FMC urges port worker vaccinations as US container congestion worsens

The Federal Maritime Commissioners sent letters to the governors of 11 coastal states on March 3 urging them to prioritize port workers for COVID-19 vaccinations amid worsening US port congestion that is hurting export volumes.

The letters from Commissioners Daniel Maffei and Carl Bentzel were sent to the governors of Alabama, California, Florida, Georgia, Louisiana, Maryland, New York, New Jersey, South Carolina, Texas, and Washington, highlighting the risks to economic recovery caused by a poorly functioning supply chain amid the pandemic.

"Because we continue to hear that [vaccine] access is insufficient, we write to you today to emphasize the importance of this issue," the commissioners wrote. "A large-scale workforce disruption from COVID-19 would be disastrous for the immediate and long-term fluidity of the supply chain and delivery of goods to Americans."

Record import volumes and skilled manpower shortages at several major ports have greatly increased congestion and transit delays in recent months. On March 3, there were 31 ships at anchor off Los Angeles/Long Beach, 14 anchored off the port of Oakland and 14 anchored off the port of Savannah, according to cFlow, Platts trade flow software.

US exporters seek solution to lack of access

With eastbound trans-Pacific container spot rates at record high levels, many US exporters have had their access to overseas markets greatly reduced as shipping lines prioritize repositioning empty containers in Asia.

Platts Container Rate 13 – West Coast North America-to-North Asia – was assessed on March 3 at $4,200/FEU, not including premiums for prompt loading that can lift that actual spot rate to $7,000/FEU or more, while the backhaul rate from West Coast North America to North Asia was flat at $650/FEU on March 3.

The wide gap in rates between import and export cargoes incentivizes shipowners to reposition containers in Asia as quickly as possible, particularly when US export cargoes involve an opportunity cost in added time requirements, according to a panel at the virtual TPM conference held this week.

"It helps to understand how carriers view export loads from the United States," said Bill Rooney, vice president for strategic development at logistics services provider Kuehne + Nagel. "You're looking at a load that is paying anywhere from one-tenth to one-fifteenth of what the rate is on the inbound."

US exporters should be willing to accept higher contract rates in exchange for better guarantees that empty containers will be made available to them consistently, Griffin Creek Consulting President Edward Zaninelli said at the panel discussion.

"Once you get to over $1,000/FEU port to port, I believe it would be acceptable to the carriers to start actually doing contracts longer term for exports," Zaninelli said. "I think that would help them an awful lot with regard to sales and operations."

In the meantime, Zaninelli stressed that the FMC should focus its attention on improving port congestion issues as best it can, because those delays are contributing to the lack of containers available for exports by exacerbating time constraints.

"That's where I think the FMC should step in," Zaninelli said. "If the ships are on time, people will know when to go get their containers and know when to deliver them."