decreased Productivity due to Worker Shortage
The ports of LA and LB have been flooded with imports with as many as 100 ships waiting off the coast of the ports in late November. It reached a record 106 ships on New Year’s Day.
A terminal representative at the Port of LA said “The shortage of workers that began during the Christmas and New Year’s holidays has expanded further reducing terminal productivity by about 20 percent.”
Corona Cluster in Ningbo, China, Strict Vehicle Restrictions
A series of Coronavirus cases have been confirmed in Ningbo.
According to shipping company officials, operations at the port including mainline cargo handling are operating normally. However, restrictions on trucks, drays and other vehicles are still in place.
As a result, truck drivers are required to apply for a traffic permit to enter the port. In some cases, there are requests for quarantine even with a permit.
Zero-Corona Policy in China
China’s Zero-Corona Policy is now very strict and has been locked down in Xi’an with an outbreak of about 1,300 infected people.
With the Beijing Olympics just around the corner, the Chinese government’s strict national policy of never spreading corona is having an impact on the supply chain.
Container Freight Rates Continue to Hit New Highs
Container freight rates from Asia to North America continue to rise from the end of 2021 to mid-January 2022.
The spot freight rate from Shanghai to the West Coast of North America, as of December 31, 2021, was USD7,681 per 40-foot container according to the Shanghai Shipping Exchange.
It recorded the highest for five consecutive weeks.
The price has risen by nearly USD1,000 in one month.
The prices to the East Coast of North America and to Western countries, such as Northern Europe and the Mediterranean, have all risen significantly resulting in an all-around increase.
Pause in Rise in Freight Rate before Chinese New Year
However, in late January, there was a pause in the rise in freight rates.
It might be due to the Chinese New Year beginning on January 31, significant delays on the mainland and strict regulations on truck drivers for China’s zero-corona policy.
As it is the time before the Beijing Olympics, the market has calmed down a bit, but the future trend is still uncertain.
Infor in U.S., Container Shipping Delay Forecast to 2023
Infor, a large company of cloud and software in U.S., has released a report on supply chain forecasts and trends for 2022.
It predicts that port congestion and container ship delays will continue to be a problem until 2023.
Problem and Challenge of Containers Delay
According to the company, congestion and delays at major ports in North America and the Nordic states are due to problems in the global supply chain network.
There are challenges with regard to labor of port, truck driver, unloading from warehouses and the availability of empty containers and chassis for containers, the company said.
It expects these challenges to interact with increased shipments from Asia due to “the highest consumer demand in history.”
Infor also cites rising ocean and air freight transportation costs in 2022 and beyond.
This will remain the case even after the current congestion and capacity constraints subside, and shippers are expected to increase their use of NVOCC and 3PL operators to secure freight capacity.
Kuehne+Nagel Provides Congestion Indices for Nine Major Ports around the World
Kuehne+Nagel, a major international logistics company, has announced that it has begun offering a new indicator of congestion at ports around the world, “the Disruption Indicator.”
The ports covered by the index are;
Prince Rupert and Vancouver, in Canada
Seattle, Oakland, Los Angeles, Long Beach, New York, Savannah, in North America
Hong Kong area, Shanghai-Ningbo area
Rotterdam in Netherlands
Antwerp in Belgium
Visualization of Ports Congestion
This indicator measures the congestion level of the global container transportation network and visualizes the bottlenecks in the supply chain.
Users can analyze and utilize the indicators to predict the impact on their own supply chain and take optimal actions.
MSC Tops Containership Rankings, First Change of Leadership in 29 Years
MSC, a shipping company in Switzerland, has overtaken Denmark’s Maersk which had previously held the top spot to become the top container shipping company for the first time since its inception.
Alphaliner’s ranking in January 6 of container shipping companies in terms of scale of operations is follows;
MSC: 645 vessels, 4,284,728 TEU
Maersk: 738 vessels, 4,282,840 TEU
MSC is slightly ahead by less than 2,000 TEU changing the top spot for the first time in 29 years.
Af January 1, 2021, Maersk had a size of 4.13 million TEU and MSC had 3.85 million TEU. MSC has reportedly increased its size by 11% for the full year of 2021.
Here’s a commentary on the January 2022 news.
Recently, the Omicron Variant of coronavirus has been raging around the world.
In North America, in particular, the number of infected people exceeds one million a day and as I mentioned in this video the manpower for logistics is also affected.
Influence of Corona
In North America, the number of port workers infected or suspected to be infected with corona is increasing. There are not enough people to handle the cargo that is staying in the ports.
During and shortly after the Chinese New Year period which begins on January 31, the number of mainline vessels coming to North America from China will decrease.
The key is how well they can clear the logistical congestion, even if they are short on manpower during this period.
Also in China, in the past few weeks, both Delta and Omicron Variant have been prevalent throughout China.
In the vicinity of the Port of Ningbo, gas distribution and garment factory operations were suspended.
In addition to the lockdown in Xi’an which has caused disruptions in the manufacture of semiconductors for computers, the entire city of Anyang was also shut down on the 11th.
I don’t think that China’s zero-corona policy will slow down in the run-up to the Beijing Olympics which start on February 4.
I think we need to pay attention not only to the disruption of the supply chain, but also to the supply side, as the world’s factory.
Trends in Ocean Freight Rates
With Corona having such a large impact, it has become difficult to read the trends in ocean freight rates.
Ocean freight rates from China to North America which had been rising until mid-January began to stagnate before the Chinese New Year.
Normally, freight rates would settle down after the Chinese New Year, but as I explained earlier, I have no idea how it will move due to the influence of Corona.
This logistical disruption is expected to continue throughout 2022.
Infor, Market Forecast
Infor, a major software company in the U.S., is forecasting the market from the unique perspective of an IT company.
One of the points that impressed me was that shippers are more dependent on NVOCC and 3PL. In general, major shippers tend to book directly with shipping companies.
However, Infor is focusing on total logistics.
And it advocates reforms to the first mile which still has room for improvement, rather than the last mile which has already been developed and improved to some extent.
KN, Visualization of Ports Congestion
And Kuehne+Nagel is focusing on SaaS, Software as a Service, as a major international logistics company.
Kuehne+Nagel is developing a service that allows online quoting, booking and tracking, and has now started a service to visualize port congestion.
Change of Container Ships Rankings
Also of note is the change in rankings for container shipping companies. MSC is adding more container ships, while Maersk is investing more aggressively in ecommerce logistics and 3PL.
Just as Infor mentioned, the importance of NVOCC and 3PL, I personally feel that international logistics is no longer an era of chasing “scale alone.”
I believe that we are entering an era where everything will be seamlessly connected.
IT technology will eliminate the dividing lines between the various logistics processes of warehousing, trucking, customs clearance, shipping, airplanes and customs.
The problems at Corona have drawn attention to the IT introduction and digital transformation of logistics. And the logistics industry has entered a period of change from the old analog days to a new era.
The important thing here is to gather information, think for yourself and take action.
I hope this video will be useful to you.
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