More Vessels Divert from Felixstowe and Southampton
By Mike Wackett 01/10/2018 TheLoadstar.co.uk
Chronic congestion at the UK’s two largest container ports is forcing ocean carrier planners to make further last-minute ship diversions, causing chaos to the country’s supply chain. Landside congestion at Felixstowe and Southampton has added to the woes of the UK haulage industry, which is already suffering from an acute shortage of HGV drivers. Even before the botched implementation of a new terminal operating system at Felixstowe in June, which was the catalyst for the current congestion, the UK haulage industry was running on empty and reckoned to be short of more than 75,000 drivers.
Indeed, one hauler told The Loadstar, before the Felixstowe IT melts down, that he was “very worried” about his firm’s ability to cover all the contracted work during the busy peak season this year. “We just can’t get the drivers,” he said at the time, “even though we are paying over the odds, and to add to it all we are seeing a couple of our existing guys retire every month.”
Container lines serving the UK are trying to push shippers to use merchant haulage but if they are contracted to cover the delivery of containers they are hitting importers with a variety of extra charges. MSC, for example, has told some of its customers that it will charge them an additional £20 per Teu for line haulage, which it said was “to cover the cost of putting on extra haulage units”. An eleventh-hour diversion of a ship that results in thousands of boxes being landed at another port can cause weeks of delays to the arrival of goods, due to the fact that deliveries were programmed from the intended hub.
Due to the worsening congestion at Southampton, the Ocean Network Express (ONE) advised its customers late last week that the 20,180 Teu MOL Truth would no longer be making an import call at the south coast port on 4 October but would instead discharge its cargo at London Gateway. In a statement to The Loadstar today DP World Southampton confirmed that the MOL Truth would discharge its imports at London Gateway, but that the vessel would still load exports at Southampton at a later date.
It said: “DP World is uniquely positioned in the UK to offer shipping lines and cargo owners a two-port strategy, with both ports able to support one another, ensuring greater certainty and resilience to UK supply chains.” The terminal operator issued a ‘terminal alert’ on 27 September advising that its ship and landside productivity was being impacted by “very high stack levels”.
DPWS gave the reasons for its congested terminals as: too many empty containers; the pre-Christmas peak; vessels cutting and running and a lack of haulage. It appealed to its shipping line customers to ship out their empties; stop using the port for transshipping empty equipment and not to discharge containers for other ports without consultation. In fact, according to today’s DPWS stack report over one third of its some 18,000 teu on the quay for export consists of empty equipment.
One local source said that carriers had been regularly shutting out planned shipments of empty containers after the boxes had been transferred to export stacks, thus causing productivity to “fall off a cliff”. Meanwhile, the problems mount up for UK importers: The Ocean Alliance carriers advised cargo owners today that the 20,388 teu Ever Goods, scheduled to arrive at Felixstowe on 6 October will instead be diverted to Rotterdam.
APL, in a customer advisory said that UK imports would be transshipped to the CSCL Mars scheduled to arrive at Felixstowe on 13 October. For UK exporters who have booked for the Ever Goods there was no substitute vessel nomination and thus there could be a lengthy delay before shipment. APL said that “exports will remain on quay for the next sailing”.
Felixstowe box congestion spreads to Southampton, just in time for Xmas rush
© Peter Titmuss | Dreamstime.com
The UK’s two biggest container ports appear to have hit crisis level. UK retailers potentially face weeks of delays in getting their Christmas stock onto the shelves in time for the peak consumer spending rush. Moreover, UK exporters to Asia can virtually forget about getting containers shipped in November, due to carriers blanking a huge 11 eastbound voyages next month. Many of those sailings that survive will be ‘cut & run’, without loading, due to the congestion at Felixstowe and Southampton.
The traditional peak season influx of holiday goods often stretches container terminals to their limits, but this year the supply chain is at breaking point – despite one source’s assertion that overall numbers are actually down this year. The congestion problems that began at Felixstowe now appear to have spread to Southampton – partly due to the south coast port’s decision to accept extra business diverted from the Suffolk port. Moreover, it is said, the UK’s acute haulage shortage and the indiscipline of the carriers in their schedule integrity and container control have put “impossible pressure” on the Southampton terminal.
One local port source told The Loadstar today that “hardly any” ships were arriving in their berthing windows, and when they do get alongside, a large amount of time is consumed in transshipping containers, information often not advised to the planners until just before arrival. “The carriers just seem to have given up,” said the source. “I know there have been bad weather delays, but they have no interest in trying to regain schedules, plus they are taking last-minute decisions on what is to come off and what is to be loaded.” As landside and ship working productivity at Southampton has deteriorated, operator DP World has been obliged to issue several ‘terminal alert’ messages to customers. One large forwarder customer who visited Southampton yesterday told The Loadstar this morning the situation was “absolute carnage”.
In its latest alert today, DP World said that, from Monday it would reduce its export receiving window from the normal 10 days to seven days. It said it had also asked container lines to “ship as many empties as possible”, to “stop using Southampton to transship empties from the US to Asia” and “not to discharge cargo for other ports without prior consultation”. This ‘perfect storm’ began brewing at the UK’s largest container gateway, Felixstowe, in June when the Hutchison-owned port embarked on what proved a disastrous implementation of its in-house-developed NextGen terminal operating system (TOS).
A source told The Loadstar at the time the initial impact “was like a cyber-attack had hit the port”, with everything grinding to a halt. “At one stage we were reduced to pen and paper for stowage plans,” he said. Felixstowe put on brave face, suggesting the problems with working the ships was temporary and began issuing weekly status updates painting an improving picture. But sources at Felixstowe told The Loadstar recently “there was still no light at the end of the tunnel”, describing the situation as “complete chaos”.
Recently the port hired 30 tractor units from a major local hauler just to shunt boxes to their correct stacks. The port has been ‘silent’ since its last customer update on 24 August, and port users The Loadstar has spoken to, including carriers, forwarders and service providers, are not optimistic of any improvement anytime soon. As a result, several carriers have diverted Felixstowe-bound ships to other ports, or in certain cases pulled services altogether, with some opting to service the UK via feeders.
Upcoming Holidays/Closures In China
Many offices will be closed or have reduced staff working, so please expect delays and plan accordingly.
|Monday, September 24, 2018||Mid-Autumn Festival||National holiday|
|Monday, October 1, 2018||National Day||National holiday|
|Tuesday, October 2, 2018||National Day Golden Week holiday||National holiday|
|Wednesday, October 3, 2018||National Day Golden Week holiday||National holiday|
|Thursday, October 4, 2018||National Day Golden Week holiday||Common Local Holidays|
|Friday, October 5, 2018||National Day Golden Week holiday||Common Local Holidays|
|Saturday, October 6, 2018||National Day Golden Week holiday||Common Local Holidays|
|Sunday, October 7, 2018||National Day Golden Week holiday||Common Local Holidays|
301 Tariff lists Questions and Answers
Not surprisingly, the recent 301 Tariff increases have caused a lot of confusion and questions. To that end, this Blast will answer some basic questions that people have posed. By no means is this Blast intended to be the final determination on this subject. As always, it is the Importer’s responsibility to know the products they import and use due diligence in providing the correct information to the US Government. If you have further questions, please contact your BOC Representative.
Attached are the three 301 Tariff lists as they were announced. As we’ve seen, though – with anything that’s in the news and potentially political, these are subject to change.
Question: What date does List 3 go into effect?
Answer: September 24, 2018, all products included in this list will be subject to an additional 10% rate of duty. This duty rate will remain at 10% for the rest of the year and then increase to 25% beginning on January 1, 2019.
Question: If our vendor manufacturers product in China, can we ship the product from China to another country, like Taiwan, and then ship it to the US to avoid these increased tariffs?
Answer: No. The US Government looks at where the product is manufactured, or where a “substantial transformation” happens, not which ports were shipped from/to.
Question: : If our vendor manufacturers product in China, and we ship first into Canada, and then ship it to the US, will we avoid these increased tariffs?
Answer: No. The US Government looks at where the product is manufactured, or where a “substantial transformation” happens, not which ports were shipped from/to. When it comes into the US, it will be subject to the increased duty rate.
Question: With the new increased tariffs, we’ve realized that we should be using a different HTS number to classify our freight. This would result in lower duties. Is this okay?
Answer: It depends. CBP is watching closely for companies who change their HTS number of a product to avoid paying the higher duty rate – this is a key red flag, that will raise increased scrutiny of your entries.
HOWEVER, if you have analyzed your classifications, and find that your product truly was classified incorrectly in the past, and you need to change the classification to be correct, then we would recommend filing a prior disclosure with CBP, showing all the entries where you’ve brought this product into the country for the past 5 years. This could open your company up to paying a higher duty rate for the past 5 years’ of product, but you may pay a lower duty rate going forward. The key element, always, is to ensure your product is classified correctly. Again, it is the Importer’s responsibility to make sure the information you provide to CBP is accurate.
Question: My HTS number is on one of the three lists, but the description does not match exactly. Does that mean I am not subject to the higher duty rate?
Answer: No, the duty rates go by HTS number. However, if the description in the full Harmonized Tariff Schedule does not match the description provided, please double-check the HTS number you are using to make sure it is correct for the product you are importing.
Question: What date is determinative for the new increased duty rates?
Answer: Date of arrival at the first port in the US is the date the duty rates are applied – first arrival by plane, ship or train. The application date has nothing to do with entry filed date. For example, if duty rate goes into effect 9/24, and ETA of the vessel into Long Beach is 9/22, and entry is filed 9/20, and then the vessel actually arrives into Long Beach on 9/25, the new higher duty rate will apply, because the vessel arrived 9/25, after the date the new duty rate goes into effect.
Question: What if we bring freight into a bonded warehouse in the US. What date is determinative for the new increased duty rates?
Answer: The date the product is pulled from the warehouse will determine what duty rate will apply.
USTR Finalizes Tariffs on $200 Billion of Chinese Imports
Please see below announcement from the Office of the United States Trade Representative. As to how this will be applied, instructions received are that CBP is to use the date of when the conveyance arrives at the first US port, even when an in-bond movement is involved. Entries can be filed before the freight arrives, so entry can have a file date before the implementation date, but if the actual conveyance arrival is after the effective date then the duties apply.
Washington, DC – As part of the United States’ continuing response to China’s theft of American intellectual property and forced transfer of American technology, the Office of the United States Trade Representative (USTR) today released a list of approximately $200 billion worth of Chinese imports that will be subject to additional tariffs. In accordance with the direction of President Trump, the additional tariffs will be effective starting September 24, 2018, and initially will be in the amount of 10 percent. Starting January 1, 2019, the level of the additional tariffs will increase to 25 percent.
The list contains 5,745 full or partial lines of the original 6,031 tariff lines that were on a proposed list of Chinese imports announced on July 10, 2018. Changes to the proposed list were made after USTR and the interagency Section 301 Committee sought and received comments over a six-week period and testimony during a six-day public hearing in August. USTR engaged in a thorough process to rigorously examine the comments and testimony and, as a result, determined to fully or partially remove 297 tariff lines from the original proposed list. Included among the products removed from the proposed list are certain consumer electronics products such as smart watches and Bluetooth devices; certain chemical inputs for manufactured goods, textiles and agriculture; certain health and safety products such as bicycle helmets, and child safety furniture such as car seats and playpens.
In March 2018, USTR released the findings of its exhaustive Section 301 investigation that found China’s acts, policies and practices related to technology transfer, intellectual property and innovation are unreasonable and discriminatory and burden or restrict U.S. commerce.
Specifically, the Section 301 investigation revealed:
- China uses joint venture requirements, foreign investment restrictions, and administrative review and licensing processes to require or pressure technology transfer from U.S. companies.
- China deprives U.S. companies of the ability to set market-based terms in licensing and other technology-related negotiations.
- China directs and unfairly facilitates the systematic investment in, and acquisition of, U.S. companies and assets to generate large-scale technology transfer.
- China conducts and supports cyber intrusions into U.S. commercial computer networks to gain unauthorized access to commercially valuable business information.
After separate notice and comment proceedings, in June and August USTR released two lists of Chinese imports, with a combined annual trade value of approximately $50 billion, with the goal of obtaining the elimination of China’s harmful acts, policies and practices. Unfortunately, China has been unwilling to change its policies involving the unfair acquisition of U.S. technology and intellectual property. Instead, China responded to the United States’ tariff action by taking further steps to harm U.S. workers and businesses. In these circumstances, the President has directed the U.S. Trade Representative to increase the level of trade covered by the additional duties in order to obtain elimination of China’s unfair policies. The Administration will continue to encourage China to allow for fair trade with the United States.
A formal notice of the $200 billion tariff action will be published shortly in the Federal Register.
The final tariff list:
Strike Notice for Canadian Ports Issues by International Longshore & Warehouse Union
The following information has just been received from the Canadian International Freight Forwarders Association (CIFFA). A strike could affect the containerized shipments loaded on vessels calling the two terminals operated by GCT Canada – Deltaport and Vanterm. BOC will keep you posted on any further developments.
CIFFA learned yesterday (September 4) that the first agreement negotiations between GCT Canada, which operates two container terminals in Port of Vancouver, and ILWU 502 representing planners and planning assistants, “have ended with significant gaps remaining between the parties. As such, ILWU 502 issued strike notice on September 3, 2018.”
GCT Canada said it was committed to working with ILWU Local 502 to negotiate the first collective agreement for its Planners in order to continue an effective working relationship and ongoing operational stability.
Global Container Terminals has advised as follows:
“If the Planners and Assistant Planners commence a strike, as they have notified GCT and the Federal Minister of Labor that they will, on September 7th at 0001, GCT Canada will have no option but to suspend all of its terminal operations in GCT Deltaport and GCT Vanterm due to the essential nature of this function. This would have a direct impact on all parties who rely on our terminal services to get their products to different international markets.
As a result, GCT has commenced the necessary planning and will work closely with our customers, the Vancouver Fraser Port Authority, and stakeholders for safe and efficient shut down of our Vancouver terminal operations.”
CIFFA has written a letter to the federal government urging that it “use all the tools at its disposal in bringing negotiations to a successful and rapid conclusion, whether through mediation, binding arbitration or any other means.”
The letter was sent today to the Minister of Employment, Workforce Development, and Labor, the Minister of Transport, the Minister of International Trade, and the Minister of Public Services and Procurement and Accessibility.
The content of the letter will be available on the CIFFA site.
This situation could change quickly and the association will endeavor to keep membership advised as information becomes available.
Trans-Pacific Service VOID Sailings
Please be advised ONE will implement the following VOID sailings, in alignment with THE Alliance member lines.
|EB ETA 1st Port||WB ETA 1st Port|
|PS4||YM Mandate*||058E/W||Oct 20, Hong Kong||Nov 5, Los Angeles|
|PS5||YM Uberty||066E/W||Oct 8, Qingdao||Oct 26, Los Angeles|
|PS7||MOL Beauty||025E/W||Oct 11, Xiamen||Oct 30, Long Beach|
|EC2||Harbour Bridge||073E/W||Oct 4, Qingdao||Nov 6, New York|
|EC2||YM Uniformity||039E/W||Oct 18, Qingdao||Nov 20, New York|
|EC2||Humen Bridge||068E/W||Nov 1, Qingdao||Dec 4, New York|
|EC3||Vienna Express||057E/W||Oct 11, Kaohsiung||Nov 12, Savannah|
|EC3||NYK Orion||056E/W||Nov 8, Kaohsiung||Dec 10, Savannah|
|EC4||Milano Bridge||005E/W||Dec 1, Kaohsiung||Jan 6, Norfolk|
|EC4||NYK Wren||004E/W||Dec 22, Kaohsiung||Jan 27, Norfolk|
*Upon PS4 VOID sailing, Kaohsiung will be covered by PS7 service vessel the MOL Beauty 025E/W with the rotation change as follows: Xiamen, Hong Kong, Yantian, Kaohsiung, Long Beach, Oakland, Kaohsiung.
The subsequent voyages for these services will be as per the published schedule.
We regret the inconvenience caused and thank you for your understanding in this regard. Should you have any questions or concerns, please contact your sales account representative for additional information.
Ocean Network Express Pte. Ltd.
APL Golden Week Blank Sailings
Maersk Line Gold Week Blank Sailings
Port Conditions, Asia
Shanghai: Heavy congestion in all SIPG terminals continue – waiting 3-3.5 days for a berth after port was closed for 57hrs due to bad weather
Qingdao: Increased congestion – waiting time around 1-1.5 days. Pot closed 66hrs last week
Ningbo: Heavy congestion – currently 1-1.5 days waiting for a berth – Port closed for about 69hrs
Dalian: Moderate congestion comes up due to the port being closed for 96hrs last week due to strong winds and rough seas
Lianyugang: Severe congestion appears this week, the port was closed for 90hrs last week, vessels can expect up to 3-4 days for a berth
Xingang: Port was closed for 11hrs last week, but port productivity situation remained normal
Manila: Manila South & North port still experiencing congestion , 15 vessels currently waiting for a berth at Manila North and 6 vessels waiting for a berth at Manila South. Terminal CY’s also heavily over capacity which leads to delays of empty returns and use of external ICD’s a “must”
Bangkok: Berth waiting time continues to be approx. 1 day
Japan: Nagoya Port is likely to be affected by Typhoon Cimaron on 23rd Aug
Korea: Port operation is normal at present, however Typhoon SOULIK will shut the ports now for approx. 24–36 hours
CBP Increases MPF Effective October 1, 2018
U.S. Customs Border Protection has announced a 2.151 percent increase of the merchandise processing fee (MPF) effective October 1, 2018 for fiscal year 2019. The assessed rate of .3464 percent of the entered value of merchandise does not change, the minimum and maximum limitations for the MPF have changed. Please find the changes below.
- Formal entry minimum increases from $25.67 to $26.22
- Formal entry maximum increases from $497.99 to $508.70
- Informal entry electronically transmitted to CBP increases from $2.05 to $2.10
- Informal entry manually submitted to CBP increases from $6.16 to $6.29
Additional information can be found through this link:
Port Conditions, Asia
Qingdao: Heavy congestion continues – waiting 1.5-2 days for a berth after the port was closed for 30.5 hours due to bad weather.
Shanghai: Increased congestion – waiting time 2-2.5 days. TS (Tropical Storm) RUMBIA caused some issues with the draft in the channel, restricting vessel access and berthing.
Ningbo: Heavy congestion – at least 2 days waiting for a berth – Port closed for about 59hrs, being affected by TS YAGI and RUMBIA.
Shantou: Moderate port congestion. Vessels out of window will delay at least 0.5-1 day.
Penang: Moderate congestion, low productivity due to crane maintenance, berth waiting time is around 0.5 day.
Manila: Manila South & North port still experiencing congestion – delays of 3-4 days even for vessels on window. The CY’s at the port are also heavily over capacity which leads to delays of empty returns and use of external ICD’s a “must”.
Bangkok: Berth waiting time continues to be approx. 2 days
Jakarta: Port congestion has eased, but due to ongoing low productivity in port, waiting 0.5 to 1 day for a berth for ships arriving off window.
Surabaya: Port congestion moderate due to low productivity in port, waiting 1 to 1.5 days for a berth for ships arriving off window.