Importers have been busy “front-loading” within the first half of the yr, ordering as a lot stock as potential prematurely to keep away from the availability chain delays that prompted many transport containers to reach properly previous their due date. This contributed to bloated retailer inventories that had been shifting items from warehouse to warehouse, looking for a house for late post-season imports. Warehouse stock ranges are nonetheless very excessive leading to congestion and growing chassis and container dwell instances at transport warehouses.
However as a result of stock ranges aren’t turning as quick as they did a yr in the past, shippers additionally lack the house to absorb extra stock. In a latest Journal of Commerce (JOC) article, an attire and footwear shipper stated, “warehouses are full as a result of big-box retailers aren’t taking the stock amid slowing gross sales. They got here to us at the very least 30 days in the past and stated we’d wish to take our orders, however we will’t take them now as a result of we don’t have the house. In contrast to final yr when inadequate labor was the most important impediment, this yr it’s house.”
In accordance with Dr. Zac Rogers, Assistant Professor at Colorado State College in Provide Chain Administration, “warehousing is simply as dangerous one step away from the ports because it was all by way of final yr. And till we work by way of all that further stock, we’re nonetheless not going to see the optimum throughput we’re used to. We’ll work by way of a variety of the surplus we’ve this yr in stock.”
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What does the second half of 2022 appear like for importers and provide chains generally?
In accordance with IHS Market PIERS, containerized import volumes elevated 2% in June, which is the second-highest on report. That’s round 8% increased than the earlier yr, and based on Nationwide Retail Federation (NRF) Vice President for Provide Chain and Customs Coverage Jonathan Gold, “Cargo quantity is predicted to stay excessive as we head into the height transport season, and it’s important that each one ports proceed to function with minimal disruption. Provide chain challenges will proceed all through the rest of the yr. It’s notably necessary that labor and administration at West Coast ports stay on the bargaining desk and attain an settlement.”
New York ports took the honors in June with the best variety of containers imported, representing a 19% y/y enhance following June’s 6% enhance. Importers have more and more been shifting extra quantity to the East Coast, the place volumes in June had been up 12% y/y in comparison with the 5% y/y enhance on the West Coast. Gulf Coast ports, together with Houston and Cell, AL, have additionally benefited from the shift away from the West Coast – June volumes had been up 9% y/y.
Can we anticipate to see extra anchored ships making headlines once more?
Within the Southeast, vessel congestion has lately worsened in Savannah, GA, the place 37 vessels queued up ready at anchor for an unloading berth to turn into out there. This compares to simply 24 in Los Angeles, the place decrease container volumes final month within the Ports of Los Angeles and Lengthy Seaside translated into decrease truckload load submit volumes within the first two weeks of July. Load submit volumes in Los Angeles had been down 23% m/m leading to outbound spot charges dropping for the third week by $0.03/mile to a market common of $2.22/mile. The alternative was the case on the intermodal-heavy Los Angeles to Chicago lane, the place spot charges elevated by $0.17/mile above the June common to $1.85/mile or $0.86/mile decrease than the earlier yr
What does all of this imply for truckload carriers?
For truckload carriers, this implies a repeat of 2021, when vessel congestion and surging import volumes at our largest ports made headlines. This pushed appreciable freight quantity into the spot market as intermodal and contract truckload capability overwhelmed container quantity. We anticipate this to happen once more this yr however extra on the East Coast based mostly on present developments.