Source: Journal of Commerce
Date: 8th February 2022
Japanese and South Korean cargo owners are paying dearly to ship their products to North America compared with those in China as they see a drop in the number of direct trans-Pacific calls with carriers struggling to restore schedule reliability. The falling level of connectivity has led shippers to use short-sea services from Japan and South Korea to China where cargo is transshipped to mainline services.
“Carriers have rescheduled their vessels and implemented recovery plans to improve schedule reliability,” a reliable source in China told JOC.com. “In some cases, port calls have been cut [from] Japan and South Korea.
“Some routings from Japan to the US West Coast will ship via Shanghai,” he added. “US East Coast services will keep the original ex-Japan/South Korea port schedule.”
Highlighting the freight rate disparity, spot rates to ship a 40-foot container from Japan to the US West Coast were about 64 percent higher than comparable rates from China, according to data provided by the ocean freight rate benchmarking platform. Rates from South Korea were about 32 percent higher.
Container freight rates from Japan to the US West Coast are currently about $14,000 per FEU, with South Korea to the USWC at about $11,200/FEU. By comparison, rates from China are about $8,500/FEU, data showed.
“Clearly something is boiling in the intra-Asian basin,” chief analyst, told JOC.com. “Chinese ports are consolidating cargo before it leaves the region. Since May , the rates out of China on the trans-Pacific have become relatively much cheaper compared with rates out of Japan and South Korea.”
Highlighting the drop in connectivity, figures from Yokohama, Japan’s second-busiest container port, show the number of trans-Pacific calls fell from about 400 in 2019 to 350 in 2020. Trans-Pacific container volumes dropped about 30 percent in the same period. At the same time, the number of feeder services connecting ports in China increased slightly to about 1,860 calls.
“One of the reasons is that carriers missed Yokohama to make up for delays caused by congestion on the US West Coast,” an executive at the Yokohama City Port Bureau logistics management division told JOC.com.
“Our bureau is calculating the figures in 2021 just now,” the source added. “However, the volume of containers [and] the number of trans-Pacific and China services in 2021 [are] showing a similar trend to that from 2019 to 2020.”
Volume declines from all major Japanese ports
All of Japan’s top ports — Tokyo, Yokohama, Kobe, Nagoya, and Osaka — saw total throughput volumes plunge in 2020, the most recent year where annual figures are available, while China’s top gateways saw volumes surge.
“Most shippers are suffering from space availability, especially to US West Coast,” a reliable source told JOC.com. “From Japan, we have only one direct service — the Far East Pacific 1 (FP1). The situation is worse now, as there have only been three vessels coming to Japan over the past eight weeks.”
While Busan maintained a similar number of trans-Pacific services in 2021 compared with 2020, the number of missed calls on those services has steadily risen in the last few months, according to data from the Busan Port Authority and maritime consultancy Drewry.
Carriers include Busan in about 29 trans-Pacific services, but the port was blanked 49 times in January, 24 times in December and 14 times in November, according to data provided to JOC.com by Drewry’s senior manager of container research.
All-in prices per FEU for spot export cargo from Busan to Los Angeles increased 50 percent in January compared with August last year, while prices from Shanghai to Los Angeles were down by about 8 percent, Drewry said. “Busan now carries a premium of about $1,000 for a 40-foot container compared with Shanghai,” Drewry added.
“Capacity from Busan and Japanese ports is always tight,” a reliable source in Asia-Pacific told JOC.com. “Most of the time, Busan serves as the last call on the trans-Pacific trade so carriers could have the tendency to drop the Busan call to catch up overall service reliability.”