The combination of congestion at US west coast ports and low interest rates is allowing US importers to use containerships as ‘offshore warehouses’, mitigating logistics costs.
The combination of congestion at US west coast ports and low interest rates is allowing US importers to use containerships as ‘offshore warehouses’, mitigating logistics costs.
According to freight visibility company project44, transit times from China to Los Angeles have nearly tripled, with freight taking up to 60 days to be cleared through LA and Long Beach ports – its data suggests an average of 540,255 teu per month was waiting to berth at LA.
Figures from p44 and HSBC estimate the average value of a container load at $40,000, with an average cost of financing of 3.2%, generating an extra $321m in interest between January and November 2021, says p44, adding this is “a small fraction of the total cost of goods”.
It said: “With interest rates at historic lows, companies could finance a surplus amount of inventory and essentially store it at sea for two months. While this might not be entirely deliberate, the congestion helped companies circumvent storage costs on the excess inventories.
“Though shippers paid interest-related penalties on freight stranded at sea, the costs were diminutive compared with storing that inventory on land (warehousing prices are high, while availability is scarce).”
While overall costs have increased, the pre-pandemic transit times from Chinese ports to Los Angeles was 16 days, with another six for clearance, said p44, using data from Shifl and the port of LA.
Meanwhile, project44 announced yesterday, it had received investment of $420m from a syndicate led by US private equity specialist Thoma Bravo. This followedthe $202m in equity p44 raised in last May and brings the company’s total valuation to $2.2bn
Robert Sayle, partner at Thoma Bravo, said: “Supply chain visibility has become increasingly important as shortages, delays and bottlenecks ramp up. project44’s potential to solve even the most complex of these issues is unparalleled.”
Disclaimer: The content here is for informational purpose only. Seabay Logistics does not represent or endorse the accuracy or reliability of any advice, opinion, statement or other information provided.
Reduced container shipping capacity on intra-Asia tradelanes has l
2022-01-28 / Logistics News
New evidence has emerged as to the cause of the container collapse
2022-01-26 / Logistics News
Global forwarder DB Schenker believes India presents opportunities
2022-01-20 / Logistics News
Ocean Network Express (ONE) has confirmed that around 60 container
2022-01-14 / Logistics News
The combination of congestion at US west coast ports and low inter
2022-01-13 / Logistics News
An Aviastar-TU Tupolev Tu-204C caught fire at Hangzhou-Xiaoshan Ai
2022-01-11 / Logistics News
Australia’s Omicron wave has skyrocketed staff shortages in contai
2022-01-10 / Logistics News
Things went from bad to worse for airfreight shippers and forwarde
2022-01-07 / Logistics News
Add ：# 3108, CIQ Building, South Wenjin Road, Luohu District, Shenzhen China 518001.
Tel ：+86-755-82141292 Fax ：+86-755-82141001
E-mail：mark@seabay.cn
Please login WeChat on your mobile and scan below QR Code to find us.(You will have to download WeChat Apps on your mobile first if you don't have this application.)
