North American importers cut back and delayed goods from Asia

Shippers are increasingly reducing and delaying ocean shipments from China to North America. This change is a major contradiction compared to just a few weeks before shippers are looking to speed up shipments through the supply chain to replenish already depleted inventory made by China.

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Shippers are increasingly reducing and delaying ocean shipments from China to North America, forwarding companies said. This change is a major contradiction compared to just a few weeks before shippers are looking to speed up shipments through the supply chain to replenish already depleted inventory made by China.

With U.S. retailers temporarily shutting down U.S. stores and businesses in March, experiencing the sharpest decline since 2009, according to IHS Markit, shippers are looking for how to delay transshipment goods by keeping them at sea for longer, in part by diverting them for longer shipping times, forwarders told JOC.com. IHS Markit is the parent company of JOC.com.

Shipments are still arriving in North America, but there are signs that some retailers are accepting to add fewer goods to their distribution centers. That raises the question of where the imported containers will be moved, how much the trailer supply will be scarce at major gateways like Los Angeles and Long Beach, and how shipping lines will handle them. What is the container charge if they cannot be returned within 7 to 10 days within the time allowed.

“I started to see canceled and canceled orders. While two weeks ago everyone required the fastest shipping, now you start to see customers trying to delay orders. For goods that have been manufactured and packed into containers to get it out of the factory, customers are seeking to delay it with longer transit times, ”said Keith Kurt McElroy, executive vice president of Apex Maritime, told JOC.com. “It almost turned 180 degrees; You don't want to get it really fast before, and now you want it to slow down. It is amazing that things can change so quickly. ”

According to Flexport, about 20% of bookings have been delayed and / or reduced at the request of the consignee, up from 10% compared to normal - mainly because shippers delay queuing because goods are not available at factory. "In the past few weeks, changes have been made because the supplier is not ready, but now because the consignee is postponing or reducing orders," said Keith Sanne Manders, managing director at Flexport, tell JOC.com

Priority only meets emergency needs COVID-19

The cancellation and postponement are uneven among commodity groups. Unsurprisingly, products associated with the urgent needs of the 2019 Corona virus disease (COVID-19), such as medical supplies or specific consumer goods, are online by Amazon and online retailers. Priority routes are showing great demand. By comparison, orders for non-emergency goods such as toys or clothes are being canceled or postponed.

"If it is an essential commodity, it cannot be stopped or postponed," Jon Monroe, a consultant for forwarding companies and non-ship-owned carriers (NVO), told JOC. com on Tuesday. Monroe said factories in southern China had recently been manufacturing and were planning to export products but now abruptly canceled orders.

A manager of a shipping carrier also reported a similar situation on Tuesday. On the one hand, he cited two national retailers canceling orders from suppliers and refusing to accept shipments. On the other hand, he cited a medical supply company increasing booking.

Therefore, it is still too early to draw a general conclusion about container shipping needs. David Bennett, president of the Americas at Globe Express Services, said a customer who had canceled 11 containers was scheduled to take the book this week, but the business came from owners of apparel, furniture and furniture. Light equipment is still continuous.

A logistics consultant - once the logistics director of a national retailer - recommends not making a general assessment of demand even if the same product is the same. For example, a garment importer who finds it too late to acquire items for spring-summer can cancel bookings that cannot be shipped two months ago because of a factory closure in China, while an importer. Fall outfit will not cancel your booking like that.

As for transit to North America, a number of forwarders said bookings were on hold. A managing director of one of the five largest forwarding companies of trans-Pacific service, who requested anonymity, said "cargo by sea is showing a smooth increase". He added that the more urgent concern right now is whether domestic drivers can deliver goods to US warehouses, when port operators close or reduce shifts and reduce delivery times.

Detention and demurrage

Monroe anticipates growing demand for warehouses at major gateways in Southern California and the Southeastern United States, as retailers have received shipments and have to find warehouses for storage as sales are falling. shot. "Then there will be problems with container storage and storage," he said, referring to the lack of container storage that could prevent drivers from representing cargo owners to pick up goods and return equipment. to ship owners, resulting in penalties. Another forwarder, who asked not to be named, said they have not seen a lot of order cancellations at the moment, but fear that some back-to-school and holiday-season orders this summer will have to be delayed. cancel. The US and global economies are in recession, forecasts will be adjusted quickly as the pandemic spreads around the world, ending the US economic development in 10 years, according to IHS chief economist. Markit, Nariman Behravesh. He said, if consumer confidence does not recover, I think there will be a period of serious quiet, "he said.

McElroy pointed to problems that could lead to a growing crisis in Southern California when major retailers refused to deliver unused goods, containers and trailers.

“The next problem will be the storage space for containers because big retailers suddenly don't want to receive goods from multiple import suppliers. What will you do with them? There is no place to store these goods, either because their own warehouse is full, or the warehouse that can be taken back is closed due to isolation, Mr. McElroy said. If you have a container in a trailer outside the port, and there's no place to unload it, or if they can pull it out of the port, then you might have to leave it on the trailer in the yard. Parking for weeks. You do not have enough trailers in Southern California to handle incoming cargo unless the trailers are being circulated. That would be an interesting thing to witness, because it's completely unheard of before.

Phaata (Source JOC)

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