Fogo Akorede
Port congestion in major seaports across the world has worsened shipping crisis by driving some companies to ship their goods via air charters.
There have been vessels congestion at the ports of Los Angeles and Long Beach, making importation of raw materials and finished goods a nightmare for importers.
Also, foreign shipping companies are abandoning routes across the world for commercially viable India-United States and China-United States routes.
According to eeSea, a company that analyzes carrier schedules, there are over 60 container ships full of import cargo stuck offshore of Los Angeles and Long Beach.
The company said there are more than 154 vessels as of Friday, September, 24th waiting to load export cargo off Shanghai and Ningbo in China to the United States.
The congestion, it was gathered was as a result of businesses rush to re-stock pandemic-depleted inventories and surging demand for imports as the US economy has reopened.
Retailers and manufacturers have rushed to place orders and restock their inventories, but the global shipping system is struggling to keep up.
However, tens of thousands of containers are stuck at the ports of Los Angeles and Long Beach, California, the two West Coast gateways that move more than a quarter of all American imports. More than 60 ships are lined up to dock, with waiting times stretching to three weeks.
Due to the port congestion that has trapped over 200 vessels in the Chinese port of Shanghai, Ningbo as well as American ports of Los Angeles and Long Beach, importers resort to expensive air freight charter to deliver their cargoes.
According to Air Charter Service, a trans-Pacific Boeing 777 air freight charter has hit $2 million from $750,000 pre-pandemic price.
It could cost even more to ship out of Vietnam, as the manufacturing hub faces multiple disruptions occasioned by high demand for vessels to move cargo across the world.
The shipping crisis is boosting demand for air cargo, with desperate retailers sending the price of an air freight charter to record levels.
According to the UK-based air charter service, the pre-pandemic peak price for such a charter was $750,000.
Trade publications American Shipper and Journal of Commerce report similar prices quoted by other industry executives.
It could get even more expensive for companies trying to ship goods out of Vietnam with rates in the $2.5 million to $3 million range, said Edward DeMartini, vice president of air logistics development for North America at Kuehne+Nagel, per American Shipper.
Vietnam is a major manufacturing base for clothes, shoes, and electronics. But a months-long lockdown and recent worker exodus from the country’s business hub have caused operational disruptions on the factory floors and at ports.
Such bottlenecks come amid recovering demand from the US and Europe, stressing global supply chains.
“We’re chartering like mad,” Marc Schlossberg, executive director for air cargo at New York-based Unique Logistics, told American Shipper.
Sportswear giant Nike is one of those using more air freight, reported trade publication Retail Dive .
E-commerce giant Amazon is also reportedly shopping for secondhand cargo jets to avoid major port delays.
“If you had asked me a few years ago whether anyone would take an option of an aircraft positioned in at that price, I would have said it’ll never happen, but some shippers have simply been left with no other options,” said Dan Morgan-Evans, Global Cargo Director at Air Charter Service in a website post earlier this month.
Around 90% of the world’s traded goods are carried via ocean freight, as it’s typically four to six times cheaper than air freight.
But Morgan-Evans said the company was starting to receive calls from “retailers who normally wouldn’t dream of chartering” to cope with an increase in shipping demand.
While there are signs the shipping crisis could be easing, it’s still crunch time for retailers racing to put goods on shelves ahead of Black Friday and Christmas.
“October is probably going to be one of the worst months [ever] in terms of airfreight transportation for the shipping community,” said DeMartini, according to American Shipper.