The US East Coast will start 2022 with 25 percent more vessel capacity from Asia than it had at the start of 2021, according to maritime intelligence firm eeSea, as shippers seek ways to avoid the severe and ongoing backlog of ships at the Southern California ports of Los Angeles-Long Beach.
West Coast ports handle most containers coming into the US from Asia, something that won’t change any time soon. Data from PIERS, a sister company of JOC.com within IHS Markit, shows West Coast ports handled 5.08 million more import TEU from Asia than East Coast ports during 2021. In 2020, West Coast ports handled 4.57 million TEU more imports from Asia than East Coast ports.
However, East Coast ports last year saw higher growth in Asian import volumes, which rose 14.8 percent year on year to 6.34 million TEU. West Coast imports from Asia rose 13.2 percent to 11.4 million TEU.
Peter Sand, chief analyst for rate benchmarking firm Xeneta, said in a market update Wednesday that shippers are willing to pay an increasing premium to avoid the bottlenecks facing imports on the West Coast. Xeneta said Asia–East Coast freight rates were $2,750 per FEU higher than rates to the West Coast at the start of 2022, compared with an average spread of $1,150 per FEU during 2018 and 2019.
“Sailing into the East Coast allows a shipper to avoid the chokepoints on the West Coast,” Sand said. “Although port congestion and delays are also a problem on the East Coast, there are more hinterland options to choose between and shorter distances to cover on clogged-up networks than the relatively few options offered on the West Coast.”
Suez services drive East Coast volumes
Carriers are responding to the higher East Coast demand with more ship calls. Asia–US East Coast vessel capacity will average about 742,500 TEU each month between January and April 2022, eeSea data shows. That’s up 25 percent over the same four-month period a year ago. Capacity will drop below 687,000 TEU in February as more carriers cancel voyages during the traditional Chinese New Year slowdown. But capacity will range between 753,000 to 771,000 TEU in January, March, and April, according to eeSea. For the entirety of 2021, eeSea said Asia–East Coast vessel capacity averaged 671,000 TEU each month.
On the West Coast, eeSea said that ocean carriers will deploy an average of 1.71 million TEU in monthly capacity from Asia during the first six months of 2
022. That compares to 1.38 million TEU in average monthly capacity during the entirety of 2021.
The eeSea data comes as container alliances tout East and Gulf Coast ports in contract negotiations with shippers as an alternative to congested West Coast ports. The start of negotiations with the International Longshore and Warehouse Union over a contract renewal this year also looms over shipper decisions on where to land freight.
Ken Kellaway, chief executive of third-party logistics provider and drayage carrier RoadOne IntermodaLogistics, said the shift of product sourcing away from China to Southeast Asia and the Indian subcontinent underpin the additional East Coast vessel calls.
“Services from Southeast Asia are naturally going to route through the Suez, and not go through the West Coast,” Kellaway said. “Retailers are taking a four-point strategy as a hedge against any issues along the West Coast.”
The Ocean Alliance this month announced that it would be offering a new Asia-direct service to US Southeast ports starting in 2022. In addition, Mediterranean Shipping Co. and Wan Hai Lines are adding new trans-Pacific services into the East Coast.
“Large forwarders and importers are asking where they can get vessel space into the US so they can get it to ground and send anywhere in their network,” he added.
Contact Michael Angell at michael.angell@ihsmarkit.com and follow him on Twitter: @michael_angell.
