Container rates from China to US West Coast fall, but port congestion persists

Author: Adam Yanelli


HOUSTON (ICIS)--Rates for shipping containers from east Asia and China to the US Pacific Coast have eased, but China’s “Zero COVID” policy is starting to impact operations at the major port of Ningbo and the ports of Los Angeles and Long Beach remain congested.

Global shipping major AP Moller-Maersk said earlier this week in an advisory that closures and restrictions in the area to prevent the spread have limited truck access to the port of Ningbo and some warehouses in the region have closed.

The action was taken after a few people in the Beilun District tested positive for COVID-19.

Maersk said that of the five container terminals in Ningbo, three are located near the Beilun District. However, no positive cases have been reported in the terminals.

Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said the impact from the outbreak remains unclear.

“The recent increase in cases could limit manufacturing in the region and in other areas with outbreaks,” he said, which could reduce output destined for US consumers.

“But broader travel restrictions could also mean factories that normally close over the Lunar New Year holiday will stay open, reducing the typical pre-holiday pressure on logistics,” Levine added.

However, he thinks the end result will be increased rates.

“Any additional slow down due to COVID will likely exacerbate the congestion and backlog and continue to keep pressure on container rates as well,” Levine said.

Meanwhile, congestion outside of the US ports of Los Angeles and Long Beach persists.

A new queuing system for container ships put in place by the Marine Exchange of Southern California (MESC) moves the ships to a safer location, known as the Safety and Air Quality Area (SAQA), to help reduce emissions near the coastline.

But even though the container ships are spread out, the backlog is significant.

MESC said that as of 6 January there were 105 container ships backed up, which includes 16 at anchor or loitering inside 40 miles from the ports, plus 89 in the queue - vessels that are slow speed steaming or loitering outside the SAQA.

This is up from before the Christmas holiday when there were 91 total container ships backed up, including 24 at anchor or loitering inside 40 miles, plus 67 in the queue.

The record before the new queuing system was implemented is 116 container ships on 16 November.

For context, there were 86 container ships in port on 13 October ahead of the peak-season arrivals.

Levine said the southern California ports are dealing with their own COVID issues as the surge of the Omicron variant continues.

He said two-thirds of COVID tests administered on Tuesday came back positive, and port authorities are bracing for a slowdown in operations.