With US exporters struggling to obtain containers and then having to wait for up to eight weeks to find space on ships heading for Asia, tempers have begun to fray.
Ocean carriers have responded by asking for a better dialogue and more advance warning of customer requirements as they work hard to respond to the changing dynamics of the marketplace.
This was one of the key messages to emerge from a meeting between members of the Westbound Transpacific Stabilization Agreement and about two dozen shippers in Washington yesterday.
WTSA chairman Ron Widdows, who is also chief executive of NOL’s liner division, called for more communication along the supply chain as those present at the meeting debated how best to cope with the steep rise in exports from a country that has focused for so many years on inbound cargoes.
But lines are telling their customers not to expect any quick answers.
Shippers will have to accept “incremental improvements”, said APL senior vice president Bob Sappio, who is responsible for the transpacific trades.
“There is no simple solution,” he warned in a telephone interview.
The dollar’s slump has restored the competitiveness of some US exports in world markets, with commodities such as cotton, wastepaper, or agricultural products now in strong demand abroad.
US containerised exports to Asia are running some 20% ahead of a year ago, whereas imports have slumped. The overall drop was about 6.5% in the first four months of the year, but inbound cargo from Asia via US west coast gateways fell 10%, according to latest trade statistics.
For years, the Pacific trades have been heavily imbalanced, with ships arriving full but returning half empty and heavily laden with empties that had to be repositioned.
The problem now faced by the industry is a weight issue. Export cargo is much heavier than import cargo, so ships are coming up against deadweight limitations and are unable to accept as many loaded boxes outbound as inbound.
A typical export container loaded with chemicals or wood products would weigh around 22 tonnes, whereas one containing lighter manufactured goods is nearer 12 tonnes.
That means a ship able to carry 5,000 loaded 20 ft containers eastbound from Asia would only be able to return with about 3,500 boxes on the backhaul leg. The rest would be empties.
But this is not the only challenge, since the majority of import containers are delivered to areas of dense population, whereas many of the new exporters are in the farmlands of the midwest where there will never be a surplus of equipment availabkle for the export trades.
Furthermore, many US exporters prefer 20 ft boxes, whereas the US import trades are heavily biased towards 40 ft or 45 ft containers.
Until recently, these heavy cargoes would have been shipped in bulk form, but as rates in the drybulk trades soared, so producers switched to containers. Whether this cargo returns to bulkships if costs level out in the future remains to be seen, but in the meantime lines are under pressure to re-think their cargo planning and be less focused on headhaul routes.
Eastbound freight rates across the Pacific, at around $4,000 a container, are more than double westbound averages of nearer $2,000. But with the former under pressure as US consumer demand slows, so lines are now starting to look at round-trip economics rather than just rely on revenue in one direction to cover the two-way costs.
Ocean carriers also need to persuade exporters to accept a floating bunker surcharge rather than all-in rates.
Shippers have become so frustrated at not being able to obtain ship space that phantom booking have become a feature. Customers will make several bookings with different lines to protect against the risk of cargo being left on the quayside.
This week’s meeting was designed to improve communication so that both sides have better access to forecasts, changes in sourcing patterns, and other market intelligence that will help forward planning.
More meetings are planned, although no dates have been fixed yet.