(Report Producer/Author: CITIC Securities, Han Jun)
1. The West Coast port has become the most congested port in the world
Global port congestion has resulted in a loss of approximately 12.5% of effective shipping capacity, exceeding the capacity of France’s CMA CGM. As of October 2021, the global average container ship transport capacity in port within 7 days reached 8.45 million TEU, a year-on-year increase of 7.9%; accounting for approximately 34.6% of the global transport capacity, a year-on-year increase of 1.2pct, and a year-on-year increase of 3.5pct in 2019, reflecting The operating efficiency of global ports has dropped significantly, and effective shipping capacity has been severely lost. According to SeaIntelligence data, approximately 12.5% of the world’s effective shipping capacity was lost due to global port congestion in October, with a shipping capacity of more than 3 million TEU, which has exceeded the total shipping capacity of France’s CMA CGM, the world’s third largest shipping giant, by approximately 12.2%.
The container shipping capacity of ports in the West Coast of the United States has increased significantly, with the average shipping capacity in the port reaching 790,000 TEU within 7 days. The average port capacity of ports in the West and East US within seven days reached 79 and 740,000 TEU, respectively, an increase of 192.5% and 100.3% compared to before the epidemic. The growth in port capacity of ports in the west and east of the United States far exceeds that of other ports in the world, and ports in the west and east of the United States have become the most congested ports in the world.
The two most important ports in the western United States are the Port of Los Angeles and the Port of Long Beach. The combined import volume of the two accounts for about 40% of the total. Judging from the U.S. container import volume in 2020, the total import volume of the Port of Los Angeles and the Port of Long Beach is approximately 8.83 million TEU, accounting for approximately 40% of the overall U.S. import container volume. Its importance to U.S. imports is self-evident.
The current number of container ships waiting for berthing and the average waiting time have not improved significantly, with the longest waiting time exceeding 40 days. According to the daily operations report of the Port of Los Angeles, as of November 10, a total of 81 container ships were anchored off the coast of Southern California, of which 48 were bound for the Port of Los Angeles and 33 were bound for Long Beach. About 17 container ships are expected to be en route, with 10 bound for the Port of Los Angeles and seven bound for the Port of Long Beach. The 48 vessels waiting to berth at the Port of Los Angeles, containing approximately 203,000 TEUs, have not improved; the average waiting time for berthing is 16.1 days, continuing to hit a record high. Container overdue fees at the ports of Los Angeles and Long Beach will be decided on November 15 depending on the situation. Under the pressure of high demurrage fees, some ships may choose not to berth in the Changluo area, especially some small shipping companies and cross-border shipping companies. Since the operating cargo owners or freight forwarders do not have exclusive berthing rights at the terminal, the longest waiting time is more than 40 days.
At present, the dwell time of containers on the railway terminals has dropped significantly, but the dwell time of containers transported by trucks outside the terminals has not improved yet. As of October 28, the average residence time of containers at the Los Angeles terminal within 30 days was approximately 9.7 days, which has not improved; the average residence time on the terminal railway was approximately 4.5 days, a significant decrease from the peak of 13.4 days. According to POP website data, as of November 8, the average dwell time of containers and trailer chassis outside terminals was about 9.3 days, a slight improvement from the peak of 9.9 days.
2. Multiple links have jointly contributed to the congestion at the US-Western port.
The cycles of all links in the global logistics supply chain have been lengthened, and the current transportation cycle is more than twice as long as the normal transportation cycle. From the perspective of the international container liner transport process, the efficiency of unloading, picking up, unpacking and returning containers at the West America Terminal has been greatly reduced. A large number of containers are backlogged in the terminal yard, which further reduces the efficiency of terminal operations and forms a vicious cycle, resulting in terminal The operation was once paralyzed. From the overall transportation cycle, taking Shanghai to Chicago as an example, the normal transportation cycle is only about 71 days, and the current transportation cycle is more than 135 days, which is more than twice the normal time.
2.1 Consolidated shipping volume on the Asia-North America route increased by 25% year-on-year
From January to September 2021, the consolidated shipping volume on the Asia-North American route reached 17.74 million TEU, a year-on-year increase of 24.6%, and a year-on-year increase of 25.9% in 2019. According to CTS data, global container shipping volume reached 134 million TEU from January to September 2021, a year-on-year increase of 9.4% and a year-on-year increase of 5.5% in 2019. Among them, the Asia-North America route's container volume has grown the most in absolute terms. From January to September, the Asia-North America route's container volume increased by 3.5 million TEU year-on-year, and a year-on-year increase of 3.65 million TEU in 2019.From the perspective of monthly shipping volume, the growth rate of container shipping has maintained rapid growth since 2021. Since July, affected by congestion in the route network, the growth rate of container shipping has declined.
2.2 The capacity of the route from the Far East to North America has increased by 15% within half a year.
The capacity of intra-Asian and other non-trunk routes has been invested in the route from the Far East to North America. Judging from the growth rate of the transport capacity of each trunk route, the global container transport capacity in October 2021 was approximately 24.95 million TEU, a year-on-year increase of approximately 4.2%, while the transport capacity of the Far East to North America route in October 2021 increased by 14.6% year-on-year, compared with April An increase of 15.2%, a growth rate far exceeding the overall growth rate of the industry.
Judging from the proportion of the capacity of each main route, the proportion of the capacity of the Far East to North America route increased from 15.3% in January 2020 to 21.2% in October 2021. The proportion of the capacity of the Far East's internal routes dropped from 13.1% in January 2020 to 11.5% in October 2021, and the proportion of the capacity of other non-trunk routes dropped from 5.8% to 0.2%. Latin America, the Mediterranean, and Africa , Australia and New Zealand and Europe-North America routes have relatively stable capacity proportions.
The growth in shipping capacity on North American routes mainly comes from small container ships. New entrants are mainly small shipping companies and cross-border operators such as cargo owners and freight forwarders. Judging from the changes in transport capacity on the Far East-North America route, capacity will increase significantly starting in April 2021. Judging from the ship types with increased shipping capacity, they are mainly ship types of 5,000TEU and below. In October 2021, the proportions of 100-2,999TEU and 3,000-5,099TEU ship types in the North American route were 2.5% and 10.0% respectively, compared with 0.9 in April. % and 5.3% increased significantly, mainly due to the transportation capacity invested by small shipping companies, cargo owners, freight forwarders and other cross-border operators.
2.3 The cumulative container throughput of Changluo Port increased by 20% year-on-year in 2019
The container throughput of Los Angeles and Long Beach terminals increased sharply, far exceeding the carrying capacity of the terminals. From January to September 2021, the container throughput of Los Angeles and Long Beach terminals was 8.1769 million TEU and 7.0949 million TEU respectively, a year-on-year increase of 26.50% and 24.31% respectively, and a year-on-year increase of 15.30% and 24.95% respectively, far exceeding the capacity of the terminals. ability.
A large number of empty containers are stranded at the US West Terminal, exacerbating port congestion, and occupying trailers, resulting in insufficient truck capacity. Judging from the specific import and export heavy containers and empty containers, the proportion of import heavy containers and the proportion of export empty containers at the Port of Los Angeles and Long Beach continues to increase. In September 2021, the proportion of import heavy containers was 98.24%, and the proportion of export empty containers was 76.66%, reflecting the U.S. import Strong demand and stagnant empty container pressure issues. As ocean freight rates continue to rise, some container ships sail back empty without waiting to load empty containers, resulting in a large number of empty containers stacked at ports in the West United States, exacerbating port congestion. At the same time, empty containers occupy a large number of trailer chassis, resulting in insufficient trailer frame turnover.
2.4 Insufficient truck rail capacity and limited inland storage space
Gene Seroka, executive director of the Port of Los Angeles, said that the container throughput of the Port of Los Angeles increased by nearly 30% year-on-year, while trucking capacity only increased by 8%, and the storage gap is at least 25%; and About 30% of the terminal’s towing appointments are not fulfilled every day. The warehouse vacancy rate across the entire Western United States is just 3.6%, according to real estate firm Cushman & Wakefield.
Since the epidemic, the available truck transport capacity in the United States has dropped significantly, and the United States has suffered from a serious labor shortage. Although truck freight expenditures have continued to rise, the overall truck freight volume growth has been limited. Judging from the U.S. Cass truck freight index, the truck freight industry's revenue continues to hit new highs, while truck freight volume has declined since July. This is mainly due to the serious labor shortage in the United States, the increase in available truck capacity is very limited, and the truck loading ratio ( The amount of cargo loaded on a single truck) has also reached an all-time high. According to Truckstop data, the truck driver stress index has climbed to 2.5, while the indicator had been stable in the negative before the epidemic.
US railway intermodal transport volume has declined in the third quarter of 2021 due to terminal congestion. Intermodal transport spot rates originating from Los Angeles, California are at an all-time high, and the rates far exceed those of other routes.In the third quarter of 2021, the year-on-year growth rate of U.S. railway intermodal transport volume declined, only maintaining the same level as last year. However, the intermodal transport spot rate at the origin point in Los Angeles, California continued to rise, with a year-on-year increase of 13.4% in October, which was much higher than the same period last year. on other freight routes.
The number of job vacancies in transportation, warehousing and utilities in the United States accounted for more than 50% of the overall job vacancies in August, and hourly wage increases will have little effect. The U.S. Department of Labor reported in October that there were 10.44 million job vacancies in the United States in August, a decrease after breaking through record highs for five consecutive months. Among them, the number of job vacancies in transportation, warehousing and public utilities in the United States reached 5.4 million in August, accounting for about 51.7% of the overall job vacancies. It continues to hit a record high, with the job vacancy rate as high as 7.9%. At the same time, the average hourly wage of employees has increased rapidly year-on-year. In October, the number of private non-agricultural enterprise employees in the U.S. transportation and warehousing industry increased by 6.2% year-on-year, which is much higher than the 2.1% year-on-year growth rate before the outbreak. It has little effect in attracting labor employment. The reason is that after the outbreak of the epidemic, the United States has implemented multiple rounds of large-scale economic stimulus. Companies have a strong willingness to resume work and production, and there is strong demand for recruitment. However, the economic stimulus policy also includes measures such as increasing unemployment benefits and directly issuing cash checks, which has significantly increased It has increased the income level of American residents and also lowered their willingness to work.
To sum up, the reasons for the congestion at the US-West Terminal can be roughly attributed to the following points: 1) Affected by the strong consumer demand in the United States, the container volume of the Asia to North America route has increased significantly, exceeding the carrying capacity of the terminal; 2) A large number of small ships Shipping capacity was put into the Far East-North America route, which increased the intensity of terminal operations, and many ships had to queue up to wait for berthing; 3) A large number of containers were unloaded and stacked at the terminal yard in a short period of time, and the empty containers were not transported back in time, resulting in empty containers occupying a large amount Storage yard space further reduces terminal operation efficiency; 4) Truck and railway links have insufficient transportation capacity, and inland warehousing space is also limited. Customers cannot pick up containers in time, resulting in a large number of heavy containers being blocked at the port. (Report source: Future Think Tank)
3. A variety of measures have been tried, but high demurrage fees are really a helpless move
3.1 The 24-hour operation system of the Port of Los Angeles may have little effect
On October 13, the United States Biden The government announced that the Port of Los Angeles will be required to operate 24 hours a day to deal with the supply chain crisis caused by stranded cargo. In addition, several logistics service providers and large retailers in North America have also announced that they will extend working hours and move towards all-weather operations, including Walmart , Home Depot , Target , Samsung , FedEx , UPS etc.
The 24-hour operation system of the Port of Los Angeles may have little effect, mainly for the following reasons:
1) According to calculations, under ideal circumstances, it can handle an additional 3,500 TEU per week. Compared with the weekly import volume of about 150,000 TEU, the effect is still very little. .
2) It is difficult to unify the schedules of many supply chain nodes, and the 24-hour operation of the Port of Long Beach has proven to have little effect. Asian and European ports are mostly transshipment ports, with 24-hour operations speeding up the shipment of goods from large ships to smaller ships. Most U.S. ports are gateway ports, connecting to multiple supply chain nodes such as railways, highways, and warehouses, and it is difficult to unify the timetable. The Port of Long Beach has been operating 24 hours a day, four days a week since Sept. 13, but has seen little truck loading or unloading at extended gates at night and on weekends.
3) The 24-hour operation system requires the terminal administration to coordinate with multiple interests, and the actual implementation is still being delayed. The Terminal Authority participated in the White House Conference. In fact, the real terminal operators and shipping companies did not participate. The Terminal Authority needs to coordinate with multiple stakeholders and requires cooperation from all parties before it can be implemented.
3.2 California temporarily exempts vehicle weight limits, allowing trucks to "overload"
On October 20, California Governor Gavin Newsom signed an executive order directing state agencies to identify ways to ease congestion at the state's ports. Methods.The executive order includes the following: 1) requires the Treasury Department to work with state agencies to develop long-term solutions to support port operations and cargo movement; 2) short-term storage needs need to be met as quickly as possible once cargo is unloaded from ships, expediting storage space on state-owned land freed. 3) Temporarily waive the current gross vehicle weight limit to allow trucks to carry additional cargo; 4) The California Department of Labor and Workforce Development will identify potential training partnerships to increase education, career opportunities for port workers and other workers throughout the supply chain technical education, job training, and workforce development opportunities; 5) State departments and agencies are required to use all legal and fiscal authorities to expedite and prioritize these loading and unloading operations, including giving them priority in state funding.
It can be seen from the executive order that issues of warehouse space, truck capacity, and truck driver shortages are all involved. However, the current shortage of truck drivers is still severe, and the increase in hourly wages has little effect. Even if trucks are allowed to be "overloaded", the capacity released is very limited.
3.3 Long Beach City’s medium-sized and general industrial zones are allowed to increase the number of container stacking levels
On October 22, Long Beach City issued an emergency administrative order, allowing companies to temporarily increase the height of container stacking in medium-sized and general industrial zones to 4 floors. 5 floors require additional Firefighting measures to reduce storage pressure in warehouses, speed up the turnaround of truck trailers, and reduce massive congestion at the ports of Los Angeles and Long Beach.
Long Beach City divides the city into residential areas, commercial areas, industrial areas, park areas, etc., and sets different management regulations for different areas. Only industrial zones provide for outdoor storage of goods, materials, equipment, etc., except in front and back street yards and parking and loading areas. Industrial zones are further divided into light industrial zones (IL), medium industrial zones (IM), general industrial zones (IG) and port-related industrial zones (IP). Different industrial zones have different storage height restrictions. In the light industrial area (IL), the outdoor storage height shall not exceed 8 feet (the height of a 20-foot container is 8.5 feet); in the medium industrial area (IM) and general industrial area (IG), the outdoor storage height shall not exceed 15 feet, and the additional container stacking height shall not exceed 2 There is no height limit for outdoor storage in port-related industrial areas (IP). Currently, the stacking height at the Ports of Los Angeles and Long Beach is both five stories.
Most of Long Beach City is residential area, and the container yards are mainly concentrated near the terminals. The storage space that can be released by this measure is very limited. Carlo DeAtouguia, CEO of Cypress International Logistics West Coast, said, "Increasing the size of urban enterprises' stacking is only a Band-Aid and does not solve the root of the problem."
3.4 The ports of Los Angeles and Long Beach announced high container detention fees
10 On the 25th, the Port of Los Angeles in the United States issued an announcement announcing that the Port of Los Angeles and the Port of Long Beach will charge shipping companies a surcharge of US$100/box for the following two types of cargo starting from November 1 this year, and will increase by US$100/box every day: (i.e. USD 100/box on the first day overdue, USD 200/box on the second day, and so on) Category 1, for containers planned to be transported by truck, if the stay time at the terminal exceeds 9 days (including 9 days), The above surcharge will be charged to the shipping company. Category 2: For containers transported by rail, if the stay at the terminal exceeds 6 days (including 6 days), the above-mentioned surcharge will be charged to the shipping company. The Los Angeles Port Commission will monitor how congestion at the port improves over the remaining time and will formally issue a bill for charges for containers stranded at the terminal after November 15 at the earliest.
The Port of Los Angeles stated that this new policy was negotiated and formulated by the Port of Los Angeles and the Port of Long Beach with the Biden Administration Supply Chain Working Group, the U.S. Department of Transportation and other supply chain stakeholders. It is also a measure to improve the plight of the U.S. supply chain. one. At the same time, this fee collection is not to generate revenue, but to bring together stakeholders in the supply chain to work together to solve the terminal congestion problem. The fees collected this time will be used to invest in port construction, including improving port operation efficiency, speeding up freight and solving congestion problems in the San Pedro Bay area.
On November 1, the Washington United Terminal and Husky Terminal in Tacoma announced that starting from November 8, all imported containers will be charged $310 and $315 respectively if they are detained at the terminal for more than 15 calendar days. Long Stay Rehandling Fee. Terminals that are too congested may be charged additional storage fees.
4. Huge demurrage charges at West American ports may have multiple impacts
4.1 Nearly 60,000 containers face demurrage, and the amount of fines may exceed 80 million US dollars.
Gene Seroka, executive director of the Port of Los Angeles, said that after preliminary statistics from the port, , approximately 58,900 containers are facing this problem, and the accumulated demurrage may be as high as approximately US$88.35 million. There are currently about 84,000 containers in the Port of Los Angeles, 40,000 of which have stayed at the port for more than 9 days; Long Beach Port has 18,900 containers staying at the port for more than 9 days. If container demurrage is officially levied on November 15, the cumulative demurrage at the Port of Los Angeles may be as high as approximately US$45.32 million. As of November 10, there were still 30,210 containers detained at the Port of Los Angeles for more than 9 days, accounting for approximately 41.0% of the overall import container volume. If the containers detained for more than 9 days on November 15 maintain this value, each container will be charged a total of 5 days of detention fees of US$1,500, and the accumulated detention fees will be as high as approximately US$45.32 million.
4.2 Short term: Terminals are congested or moved to sea, and the supply of slots is even tighter
Such a huge container demurrage will have many impacts in the short term. We analyze its impact specifically for different objects:
1) For American trucking companies For example, as cargo owners need to try their best to avoid high container demurrage fees, the demand for truck transportation capacity is more urgent. Subsequent U.S. land transportation prices may continue to rise, ultimately leading to an increase in customers' transportation costs. At the same time, shipping companies represented by Maersk will also face rising costs while carrying out end-to-end layout.
2) For West American ports, the number of containers stacked in the terminal yard may decrease significantly, and the terminal operation efficiency will be greatly improved.
3) For shipping companies, the impact is more complicated:
a) If the container storage at West America Terminal can be greatly improved on November 15, and high container demurrage charges are no longer levied, it will not have a major impact. Therefore, shipping companies and cargo owners are currently actively cooperating to speed up container delivery;
b) If container demurrage is officially levied on November 15, according to FMC regulations, shipping companies can immediately levy the surcharge from cargo owners or freight forwarders. At the same time, the shipping company has recently sent a notice to customers, reminding them to speed up the pick-up of containers, and explained the issue of cost responsibilities. All of them indicate that the additional demurrage fees, except those caused by the shipping company itself, will be borne by the cargo owner.
c) The subsequent congestion at the terminal may be transferred to the sea, and shipping companies may coordinate berthing times to control the flow rate, which may lead to an even tighter supply of space. In addition, shipping companies without exclusive terminals, that is, 12% of the shipping capacity outside the alliance, may be squeezed out due to berthing rights, resulting in less shipping capacity. After this experience and lessons, in order to ensure that subsequent terminals are no longer congested, shipping companies may control ship berthing speeds and adjust berthing times to avoid congestion. Since many terminals are invested and controlled by large shipping companies, the dedicated attributes of subsequent terminals may become stronger and stronger, that is, ships within the alliance will have priority to berth, while ships outside the alliance may be greatly affected. On the North American route, 12 % of non-alliance capacity may be squeezed out.
4) For cargo owners, in order to avoid high demurrage fees that may occur in the next 90 days, the willingness of cargo owners to ship goods may decrease in the short term. At present, no shipping company can guarantee that containers can be quickly transferred out after arriving at the West American port, which may have a greater negative impact on cargo owners' willingness to ship goods.
5) For freight forwarding companies, if the cargo owners’ willingness to ship goods is affected in the short term, there is room for freight forwarding quotations to continue to loosen downwards.(Report source: Future Think Tank)
4.3 Medium and long term: Terminal congestion relief is a systematic project, and labor shortage is still the key
1) As mentioned above, there are many global logistics supply chains that are interlocking, and easing congestion at U.S. ports and terminals is a key A system project cannot be solved quickly in the short term. We believe that under current conditions, terminal congestion may continue throughout 2022 unless major sudden events occur.
We refer to the changes in the number of container ships at the anchorage and the volume of containers in the yard during the nearly one-month shutdown of Yantian Port from May to June 2021 to judge possible congestion changes in the Changluo area of the United States. Yantian Port is responsible for nearly a quarter of China's exports to the United States. Due to repeated epidemics at the port, disordered shipping schedules, and terminal congestion, it was once paralyzed. Starting from May 28, 2021, by limiting the number of heavy containers entering the port and gradually increasing port operations staff, Yantian Port spent a month clearing 42 anchored ships, and the density of heavy containers in the yard dropped to 56%.
Taking into account the different roles of Yantian Port and Changluo Port Area as the starting port and terminal port respectively, congestion relief in Changluo Port Area relies more on the improvement of inland transportation capacity in the United States. However, the United States has a serious labor shortage and its port dredging capacity may be weaker than that of Yantian. port. At the same time, boxes unloaded from container ships are still coming in. Although the number of detention boxes has decreased, as of November 10, the 48 ships waiting to berth at the Port of Los Angeles still contain about 203,000 TEU and are anchored near the coast of Southern California. The 81 container ships contain approximately 343,000 TEU, and the volume of containers waiting to enter the port is still huge. According to the "Global Port Tracking Report" released by the National Retail Federation (NRF), the volume of imported containers in the United States in the second half of 2021 is expected to increase by 3.7% compared with the same period in 2020; the import volume in the first half of 2022 will increase by 2.9% compared with the same period in 2021. %. Total U.S. imports in 2021 are expected to be 29.28 million TEU, an increase of 16.2% from 2020. Among them, the import container volume of West American ports in the second half of 2021 will decrease by 0.8% compared with the same period in 2020, but the import volume in the first half of 2022 is expected to increase by 2% compared with the same period in 2021; the total container volume imported by West American ports in 2021 will be less than that of the same period in 2020. In 2020, it increased by 14.2% to 15.43 million TEU. For ports in the East United States, the volume of imported containers in the second half of 2021 is expected to increase by 8.1% compared with the same period in 2020, and the import volume in the first half of 2022 is expected to increase by 3.3% compared with the same period in 2021; the total volume of imported containers in the East US ports in 2021 will reach 12.24 million TEU, an increase of 17.8% compared with 2020.
We believe that within 90 days of the subsequent huge fine taking effect (i.e. November 15th - February 12th), combined with the decline in shipments in China during the Spring Festival in February, the Asia-North America route in February 2021 may be a normal month. 80% of the total, and the number of heavy containers in Changluo area is expected to drop by 25% to 35%. Thereafter, U.S. retailers will begin to increase inventory purchases in the second quarter of 2022, and the third quarter will enter the traditional peak consumption season in the United States. It will be difficult to improve port congestion. Therefore, under current conditions, terminal congestion may continue throughout 2022 unless major sudden events occur.
2) 12% of non-alliance capacity may gradually withdraw from North American routes, which is more meaningful for the balance of supply and demand in the US line market. From March to October 2021, the weekly shipping capacity of non-alliance shipping companies on the Far East to North America route increased by approximately 30,000 TEU, accounting for 11.9% of the overall weekly shipping capacity from 8.4% in March. Shipping companies that do not have exclusive terminals in the future, that is, shipping companies outside the three major alliances, may have more difficulty obtaining berthing rights. It is expected that about 3.5% of the rapidly increasing capacity of non-alliance shipping companies in 2021 may be squeezed out first. In the medium and long term, 12% of non-alliance capacity may gradually withdraw from North American routes, which is more meaningful for the balance of supply and demand in the US line market.
3) The US West Terminal Union contract will expire on June 30, 2022. In order to avoid the impact of strikes that may be caused by unfavorable union negotiations, cargo owners may rush to ship goods before June next year.
ILWU (International Longshoreman and Warehouse Union, International Longshoreman and Warehouse Union) was formally established in 1937. It has about 50,000 members and has branches in various regions, including Alaska , Hawaii, Washington State , Oregon and california etc dock.Among them, there are approximately 15,000 members in ports in the western United States. PMA (Pacific Maritime Association) is the employer of ILWU. Its members include 29 terminals on the West Coast of the United States and about 70 shipping companies. The board members come from senior executives of various shipping companies and terminals. Their main responsibility is to represent terminals and shipping companies with ILWU. Negotiate.
The union contract has been for 6 years since 2002, and the next expiration date of the contract is June 30, 2022. At that time, the operation of the US West Terminal may fluctuate. First, judging from the historical negotiation process between ILWU and PMA, sabotage during negotiations is inevitable. Although the contract stipulates that workers cannot go on strike during the validity period, the ILWU often resorts to work slowdowns to exert pressure during negotiations, and can cite health or safety issues to defend work slowdowns. Secondly, the ILWU has always been strongly opposed to terminal automation. However, the current US line transportation volume has increased significantly. Terminal automation is the best way to improve efficiency within a limited space. It is difficult to reach a smooth agreement in the negotiations in 2022. So far, among the 12 terminals in the Changluo Port area, only one berth of the LBCT terminal and the Traoac terminal, originally owned by OOCL, has been automated. While a 2008 union contract allows terminals to introduce automation equipment, the ILWU has consistently sought to slow down progress at the terminals and has vigorously opposed a 10-year automation project at TTI Terminals.
4) The US retail inventory sales ratio compared to is still at an all-time low, and there is still sufficient support for medium- and long-term trade demand. We should not expect a drop in demand to alleviate problems such as congestion and supply chain bottlenecks. Data from the U.S. Bureau of Economic Analysis shows that as of September 2021, personal consumption in the United States has increased by 25% and has returned to pre-epidemic levels; the two-year average compound growth rate of commodity consumption in September exceeded 5%. According to the National Retail Federation NRF, the retail industry's seaborne imports in December 2021 will increase by 20% compared with the same period in 2019 before the epidemic. At the same time, data from the U.S. Bureau of Statistics in August showed that the U.S. retail inventory-to-sales ratio (excluding automobiles and parts) was only 1.04, continuing to be at a historically low level; in September, the year-on-year growth rate of retail inventory was only 0.47%, and consumption was much faster than With the speed of inventory replenishment, trans-Pacific shipping volume will continue to rise.
5) The shipping company has announced on November 1 that it will increase the freight rates for the European and American lines. The increase for the American line will be US$600-1000/FEU, and the increase for the European-European route will be US$200-800/TEU. The U.S. line remains fully loaded, and some carriers have announced an increase in FAK freight rates on November 1, with an increase of 600-1,000 US dollars/FEU; some carriers on European routes have announced an increase in freight rates in the first half of November, with an increase of 200 US dollars. -USD 800/TEU. There is a large gap between the quotations of shipping companies and freight forwarders, and there is ample room for shipping companies to increase freight rates. In the future, West US terminals may control the number of ship berthings to avoid large-scale unloading causing terminal operation paralysis. The supply of slots will become even tighter. Combined with the imposition of demurrage fees at the ports of Los Angeles and Long Beach, the freight rates on the US line will continue to remain high.
6) The labor willingness of American truck drivers has changed. Due to the high intensity of long-distance truck work, the wage increase in the American service industry after the epidemic has significantly exceeded that of other industries, and practitioners are more inclined to choose positions with higher cost-effectiveness. Since the epidemic, wage increases in other service industries in the United States (excluding professional services such as finance, information, education, and medical care) have significantly exceeded the overall wage increase. In April 2020, the average hourly wage in other service industries in the United States increased by 10.81% year-on-year. The overall average hourly wage The year-on-year increase was 8.17%, while the average hourly wage in the transportation and warehousing industry only increased by 4.14% year-on-year. At the same time, due to the nature of long-distance trucking work, the average weekly working hours in the U.S. transportation and warehousing industry reaches 38.6 hours, which is much higher than the 32.2 hours in other service industries and the overall average working hours of 34.7 hours. As a result, truck drivers are choosing to leave the industry and move to other more cost-effective positions. According to the U.S. Bureau of Labor Statistics, more than 3.99 million people resigned in April 2021, breaking the highest record since statistics were collected in 2000. Since then, the number of resignations has continued to rise, with more than 4.27 million people resigning in August, and the resignation rate reached a record 2.9%. .
In fact, this problem exists in the UK, continental Europe and China. In economics, this phenomenon is described as a backward-bending supply curve, that is, the labor supply first increases and then gradually decreases as wages rise. When the wage rate increases to a certain level, workers can improve their living standards without providing more labor. For example, most construction workers and shipyard workers in China's traditional manufacturing industry are 40 years old and above. Due to higher salary increases in the service industry after the epidemic, and more diversified ways of making money represented by live broadcasting, the labor force has migrated from the manufacturing industry to the service industry. , this will be a common problem faced by the world after the epidemic.
The American Trucking Associations estimates that the shortage of truck drivers will exceed 80,000 in 2021, reaching a record high; the shortage of truck drivers may exceed 160,000 by 2030. This forecast is based on demographic characteristics such as gender and age of drivers. Changing trends, and expected freight growth. The American Trucking Associations estimates that the industry will have to hire nearly 1 million new drivers over the next decade to replace retiring drivers, drivers who quit voluntarily and additional factors driving industry growth. While all segments of the industry are currently struggling to find drivers, the driver shortage is most acute in the long-haul trucking market. The American Trucking Associations believes that the reasons for the driver shortage include multiple aspects: (1) The average age of existing drivers is too high, and a large number of drivers have retired; (2) The proportion of female drivers is only 7%, and most of the labor sources are men; (3) The epidemic has caused some drivers to voluntarily leave the industry, and driver training schools cannot be carried out during the epidemic; (4) The federal government stipulates that the minimum age for interstate commercial driving is 21 years old, making it difficult to recruit drivers; (5) The time away from home for long-distance trucking work Reasons such as being longer; (6) U.S. Department of Labor data shows that the average income of long-distance truck drivers is about five times the historical average, but some drivers will choose to work less at higher wages, offsetting the salary increase. The number of drivers coming increased. Therefore, because there is no single cause of the driver shortage, there is no single solution to it. Improvements in driver working conditions, higher compensation, and changes in regulatory regulations and business practices of shippers, consignees, and carriers are needed to guide More labor is willing to enter the industry.
(This article is for reference only and does not represent any investment advice on our part. If you need to use relevant information, please refer to the original text of the report.)
Selected report source: [Future Think Tank]. Future Think Tank - Official website
