18 November 2014

[181114.EN.SEA] US West Coast Labour Disruption Drives Shippers to Air Cargo as Xmas Nears

HONG KONG shippers are turning to air cargo because of US west coast labour disruption and harbour congestion in such numbers that prices are going "through the roof", say local forwarders.

"It looks like the situation is not going to be resolved quickly. I can see demand being strong until the third or fourth week of December," said Hongkong Association of Freight Forwarding and Logistics (HAFFA) chairman Paul Tsui.

Dr Tsui said available air freight space to the US had reached critical levels and costs "have jumped through the roof", reported Newark's Journal of Commerce, adding that the situation could "further deteriorate."

Ocean shippers are forced to fly goods because of port congestion, rolled cargo and missed sailings. Electrolux vice president Bjorn Vang Jensen said he spent a "ridiculous amount" on air cargo because of poor reliability from container lines.

Said local DHL forwarding chief Li Wenjun: "We expect air freight volumes to grow as more shipments are being diverted from ocean freight. DHL has received requests from customers seeking air chartering solutions for sea freight."

Said Cathay Pacific cargo chief James Woodrow: "We are very much in a peak. I expect that market to remain strong right up until Christmas and am also cautiously optimistic that 2015 will start strongly with good loads up until Chinese New Year."

Forty per cent of US retail imports enter through LA-Long Beach, but now docker go-slows combined with a lack of chassis to take away cargo that is piling up massively from new mega ships at the height of the peak season.

Add to that increasingly tense contract talks with the dockers' union as the Christmas cargo rush is on, after which the longshoremen will lose immediate leverage in the contract talks for a new collective agreement that lapsed on July 1 - not to mention strike-prone truckers unhappy about working conditions.

New Jersey-based NVOC CaroTrans has announced plans to bypass congested and strike prone US west coast ports and recommends that west coast export freight depart from Houston or US east coast, that Pacific Northwest freight departs from New York and Chicago/Midwest cargo departs from the US east coast.

"Our infrastructure challenges require sustainable solutions that will support global competitiveness and improve productivity," said CaroTrans CEO Greg Howard.

The situation has resulted in a dozen big containerships riding at anchor outside the San Pedro ports awaiting berths to open, particularly in the worst hit Port of Los Angeles.

The air cargo industry has been losing market share to ocean freight for several years, but it remains the default option for shippers requiring emergency deliveries.

Source : HKSG.

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