AEC Industrial Magnetics Manufacturing

 
4699 Interstate Drive
Cincinnati, OH 45246

Shipping Update:  A Long Wait
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Shipping Update: A Long Wait

Permanent & Electromagnets for Automation | AEC Magnetics

The worldwide shipping crisis continues to wreak havoc.  AEC Magnetics' latest shipment of permanent magnets has been offloaded and is awaiting devanning. It will be a lengthy wait. Shipping remains incredibly backed up. Here are today's highlights: Forbes reports ocean freight rates are now 460% higher than one year ago, with several weeks' worth of container ship traffic is stuck in port plus a dockworker, truck and truck driver shortage. Bloomberg reports today the cost of moving cars across the ocean is at a 13-year high.  Today Goldman reported it cut its U.S growth forecast. Consumers are bearing a bigger burden than it had previously recognized. Businesses using just-in-time inventory are at a crisis point; they can't re-supply fast enough, according to the Wall Street Journal. Here at AEC, our shipping agents tell us the shipping crisis will likely continue at least into the first quarter of 2022. Some experts tell the Wall Street Journal it will last well into 2022.  One bright spot:  Shipping containers are starting to make their way out of Las Angles and Long Beach to ports where there are none, hopefully this will begin the correction of the worldwide container imbalance. Here are the major factors affecting shipments plaguing shipping worldwide.

shipping in portLong Beach/Los Angeles port-jam: A record number of ships--48--were waiting to be offloaded as of September 3 at the port that receives most all of goods shipped from Asia.  Check out a live link to the port, the backup has not cleared.  Worker shortages, the sheer size of the new, larger container vessels, covid protocols, warehouse and devanning space are all slowing down shipping. The Port of Seattle is an offload option for some lines, but most all Asian shippers have dedicated space at Long Beach and the Port of Los Angeles, so the option is not for every shipper. Hours ago, officials signed an MoU to bring a shipping container facility to Coos Bay, Oregon. This option will offer little relief of the current crisis but may be useful in helping to relieve the backup in the future.

shipping containersShipping Containers:  China, a net-export country, resumed shipping earliest in the pandemic. Importing countries slowed or stopped shipping altogether during the pandemic. The world's shipping containers piled up in net import countries. Empty containers are now leaving the ports of Long Beach and Los Angeles at a rate of three empty contaners to one full.

shipping evegreenTerminal Space: The size of new container vessels is considerably larger than previous generations of ships. Some carry ten times the amount of cargo. Not only do these mega-ships take longer to unload, but more their cargo demands more space to offload breakdown and store their contents.  Full container loads (FCL) go to a warehouse and less than container loads (LCL) go to a CFS (Container Freight Station) for devanning.  The amount of FCL and LCL are overwhelming warehouse and CFS facilities.

shipping rail cogestionRailways:  The volume is overwhelming the railways.  Container space is at a premium. Railroads can't accept more containers if their destinations are already full.  Trains have slowed and even stopped some traffic into the U.S. Midwest due to high volume. Chicago railyards were temporarily closed due to the extraordinary volume--volume that had no place to go while awaiting transfer to trucks.  Memphis is an option to relieve the system's stress, but it, too, is at or near capacity.

shipping typhoon
Typhoons:  The typhoon season in China has been devastating.  Major Chinese air- and seaports have reduced capacity or closed.  Factories have taken a hit, too, having to cease operations. Typhoon season does not typically end until mid-December. Forecasters predict as many as 16 typhoons in Asia this typhoon season, a season that has already caused mayhem.

shipping crew covidCovid-19:  The pandemic has affected every operation cited in this article.  Illness and protocols have slowed or stopped many port operations. Ships offloading in China are particularly affected, as its strict protocols have slowed or stopped shipping entirely.  China closed its third-biggest port, and an airport, because one employee was found to test positive for Covid-19. All ships must all quarantine and produce negative Covid-19 results before berthing at any China port.  Ships with any crewmember testing positive may not dock. Ships scheduled for several ports of call must repeat the process. If a positive test result comes back among its crew, the entire ship is offloaded at that port and the crew must quarantiine up to 28 days with alternate arrangements required for cargo.  Any ship that has been to India, or has Indian crewmembers or who has called at an Indian port, has stiffer protocol requirements.  

bill august 24 21"AEC Magnetics' shipping agents have been in direct contact with us every day, giving us updates on our shipments," said Bill Klaus, president of AEC Magnetics based in Cincinnati, Ohio, U.S.A.  "We know when our permanent magnets are offloaded, devanned and shipped by rail.  The delays are real and impact the price and availabiity of our permanent magnets.  Because of our close ties with our China suppliers, and our terrific agents, we prepared as well as we could to adjust our inventory, but the reality is the current situation shows no sign of easing."  

permanent magnet stack aecKlaus outlined steps customers may take to alleviate some of the inconvenience.  "Order now. If you anticipate a need for permanent magnets, get on the books right now.  Advance your usual orders.  If you typically order six months ahead for your anticipated needs, order now.  Order in bulk to offset the price increase the shipping crisis is causing.  We offer price breaks at many intervals, call me and I'll give you those break points.  And consider our free blanket service.  Order in bulk at today's price and AEC will release th magnets to you on your schedule, at no cost.  That way you lock in today's price, you don't have to store them.  We will send you your magnets on a regular schedule."