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Post-lockdown Shanghai container volumes lagging Q1
Shanghai port volumes bounced back in June from the disruption caused by the two-month Covid lockdown that shuttered factories and warehouses. However, volumes are still down compared with earlier this year.
The Shanghai terminals handled about 3.8 million TEU in June compared with 3.4 million in May and about 3.1 million TEU in April. Shanghai handled 4.1 million TEU in March, the month before the lockdown began.
Some forecasted a cargo rush after warehouses and factories reopened once the lockdown was lifted on June 1st, but that has yet to happen. Companies outside the Shanghai area diverted cargo to other ports, including Ningbo.
The Port of Ningbo saw an 18.7% YoY increase in container volumes in May, to almost 3.4 million TEU. Capacity utilization for ships leaving Shanghai is forecast at about 80 to 90% in the third quarter.
Rising U.S. imports keep pressure on trans-Atlantic
Westbound trans-Atlantic cargo demand surged to a record high in June, building on a sequential volume gain in May as strong demand from consumers and manufacturing industries continues to shrug off fast-rising inflation.
U.S. imports from North Europe and the Mediterranean rose 13.8% from the previous month and 8.9% YoY to an all-time high of 343,651 TEU in June. However, the sustained demand is being accompanied by heavily disrupted carrier schedules, full terminals unable to handle the growing imports, and overwhelmed inland logistics networks in the U.S.
Carriers have already warned shippers to expect no improvement in the poor vessel schedule reliability this year as the inbound flood of containerized imports from Europe meets volume diverted from the USWC.
One in five ships on the North Europe to North America westbound routes arrived more than one day later than scheduled. Average schedule reliability for the first five months of the year was 18.7%, compared with 19% in the same period last year.
U.S. retail inventories leveling off
Stockpiles of goods across the U.S. continue to creep higher, with total business inventories rising 0.7% in May from April. However, not all stockpiles are stacked the same. Retail inventories dropped $293 million in May, while manufacturing inventories rose $12.7 billion.
Retailers are trying to pare down stockpiles as they match inventories to changing consumer preferences. On the other hand, manufacturers are trying to find and stock the materials needed to produce their goods.
Manufacturers’ materials and supply inventories are rising faster than their inventories of finished goods. Those high inventories of raw materials, coupled with high retail and wholesale inventories, explain the extremely low U.S. warehousing vacancy rates.
Warehousing tightness is creating gridlock at distribution facilities and in intermodal yards. As inventories remain high, pressure is rising on inventory carrying costs. In 2021, those costs rose 29.5%, and they are heading higher this year as interest rates rise.
A lack of inventory churn has goods stacking up at inland rail depots and intermodal terminals. That is slowing intermodal trains and disrupting rail schedules. Big-box retailers have been accused of delaying goods amid slowing sales, leaving inventory in warehouses or trailers and containers.
About O’Neill Logistics
O’Neill Logistics is a leading 3PL with operations in Rancho Cucamonga, CA; Savannah, GA; and Newark/Monroe, NJ. We service many verticals including Garments, Fashion Accessories, Footwear, Furniture, Home Goods, & Electronics. Additionally, we offer omni-channel distribution and all value-added services. Lastly, we focus on retail “drop shipment” fulfillment and item-level fulfillment services with same-day service offerings.
O’Neill Logistics has over 2 million square feet of state-of-the-art facilities. Additionally, we offer dray services to support the warehouses and provide distribution to retailers and wholesalers. Our reliable 3PL platform combines sophisticated technology with robust, flexible processing designs and speed-to-market gateway models.
Lastly, we aim to simplify your supply chain. We deliver exceptional service and can optimize your operational performance. Therefore, we aim to build, protect and foster strong business partnerships.
