Nov 03, 2016
Let’s face it, Christmas is just around the corner. Yes, here in the Northeast the leaves are still turning, the nation is engaged in fall football and we just wrapped up the World Series. But, Thanksgiving is a few short weeks away and some stores are already selling Christmas ornaments. Santa is almost here!
The Ghost of Christmas yet to come
Hanjin’s latest service advisory indicates that three vessels the Scarlet, Seattle and Chongqing are still making port calls one to two months after their scheduled arrival. The Hanjin Chongqing for example scheduled to call New York on September 23rd discharged here last week. She’s only just arrived in Savannah putting an added burden on importers from Atlanta to Augusta patiently awaiting their holiday goodies. The Hanjin Seattle due in Vancouver at the end of September will not arrive until November 5th. Now, there’s a scary thought! Somebody’s not going to get that train set for Christmas! Actually most holiday merchandise should have been in the warehouse by the first week in September but as you can see there are still several thousand TEUs still missing from someone’s stocking.
Christmas comes but once a year – Unless you can’t find wheels
During the middle of the month the Ports of LA and Long Beach estimated that around 8,700 chassis were tied up with the Hanjin bankruptcy either due to extended lease or units mounted with Hanjin boxes. Chassis pool efficiency was down by 30% in a region that could ill afford the loss of so many units within the system. In the PANYNJ a recent Hanjin vessel scheduled to call at a terminal in Newark Bay had to be diverted to Global Marine Terminal, Bayonne. You see there was no export cargo going out on this ship so she rode higher in the water. In fact, too high to make it back under the Bayonne Bridge. Can you imagine what a nightmare this caused for containers scheduled to be mounted on wheels in one terminal and now diverted to another?
Coal in their Stockings
On this last day of October ship owners and ports have been getting tricks not treats when it comes to fleet and equipment inventories. Hanjin’s collapse has placed a further burden on an already swollen charter market. The carrier returned 54 vessels to the market bringing it to an all time high of 1.55 million TEUs of capacity. As carriers begin to trim their fleet for the winter it’s doubtful that much of this tonnage will be reactivated. As more Hanjin vessels are released into the system, rates will continue to drop through the holidays. The Port of Oakland reported a backlog of 900 TEUs of empty Hanjin boxes with an estimate of another 300 to 400 units by early November. Terminals all over the United States have similar problems with rows of Hanjin empties with no home and nowhere to go.
Tis the Season to be Jolly – I Guess
We should be well into winter before the mess is cleaned up! Hopefully most of the cargo anticipated for early fall will actually arrive by Thanksgiving and importers can go on with their lives. Charter rates will fall making it too easy for owners to lower their expectations on freight rates, but perhaps all of the overcapacity won’t be absorbed and another round of revenue wars will not ensue.
Chassis on lease to Hanjin will be repatriated to their respective owners and returned to the system easing current shortages somewhat. And the terminals will receive a final disposition on boxes choking their yards and lowering their revenue per acre. Perhaps all will be right with the world of ocean shipping. I certainly hope so!
Oh by the way, did I wish you Happy Holidays?