The rerouting of ships to the US East and Gulf coasts could become permanent, according to the January-February freight update from Dimerco, which also noted that carriers could conduct more blank sailings to curb excess capacity and meet regulatory requirements.
The global 3PL noted that retailers and NVOs have been routing their cargos through the US East & Gulf coasts since early 2022 due to the unsettled contract negotiations with the ILWU (International Longshore and Warehouse Union).
Nonetheless, it said that retailers to continue to ship to USEC.
"The situation may not change until the contract is settled. However, some retailers may even choose to remain in this shift afterwards," Dimerco said.
Meanwhile, it added that blank sailings continue to intensify.
In order to alleviate the worsening loading factors, the company said carriers are intensifying their blank sailings from the previous average of 20% up to 26% during weeks 4 – 8 of 2023 in order to cope with the long Lunar New Year holidays in China.
Dimerco said carriers would also control market capacity.
"According to Alphaliner, carriers will need to rely on (1) slow steaming, (2) Cape route diversion, and (3) deferred new ship deliveries to control market capacity," it said.
"The first two measures would allow carriers to conduct more blank sailings as well as to meet IMO 2023 (effect on Jan 1st), aiming to achieve a 40% reduction in carbon emissions by 2030 compared to 2008," it added.
Lifting of China restrictions to boost global supply chains
In terms of air freight, Dimerco said the move of the Chinese government to lift Covid-19 restrictions will spur "several shifts in the economy and the global freight market."
"On the 8th of January 2023, China government lifted its COVID-19 restrictions. This will spur several shifts in the economy and the global freight market. The lifting of restrictions means that disinfection of cargo is no longer required, which can save up to 2 hours for BUP cargos and half a day for loose carton cargo," Dimerco said in its Asia-Pac freight update, noting that imported chilled/frozen foods are also no longer required to enter central disinfection and testing.
Ahead of the Chinese New Year festivities, the 3PL company also noted labour shortage as most locals have not been able to celebrate Chinese New Year for the past 3 years due to the pandemic.
"Because of this, much of the Chinese workforce will be visiting their hometowns to celebrate Chinese New Year, leading to the closing of factories and a slowing in production all the way until Feb 5," it said.
Despite the slowing in production, capacity before Chinese New Year is expected to get tight as carriers are cancelling flights. Trucking capacity will also be tight as drivers visit their hometowns to celebrate the holidays.
In North America, Dimerco noted the intense winter there, which is also affecting goods transport.
"North America is experiencing an intense winter, leading to several flight delays and cancellations. This will continue to impact the transpacific Westbound on-time performance," Dimerco said.
