2021 has brought with it a sense of optimism and energy. As COVID-19 vaccine distribution continues, states have continued to slowly reopen, and many of the key economic indicators now continue to trend upwards to economic recovery in the U.S. As the fourth largest state, Florida spearheaded this trend. For example, the Port of Miami’s cargo activity is on the rise! May 2021 recorded a performance of 102,366 TEUs, accounting for an increase of 37% or up by 27,429 TEUs from last year.
The COVID-19 pandemic proved that Florida’s economic importance can only get more prominent during crisis times. With extensive infrastructure, a friendly business climate, and global access, Florida attracted a fresh wave of newcomers from other states during pandemic. This fueled unprecedented levels of new demand for consumer goods and skyrocketing import shipments to the region, causing new highs of ocean freight rates.
Even after travel restrictions were lifted, many consumers were nervous about going to crowded tourist destinations in Florida, so they instead purchased products to improve their home life, such as furniture and other home improvement goods. We saw huge increases in in furniture, kitchenware, and home electronics imports in Florida.
Except for a couple of months’ pause during the first months of the pandemic, Florida imports from Asia have been exceptionally strong. In this environment, ocean, air, inland, warehousing, and trucking-related transportation activities have seen an incredible boost.
Frustrated Florida importers have been struggling to find shipping solutions in a congested ocean freight market. Many have been pushing to find alternative solutions. For example, we saw many importers based in Miami/South Florida using the Tampa, Jacksonville, and Savannah ports to import their goods over the last few months.
What are a few of the major underlying reasons for volatility? (Asia-U.S. Trade)
When it comes to U.S. containerized shipments from Asia, even though many shippers across all regions suffered from increased ocean freight rates, congestion, lack of space, and equipment-related issues, the nonstop increase in imports from Asia has taken a larger toll on Florida shippers.
One of the main reasons is that while the U.S. West Coast enjoys access to pretty much all ocean carrier options and a larger selection of weekly vessel schedules, Florida shippers are limited to a smaller pool of steamship line options, and fewer vessel schedules calling Florida ports.
For example, while Los Angeles/Long Beach have access to all three alliances (2M, Ocean Alliance, and THE Alliance) calling its ports, Miami/Port Everglades has only two alliances (2M and Ocean Alliance) calling its ports. For Tampa, the options are even fewer.
Below is a list of steamship lines serving major Florida ports.
Miami/Port Everglades: MSC, Maersk, ZIM, CMA, Cosco, Evergreen, OOCL
Tampa: Evergreen, COSCO, MSC, ZIM
Jacksonville: Hapag-Lloyd, ONE, HMM, ZIM, YML, MSC
Additional issues have also fueled problems in Florida compared to other regions, like the Suez Canal crisis, which blocked that waterway for nearly a full week back at the end of March, delaying countless of vessels arriving to East Coast and Florida Ports. This affected all East Coast ports – not only Florida – but the aftermath and its effects continue to this day.
Yantian International Container Terminals’ (YICT) west port area was closed due to a COVID-19 outbreak in late May. As a result, we saw new increases in blank sailings, which are up 300% in the first half of June. An already small selection of available schedules have been negatively affected, causing new highs of ocean freight rates and space/equipment issues for Florida. We will continue to experience the negative results of these recent blank sailings. The outlook is not promising for the Florida ocean freight market, as many shippers are rushing to import more before the traditional peak season arrives early this year.
What is next for Florida Importers?
With Florida consumer demand expected to continue to outpace supply, disruptions that remove functional container capacity like the recent Yantian congestion will drive an already short Florida ocean freight supply to new lows and cause new highs of frustration to shippers.
What this means for Florida is “things will get worse before they get better.” Florida inbound ocean freight space, which has been already maxed-out for several months due to disruptions such as the Suez Canal blockage and congestion in Yantian and Southern China, will be felt for months to come and increasingly limit the ability of carriers to honor their quantity commitments for the remainder of 2021 for Florida. This will drive ocean freight rates to new highs.
Additionally, many carriers announced that effective July 1st they will stop U.S. East Coast ramp points via USLAX, USLGB, USOAK, and USSEA. Any shipment to gate-in from July 1st onwards will have to be re-routed accordingly to the respective USEC services. This new development will cause more pressure to available space for direct East Coast Sailings and Florida space/equipment/rates.
There are more empty container issues – 40′ GP/HC empty supply in is negatively impacted with massive vessel delays and omissions. Customers will be encouraged to amend to 20′ GP as an alternative for Florida. Carriers have announced many new services to the U.S. West Coast but no new announced new services for Gulf or Florida are on the horizon.
It will be a challenging pricing and service environment for Florida for the remainder of 2021 – that is for certain. It is difficult to keep up with demand as shipping capacity struggles. Vessel delays in Asian ports, tight labor conditions and equipment shortages will continue through the remainder of 2021. However, we must remain optimistic, screen the available alternative service options, collaborate more, stay transparent, and set our business priorities for the rest of 2021.