Some of you may be wondering why furniture has been so delayed recently?!
We are seeing unprecedented issues with supplies and shipping. Never before, in the history of international trade, have things been so upside down.
Here are some details going on, directly from our freight experts:
"As everyone is already aware, equipment shortages and space issues has been ongoing since early 4th Q of 2020. While the space and equipment issues from China showed slight relief after the CNY holiday, factories and mills are now back up to full production and orders continue pouring in at record levels.
Ports remain congested and vessels remain off schedule delaying the next string of port calls. Carriers continue to skip various ports due to schedule backlogs or lack of equipment at said ports. Add this to the new delays and congestion that resulted from the Suez Canal being blocked for a week and we are right back to where we were mid-December and January before the Lunar New Year closings.
Due to the COVID-19, we are seeing severe space & equipment shortages, and port congestion challenges. This leads to a much longer supply chain lead time for Walmart Canada and impacting the in-stock availability across all our DI programs.
In general- all vessels to all ports are delayed. There are currently 26 vessels anchored outside of Long Beach waiting to berth. Oakland Savannah and Houston have vessels anchored offshore as well. There is a shortage of rail cars at the USWC ports leading to 2 week (+) wait times for containers to be moved inland by rail after the delays of actually getting into port and the vessel being worked.
The booking forecast of goods from Asia in the TP trade remains strong until at least July. Inventories remain below comfortable levels for most importers and E-Commerce providers. Even if a slowdown in purchasing occurs, there is an estimated 3 months of congestion backlog to clear and reposition before we could see some normalcy in the market. Given that timeline, this puts us at 4th Q 2021 before any relief in terms of equipment shortages, space allocation, vessel delays, rail congestion, etc. is realistic. Bottom line- It’s going to be a challenging few months for containerized freight throughout the world.
Carriers, per usual, are using this as an opportunity to make more money and to set the rates higher for the new May 1st contract season. Allocation for contracts is additionally either being cut or withdrawn allowing carriers to give first priority of equipment release and slots on the vessel to anyone wanting to pay a premium. Most carriers have cut allocation and informed origin port offices that FAK premium is the only way freight will be released to the east coast in April/May. In response to the ocean freight issues, air freight rates are high and are continuing to climb. This environment is not only affecting US trade lanes- it is being mirrored in Europe, South America, and throughout the developed world.
Below is the current situation per loading ports as of today.
China to USWC and IPI/MLB: bookings are being dominated at the FAK levels. Carriers are rejecting bookings to some further inland destinations such as Memphis CY due to equipment restraints. Keep in mind, that although bookings can be placed and moved, the delays at port and rail are substantial and will remain so for some time.
China to USEC and Gulf ports: bookings are full. Vessels on these rotations are being delayed by the congestion around the world’s ports and have been extended by the Suez Canal blockage. Equipment is available, but this is a space issue. FAK space for April is exceedingly challenging and Carriers are pushing for FAK premium surcharges to get a container to suppliers in China. FAK premium charges have been increased by all carriers for April with some having a cost at almost $10K per 40’HC to east coast ports!
Vietnam: space is full to East and West Coast as Vietnam continues to experience massive growth in exports as companies diversify their supply chain in attempts to dodge tariffs and diversify dependence on China. There are some equipment issues coupled with major space constraints from HCM. USWC and IPI space is available. Urgent April shipments may be forced to pay premium to move the goods to East Coast or Gulf Ports this month.
Malaysia/Indonesia/Thailand/Singapore/Cambodia: equipment is a serious issue. These ports are most effected by the skipped sailings mentioned above. Space is very tight as a result of this and offloading or delays at transshipment port is almost guaranteed. Again, using the premium rate levels may demand consideration to move this month.
Korea/Japan: there is no equipment. Most of the vessels arrive at these ports already full, so there is no space on the outgoing vessels. Even if space is secured, the challenge remains that there is no equipment to load the orders. Like most of the other Asia countries, carriers have opted to have China be the focal point of equipment repositioning- leaving the other countries without sufficient containers for pending orders.
India: no equipment, the most skipped ports sailings by carriers, and severe congestion. Most carriers continue to place bookings on hold with no timeline given from India. India is the most challenging with regards to moving freight currently.
While everyone is fighting, pleading, negotiating and begging for equipment and space each night, not enough bookings are being released daily.
As vessels remain delayed, ports remain congested, bookings remain very strong, sailings continue to be cancelled or skipped, equipment(containers needed for loading and shipping) remains imbalanced and major delays continue at origin, ports and the rails. Nothing is arriving on time. Air freight rate levels are back to twice the average rate for Asia to USA. This is not just a TP trade issue, but rather, an issue we are seeing with all trade lanes throughout the world.
Forecasts and analytics continue to show very little chance of improvement in May and June.
While some commodities can absorb these record freight prices, others cannot and that list grows with each increase the carriers pass on. We remain hopeful that we are close to the peak, but until orders and bookings start slowing we will not know. Demand is currently outrunning supply and carrier on time reliability (arriving on time to port) is at an all-time low. "
Simply put- supply chains are currently clogged!
There you have it!
The problem is real, and unfortunately there is nothing anyone can do except try to keep perspective. While we realize it is a total inconvenience, delayed furniture will eventually arrive.
We are hoping that shipping continues to improve, and we will be sure to update you all as soon as we are notified!
Thank you all for your patience.
Reach out if you have questions, we are here for you.
Milk Street Baby Team
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