At the Suez Canal, the Ever Given has been dislodged and vessels are finally transiting the waterway after a nearly weeklong blockade. There were over 400 vessels waiting in line by the time the passage reopened to traffic yesterday, with nearly 50 new vessels arriving daily. It will take several days to clear the backlog. Most ships that rerouted around Africa will continue on that course to their destinations.

The immediate impacts of the Suez situation are delayed cargo arriving in the US, Europe, India, and Asia. There are already more pronounced container shortages in Europe, India, and Asia due to these delays. Further, ports will be severely congested with the simultaneous arrival of so many vessels, known as vessel bunching. The expectation is that Europe, India, Asia, and US east coast ports will experience a slowdown this week since vessels were delayed, followed by a huge influx of cargo, another lull as they await vessels that re-routed via the Cape of Good Hope, and then another surge when those re-routed vessels arrive. This will play out during a period of existing congestion and container shortage issues, so the effects will be exacerbated.

Carriers will need to adjust service schedules and implement blank sailings to accommodate the changes forced by the Suez delays. This will impact global trade lanes, including US trades and ports. The disruption from the Suez situation will be felt for months.

Demand continues to outpace supply in the international shipping world, and indications remain strong for the remainder of 2021. On the Transpacific Eastbound trade, space and equipment availability are tightening out of Southeast Asia ports (Malaysia, Vietnam) as well as major China ports (Shanghai, Ningbo, Yantian). Space on long-term contracts and FAK level rates is scarce. More volume is moving at premium levels now, and carriers are increasing those premium surcharges in many cases; this week, we have seen premium surcharges climb per container, on top of FAK levels, in light of the Suez disruption.

In Europe, carriers were already announcing full services through May prior to the Suez incident. We can expect greater container availability challenges and even fuller services as a result.

Vessel space for US exports remains a challenge, and rates are rising. Carriers are still moving large quantities of empty containers overseas to get them into the hands of suppliers faster, leaving exporters struggling to find capacity. Most export services are booked up at least a month in advance. Combined with the truck capacity shortage, it may take 4-6 weeks to get an export shipment loaded.

On all trade lanes, import and export, early booking and regular forecasting are the best ways to mitigate the impacts of this difficult market.

 

Additional Information:

The most recent update from Maersk advises that the line is temporarily suspending short-term bookings placed via the online SPOT platform on select trades. This action is being taken to mitigate the impacts of the Suez canal delays that will create greater equipment and capacity challenges over the coming months.

 

Two key trade lanes included in this temporary suspension are Asia to North America and North America to the Mid-East, India, and East Africa. Our customers ship regularly on these lanes, so we need to be prepared for growing challenges. The suspension of SPOT bookings with Maersk out of Asia, for example, will put even more pressure on the market and increase space and equipment problems across all carriers.

 

The complete announcement is attached, and the full list of impacted Maersk services can be found here.

 

 

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Rachel serves as Director, Pricing and Procurement for CVI. Her responsibilities include vendor selection, contract management and negotiation, transportation pricing, FMC compliance, and international agent network management.

Rachel began her career in international shipping with CMA-CGM America. She joined CVI in 2011, gaining experience in various departments with a focus on inside sales and marketing for the company. In 2014, Rachel assumed the role of Manager, Transportation, working on service procurement and development of client proposals. She has served in her current position since 2018.

A native of Norfolk, Virginia, Rachel earned her bachelor’s degree from the University of Michigan in 2005. She holds a Master of Business Administration with a concentration in Maritime and Supply Chain Management from Old Dominion University.

– Rachel Shames, Director, Pricing & Procurement, CVI
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