Whether or not key resources such as docks and frames are controlled is the key to determining the speed of the express ship service.
The US market was full of ups and downs and changes. The most eye-catching thing was undoubtedly the sky-high shipping costs and endless congestion and delays.
Once upon a time, the fast ships on the US line became a unique landscape in the US line market with their excellent timeliness. Existing players added routes, and new players were full of confidence. But when the epidemic, congestion, and supply chain crises occurred one after another, the fast ships had no choice but to become slow ships, but customers' desire for convenient services has increased day by day.
How can the US express ships, which are caught in the vortex of congestion and delays, get out of the predicament?
Rapid Rise
The history of express ships is not long. Before the emergence of express ships, there was not much choice for goods with time-sensitive delivery requirements (such as seasonal clothing), and the only options were relatively fast sea or air services. Air transport is of course fast, but the cost is also high. At that time, sea transport services could not meet the high timeliness requirements, so customers did not have a compromise solution that could balance timeliness and cost.
Where there is demand, there is a market.
In 2006, a shipping company launched its first express shipping route, providing fast shipping services from Ningbo-Zhoushan Port and Shanghai Port to Los Angeles Port, and later extended it to Xiamen Port. Clothing customers began to try this type of express shipping service, and the US express shipping line gradually won market reputation with its stable timeliness.
Another accelerator for express ships is the growing e-commerce boom. E-commerce products have high requirements for timeliness, and the services of express ship routes can just meet this demand. The two complement each other and promote the development of the market together, and express ship routes have also entered the fast lane.
After the outbreak, the continued congestion, especially in the western U.S. ports, has given rise to various local express shipping routes in an attempt to improve the timeliness of some logistics nodes. Among the local express shipping services, the most common is the express pick-up service at the Port of Los Angeles.
The congestion at the port and the shortage of trucks have caused a big problem in picking up containers after unloading. After the ship docks, the operation time becomes longer and the time to pick up the container is delayed. Coupled with the shortage of trucks, the time that customers can actually pick up the goods from the port has doubled compared to the past.
The express delivery service solves this problem well, helping customers to regain the time that was delayed in other links. For customers who cannot afford the full express freight, this express delivery service has the highest cost-effectiveness and is very attractive. This can be seen from the changes in the surcharges for the express delivery service, which have risen from a few hundred dollars per box when it was first launched to more than 3,000 dollars now. It can be seen that in the context of continued port congestion, this demand will always exist.
What is considered fast?
The selling point of express ships is timeliness, so what kind of ship can be called a fast ship? There are two definitions here: narrow and broad. In the narrow sense, a fast ship refers to a fast ship with a fast sailing schedule and priority and convenient service at both ends; in the broad sense, a fast ship refers to a certain section of the end-to-end process that is faster than the general route, thereby improving the overall timeliness.
Take the route from Shanghai to Los Angeles as an example. The current time of a general route is: 15 days from port to port + about 20 days waiting time + 5 days for ship operation + 7 days for picking up the container, a total of nearly 50 days. If it is calculated from the time when the customer packs the container at the factory, plus the delay at the departure port, it is normal to have about 60 days. If this time can be shortened by half or more, in the current market environment, it can be called a fast ship.
So how can we be faster?
Taking the American express ship from the Far East to the Port of Los Angeles and the Port of Long Beach as an example, the service can be divided into three parts: before arrival at the port, from port to port, and after arrival at the port.
The express ship service before arrival at the port is mainly reflected in the priority of berths, the guarantee of space and containers, and operational flexibility. Although the port congestion at domestic terminals is not as serious as that at ports in the western United States, from the estimated time of arrival (ETA), berths at prime time are still very scarce. The guarantee of berths can minimize the delay of departure time. The guarantee of space and containers is the standard of express ships. If even this cannot be done, how can we talk about express ships? In addition, for e-commerce products, operational flexibility is also very important. If you miss a ship, you may be fined by the customer, so you must catch it if you can.
In the port-to-port transportation section, there are basically two camps: fast ships and others. For example, from the ports in East my country to the Port of Los Angeles, the fastest ship can arrive in 10 to 12 days, while the others mostly take 14 to 18 days. Some routes have to transfer several times, and the entire voyage takes about a month.
The transportation section after arriving at the port was the main bottleneck of the supply chain at that time. Since the services of various routes vary greatly after the ship arrives at the port, it is also the place where the value of express ships can be best reflected. The differences are mainly reflected in three aspects: the waiting time for berths, the time to pick up the containers, and the convenience of picking up the containers.
Let's look at the waiting time first. Before the congestion at the West Coast ports of the United States, the difference in this aspect was not large, but when the congestion continued, the difference was huge. The best fast ships have their own exclusive docks and berths, and they almost don't have to wait for berthing. They can berth as soon as the ship arrives. The other type is the fast ships that can berth within a week, which was also very fast when the average waiting time was 20 days. These two types can still be called fast ships at that time. The remaining ships only need to wait for berthing for 2 to 3 weeks, which is only acceptable under the current situation.
Let's look at the time when the container can be picked up. This is also an important reference indicator for the gap between the various express ship services. The fastest service is to pick up the container 24 hours after unloading, and the next level is within 72 hours. If the container cannot be picked up after more than 3 days, strictly speaking, it cannot be considered an express ship. It should be noted that this refers to the time when the container can be picked up, not the time when the container is actually picked up. The actual time for customers to pick up the container depends on their own supply chain planning and the convenience of picking up the container.
Finally, it depends on the convenience of picking up the box. The convenience is mainly reflected in the following aspects: Does the box need to be booked? Is the box at the dock or in the yard outside the port?
The premise here is that the shipping company provides the racks, and the boxes are placed on the shipping company's racks after unloading. If this cannot be done, it will seriously slow down the speed of picking up the boxes, because the racks are the most scarce resource at the time. If there is no need to make reservations, it will naturally increase the flexibility of picking up the boxes, which is of great help to the operation of the warehouse.
In addition, whether the container is picked up at the dock or at the yard outside the port will also affect the timeliness of picking up the container. If the container is picked up at the dock, there may be problems such as dock congestion. Although the express ship picking up the container at the dock generally opens up a dedicated truck channel, this cannot completely avoid congestion.
If the container is picked up at the yard outside the port, it can avoid the congestion in the terminal. But no matter which method is used, the standard of express ship service is to complete the container collection within 2 hours. If it takes 4 to 5 hours, the timeliness will be greatly reduced.
Fast vs. Slow
The reason why the Clippers have attracted so much attention is that the delays in regular routes have seriously affected the normal operation of the supply chain. According to the latest data from the online freight platform Freightos, in December 2021, it took an average of 72 days from warehouses in my country to warehouses in the West Coast of the United States, 27 days more than in December 2020 and 37 days more than in December 2019. In comparison, the advantages of Clippers are obvious. However, the unprecedented congestion at the Port of Los Angeles and the Port of Long Beach has also brought great challenges to the operation of Clippers. The difficulties mainly come from the lack of berths and workers at the terminal, as well as the increased difficulty of picking up containers.
Berths are becoming increasingly scarce resources. Many of the ports in Los Angeles and Long Beach are controlled by shipping companies. If you want to secure a berth, it is best for a shipping company to own its own port, an advantage that is difficult to replicate now. If the port where a speedboat berths is a public port, even if a berth agreement is signed, the waiting time for berthing will be much longer than that of a ship docked at its own port, which greatly weakens the time advantage of the speedboat.
Another challenge comes from the shortage of dock workers. According to industry insiders, under the same circumstances, ships flying the US flag or running US domestic trade routes can get priority work shifts. In addition, the boxes of express ships are generally placed on racks provided by shipping companies so that customers can pick them up quickly. In the case of a shortage of racks, how to ensure that there are enough racks for the boxes of express ships is also an urgent matter.
To ensure the efficiency of express ship services, shipping companies must control every node and resource as much as possible, such as docks and racks. Providing express ship services requires shipping companies to invest a lot of money and resources. If they rely on third-party resources, the controllability is naturally low and the probability of delays increases greatly. Whether or not key resources such as docks and racks are controlled is the key to providing full express ship services.
At that time, the e-commerce industry was in its infancy, and the demand for e-commerce products would continue to remain high. The delays of general routes could not be improved in a short period of time, and the relatively high-efficiency express ship services were still sought after in the market.
As long as the nodes of the supply chain are still congested and delayed, the existence of partial and full-service express ships is inevitable. If the supply chain gradually recovers, partial express services may gradually lose their appeal and gradually withdraw from the market. However, even if the congestion disappears completely, full-service express ships will continue to exist. Because ordinary routes cannot achieve convenience and convenience, which is exactly what customers need most.
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