2010 was a watershed year for relationships between carriers and importers. Any company importing from China likely experienced higher costs and problems securing space. Reduction of vessel capacity created severe bottlenecks, particularly in the Yangtze River Delta and North China areas.
To make matters worse, many buyers increased purchases from factories or buying agents manufacturing in the area around Shanghai and Ningbo. Exports from Ningbo seemed to increase when space was at a premium. To add fuel to this already raging fire, many companies moved up their shipping window from China, resulting in an early peak.
Space became the most valuable commodity moving from China to the U.S.
Since the first quarter of 2010, five new carriers have emerged to serve the rapidly growing Shanghai-Ningbo-Southern California trade, adding more than 10,000 TEUs of weekly capacity to that route. Although not large, the additional capacity may alleviate some of the bottlenecks experienced in 2010 and minimize the impact of the Transpacific Stabilization Agreement’s space-management program.
While South China factories are closing or moving to the Yangtze River area and North China, the potential for space issues exist again this year, especially from Shanghai and Ningbo. Facing space problems with their contracted carriers, many importers last year turned to non-vessel-operating common carriers, with much success. Rates were higher, but it beat moving products by air.
History tells us that trans-Pacific bottleneck issues rarely are repeated in successive years. Rather, companies learn from the problems and change their patterns, creating a new scenario. If history does repeat itself, the large NVOCCs will be there to pick up the pieces.