Ships Stranded at North American Ports... Domestic Companies Face Year-End Export Impact

Omicron-Driven Large-Scale Flight Cancellations Continue
Year-End Maritime Transport Worsens Logistics Crisis
Over 100 Ships Awaiting Entry at LA and Long Beach
On-Time Performance Only 10% in Asia and North American West Coast

The Busan New Port terminal, piled high with import and export cargo, brightly illuminates the night sky to continue nighttime operations. South Korea surpassed $640 billion in annual export value in 2021, setting a new record high. Since recording its first $100 million in 1964, the country exceeded $10 billion in 1977, $100 billion in 1995, $600 billion in 2018, and this year surpassed $640 billion, marking a new milestone in 66 years of trade history.

Busan ? Photo by Kang Jin-hyung aymsdream@

"Spot freight rates for shipments to the Port of Los Angeles (LA) in the United States have remained at around $10,000 for several months. What happens when the ship arrives at the port? The vessel cannot enter and has been waiting for days at nearby ports. The container storage fees and congestion surcharges incurred during the waiting period are ultimately included in the charges, burdening the exporting companies."

The CEO of domestic company A, which has been exporting cosmetics to the US and Europe for over 10 years, sighs even as they prepare for the year-end peak season. Although some export items have increased due to shipping rates nearly doubling compared to last year, profits have actually decreased. Recently, with additional ship delays, they confessed that all their attention is focused on whether they can meet delivery deadlines.

The logistics crisis is worsening at year-end sea transport following a large-scale cancellation of flights in the US and Europe triggered by the Omicron variant of the COVID-19 virus. In particular, congestion on the North America route, a major domestic export route that had been recovering recently, has worsened again, deepening the worries of export companies.

According to the South California Shipping Exchange on the 28th, as of the 24th, a total of 94 container ships were waiting to enter the ports of LA and Long Beach in the US. On the surface, only 20 vessels were waiting near the port area, but 74 vessels were waiting in waters 150 miles off the California coastline. This is due to recent orders from US port authorities requiring shipping companies to keep vessels at least 40 miles away from the port for safety reasons, and the total number of waiting ships has remained above 100 for several months.

According to Danish maritime analytics firm Sea-Intelligence, as of October, the on-time performance of container ships on the Asia-North America West Coast route was 10.1%, down 22.3 percentage points from the same period last year. On-time performance indicates how well shipping companies adhere to scheduled vessel timings, meaning only about 1 in 10 container ships heading to the North America West Coast arrived on time. With the prolonged spread of Omicron, the East Coast route following the West Coast is also in a precarious situation. During the same period, on-time performance on the North America East Coast route also plummeted by 18.9 percentage points to 15.6%, causing disruptions in vessel operations.

Night operations are underway at Busan Port's Sinsundae Pier, where export and import cargo is piled high. South Korea surpassed $640 billion in annual export value in 2021, setting a new record. Since recording its first $100 million in 1964, the country exceeded $10 billion in 1977, $100 billion in 1995, and $600 billion in 2018. This year, surpassing $640 billion marks a new milestone in 66 years of trade history.

Busan ? Photo by Kang Jin-hyung aymsdream@

The global port congestion phenomenon is interpreted as a result of a rapid increase in cargo volume due to the rise in e-commerce usage triggered by COVID-19, which major ports have been unable to handle. According to the ‘2021 Annual Shipping Market Report’ published by the Korea Maritime Promotion Corporation, congestion at major global ports began to intensify as the Delta variant spread, including the closure of Ningbo Port in China.

The problem is that the logistics costs that exporting companies actually have to pay due to port congestion continue to increase. The CEO of a domestic small chemical company said, "The congestion surcharge incurred during the ship waiting period is a fee container shipping companies charge to shippers, but in reality, it is no different from passing on the freight increase to exporters," adding, "Some companies around me have already stopped exporting altogether due to the freight increase."

Shipping rates, which are hitting record highs, are also a burden. The Shanghai Containerized Freight Index (SCFI), a global shipping rate indicator, recorded 4,956.02 points on the 24th, up 61.4 points from the previous week. The US West Coast route rose by $25 per 1FEU (12-meter container) to $7,444, soaring by more than $700 in four weeks.

An industry official said, "Although US President Biden mentioned imposing fines exceeding $1,000 on long-term congested cargo staying more than 10 days at terminals in LA and Long Beach ports, the enforcement has been delayed for a month," adding, "Locally, there are concerns that imposing fees could increase the burden on companies."

This content was produced with the assistance of AI translation services.