US Exporters are advised to plan ahead to secure equipment in a tight market
Exporters are beginning to feel the ripple effects from the novel Coronavirus (COVID-19) as slew of blank sailings throughout January, February and into March have led to a shortage of equipment in key markets.
The lack of equipment flowing in from Asia will have a temporary strain on the equipment availability for exports especially out of the Gulf and select inland locations.
- Over 80 blank sailings have been announced through March 2020.
- Blank sailings and lack of import freight due to COVID-19 have led to equipment shortages in key areas:
- Atlanta, Chicago, Cleveland, Columbus, Dallas, Detroit, Fort Worth, Houston, Kansas City, Louisville, Memphis, Nashville, Phoenix, and Toronto
- The Gulf region will be most impacted and we also expect lack of equipment in the Ohio Valley region.
- Exporters are advised to forecast their shipments and to book 6-8 weeks in advance to secure equipment.
Space is tight across the board, carriers say
The flow of import containers into the U.S. has been disrupted in early 2020 after an outbreak of a new and deadly coronavirus swept through mainland China right as people began travelling for the Chinese New Year (CNY) holiday.
To control the spread of the virus, the Chinese government extended CNY holiday, closed several ports, and stopped travel between many of it's regions. Factories are just now beginning to resume operations, however, a lack of drayage capacity in China from the virus means most freight isn't moving. Many ocean carriers responded to the situation by blanking sailings.
“The imminent thing is the escalating number of blank sailings. That is going to have an impact on the influx of equipment to the US,” Uffe Ostergaard, president of Hapag-Lloyd Americas, told the JOC. In fact, over 80 blank sailings have been announced in the past two months.
We connected with the major ocean carriers to learn about how the coronavirus is affecting equipment inventory in the US for exports. So far, the Gulf appears to be the region most affected by the equipment shortage, but this could become a bigger issue the longer the import flows are delayed across all origins.
On the Houston to Asia (all water service) tradelane, multiple blank sailings have been announced due to vessels being severely overbooked. Equipment inventory in Houston is traditionally replenished from inbound cargo from Asia, but due to the coronavirus' impact on Asian imports, equipment is scarce.
"Any equipment coming from other regions is being quickly snatched up," a carrier representative told us.
In the Ohio Valley region, we are starting to see inventories dwindling down. 20' containers are especially hard to come by.
"Some locations (like Nashville and others) that are normally low equipment areas for us still have the same status. ... It would be possible that we would reposition equipment for key areas, such as Chicago, if this becomes a major issue. Bookings are unfortunately being cancelled and decisions are being made on a case by case basis," said one carrier.
To replenish empty equipment, DHL reported that some steamship lines, such as MSC, have begun deploying "megamax ships" capable of carrying 19,000+ TEUs to the U.S. This will allow them to continue their regular Transpacific services while using the additional capacity to reposition empty equipment where needed.
It is important to note that carriers allocate equipment on a first come, first served basis, so the more advanced notice they have of upcoming bookings, the better they will be at supporting your business and securing equipment.
So what is an exporter to do?
Here are three tips from our Export Team to help you get through this temporary equipment squeeze:
- Plan ahead. Equipment will be released on a first come, first served basis based on availability, so make sure to reserve your bookings at least 6-8 weeks in advance to secure your space. This will give carriers plenty of notice to plan for your shipments and you will have better luck obtaining containers in a tight market.
- Avoid rolling bookings. If you have multiple containers booked for 1 BL/shipment and additional equipment is not available, we recommend NOT rolling the entire booking. If a booking is rolled multiple times, your shipment may not get on a vessel for several weeks and there could be fees imposed by the ocean carriers if rolled more than once.
- Forecast, forecast, forecast. The best way to get ahead of this situation is to proactively forecast the shipments you expect to move in coming weeks. If you're a UWL Customer, definitely share your forecast with us (the more detailed, the better). We will in turn present the forecast to the ocean carriers so they can plan ahead and work with their equipment managers to support your bookings.
When you create your forecast, be sure to include:
- Equipment Needs by Week
- Origins / Destinations
- Vessel / Voyage #
- Booking #
- Equipment Size/Type
We put together this handy-dandy Equipment Forecast Worksheet to help you plan ahead. Download it via the button below.
Fill it out, send it to your LC – or directly to firstname.lastname@example.org – and we will do everything we can to keep your shipments moving and minimize the impact of this equipment crunch on your supply chain.
We will continue to keep you informed of the latest coronavirus developments. Should you have any questions, please contact your local UWL customer service representative.
For more information, check out some of our other helpful resources below: