Covid-19 sees liners going to LA to collect empty containers

Some shipping lines have been using vessels to retrieve empty containers from Los Angeles to prevent further supply disruptions to the US.

Maersk has said three large ships would be deployed to carry both full and empty containers from the US back to Asia.

A combination of a supply shock in China and cancelled containership sailings has led to a surplus of containers at the Port of Los Angeles and a shortage in Germany. US-bound electronics, clothing and furniture have had the biggest supply chain interruptions.

Port of Los Angeles Executive Director Gene Seroka said that “we are only weeks away from a real tipping point”. Robert Loya, vice president of port trucking firm CMI West, said that his company had nearly 1,000 empty containers in his yard and at customer facilities – significantly more than normal – as terminals cut gate opening hours to reduce labour costs.

Lingering empty containers could clog up the Los Angeles trade gateway when China factory production comes back online, which could exacerbate the supply sock cause by the original production and transport disruption in China.

The Port of Los Angeles expected to have 41 cancelled ship calls during Q1, more than double the number in the same period last year. Q1 container volume is forecast to drop 15% year-on-year.

February container volumes through Los Angeles were down 23% year on year in February, with 544,037 teus being moved. The decline was expected to continue in March.

Seroka said that “as factory production in China remains at low levels, we expect soft volumes in March. Looking ahead to anticipated manufacturing improvements, we will need to return empty containers to Asia and push lingering US export boxes out swiftly”.

While February imports decreased 22.5% year on year to 270,025 teus, exports decreased by only 5.7% to 134,468 teus.

Meanwhile, Copenhagen-based Sea Intelligence has said that blanking of sailings out of China by ocean carriers due to the coronavirus impact was returning to normal levels,

“Back haul freight rates are beginning to increase as carriers increasingly favour empty repositioning for the limited back haul sailings. This is in order to get into position to capture what is expected to be a peak in Chinese exports in the medium-term future. It could well be expected that back haul rates will be pushed even higher,” SeaIntel said in its weekly analytical report.

IMO’s 2020 low sulphur fuel rules have become less worrying. Se Intel noted that “the sudden price war on oil has the potential to send fuel prices back to levels seen in 2015/16 and hence make the cost of low-Sulphur fuel the least of the carriers’ problems”.