May 18, 2018 by The Loadstar
Shippers with Cargo on Maersk Honam Face Hefty Bill to Get it Released
Maersk Honam fire in the Arabian Sea.
By Gavin van Marle (The Loadstar) – Shippers with cargo aboard the fire-stricken Maersk Honam will have to stump up over half its value if it is to be released under general average arrangements.
MSC, Maersk Line’s 2M partner, confirmed this morning that the vessel is due to finally dock at Dubai on 22 May, with discharging likely to take between four days and a week.
This week, vessel salvor Richard Hogg Lindley (RHL) fixed the salvage security at 42.5% of the cargo value, as well as requiring a further 11.5% as a general average deposit.
This means a shipper with goods worth $100,000 in a container faces a combined general average and salvage security bond bill of $54,000 to have the cargo released.
MSC said this week: “The submission of the GA and salvage securities is a prerequisite for the cargo to be released from Jebel Ali.
“Following completion of the discharging operations, the containers identified as potentially damaged will undergo an inspection at Jebel Ali and relevant customers will be invited to be represented at a joint inspection.
“Containers that are identified as sound will be loaded at first opportunity to reach their final destination, provided GA and Salvage securities have been submitted and released confirmed by RHL.”
Alex Kemp, partner at global law firm HFW, explained: General average is a tool for sharing the losses arising from a marine casualty between all the parties involved in that casualty. The vessel owners, bunker owners, container shell owners and cargo owners will all contribute their share to the losses incurred.
“In order to ensure that everyone pays their fair share, the vessel owner usually has the power to detain the cargo pending the provision of security. If security is not provided, it is often open to the vessel owner to sell the cargo in order to raise the funds to pay the contribution due from that particular cargo owner,” he said.
However, in a further twist today, MSC that it would also look to pass on part of the extra transport and port costs incurred in Dubai to shippers with undamaged cargo.
“In consideration of the important geographical deviation provoked by the salvage operations and of the consecutive extra handling/storage costs that will accrue at port of refuge, MSC will unfortunately not be in position to carry your cargo to destination without collecting additional charges.
“We are therefore requesting an amount of $750 per 20ft or $1,250 per 40ft. This amount is destined to cover all additional transhipment, storage and on-carriage costs MSC will face as the result of this regrettable casualty.”
It added: “We are profoundly sorry for these additional costs which are imposed on us by the situation.”
For shippers that do not want to pay the extra charge, MSC said their containers would be “handed back to your local representatives under the double prerequisite that the original bills of lading have been returned to us duly endorsed and that your shipment has been released from general average/salvage, and will be subject to payment of storage and demurrage as per our tariff”.
Customers have until the close of business on 24 May to relay their decision to the carrier.
The Loadstar is fast becoming known at the highest levels of logistics and supply chain management as one of the best sources of influential analysis and commentary.
China – Dense Fog in Shanghai, Ningbo and Qingdao Causes Vessel Delays
Dear Valued Customer,
As per our advisory sent on 13 April 2018, you would be aware that terminals in Shanghai, Ningbo and Qingdao have been affected by heavy winds and intense fog, causing disruptions to port operations and vessel services.
Shanghai
Port operations at Wai Gao Qiao and Yangshan are being delayed by at least 3 days and 1.5 days respectively, with delayed opening hours for container yards. Some APL services have started calling the newly opened Yangshan Terminal 4, adding more options to our valued customers.
Ningbo
Current waiting time for vessel is estimated at 3 days. APL is working closely with the port authority to bring this down to 2 days.
Qingdao
Port operations are back to normal, but the current cargo backlog is expected to take 2 days to clear.
Please be assured that APL is working closely with the terminal operators and will keep you apprised of any update or development.
For assistance, please contact your local APL Customer Service Representative.
We thank you for your business and continued support
Sincerely,
APL
www.apl.com
POLA and POLB Marine Terminal Gates Closed Thursday, May 3, 2018, from 5 p.m.
Dear Users of OffPeak Gates,
PierPass Inc. has been notified that the International Longshore and Warehouse Union (ILWU) will observe a special stop work meeting for union business on Thursday, May 3, 2018, starting at 5 p.m. As a result, no marine terminal gates at the Port of Los Angeles or the Port of Long Beach will operate between the hours of 5:00 p.m. on May 3 through 3:00 a.m. on May 4. There will be no OffPeak shift Thursday night May 3.
Please check with individual terminals for substitute or alternative gates.
This labor shutdown falls under Rule 5 of the Marine Terminal Operator Schedule No. 1, which is available at:
http://www.pierpass.org/wp-content/uploads/2017/12/WCMTOA-Schedule-12-4-17.pdf
PierPass Inc.
PierPass Members Add Common Business Rules to Terminal Appointment Systems
LONG BEACH, Calif., April 30, 2018—The members of the West Coast MTO Agreement (WCMTOA)—the 12 marine terminal operators at the Ports of Los Angeles and Long Beach—have agreed to add common business rules for the appointment systems that will become part of the OffPeak program later this year. Subject to regulatory approval, the revised OffPeak program, which is administered by PierPass, is expected to begin in August.
The terminals agreed to add the common business rules—operational procedures that all terminals will follow—in response to requests from trucking companies and other stakeholders.
The new common business rules include an appointment window—the time span between the earliest and latest times a truck can arrive for an appointment, including grace periods—of two hours for all appointments. In addition, all terminals agreed that their last appointment times of the day will be 3:30 p.m. on the first shift and 1:30 a.m. on the second shift. The new business rules will take effect when the new program begins, and are expected to increase efficiencies for users when planning appointments at more than one terminal.
PierPass also clarified that the new system, which some have referred to as “PierPass 2.0,” won’t require appointments for individual import containers being picked up from peel-off piles. Trucking companies and cargo owners will continue to arrange for a single time window to pick up entire blocks of containers going to the same company or destination from a single container terminal.
Earlier this month, PierPass announced it will overhaul the system used by the OffPeak program for truck traffic mitigation at the two adjacent ports, replacing the current congestion pricing model with an appointment-based system that uses a single TEU-based flat fee on both daytime and nighttime container moves. The change has been welcomed by port leadership and by trucking industry associations as a way to improve flexibility and reduce the bunching up of trucks in late afternoons.
PierPass is scheduling a combined meeting of the PierPass Advisory Committee and Extended Gates Subcommittee in October. This will provide an opportunity for stakeholders to provide feedback and suggestions after implementation of the new system.
A Q&A about the revised OffPeak program is available at www.pierpass.org/wp-content/uploads/2018/04/QA-on-New-OffPeak-Program_4-16-18.pdf. The West Coast MTO Agreement is a discussion agreement filed with the FMC. For more information and to track continuing developments, please go to www.pierpass.org.
PierPass to Adopt Appointment System and Flat Fee for OffPeak Program
LONG BEACH, Calif., April 16, 2018—PierPass will overhaul the model used by its OffPeak program for truck traffic mitigation at the Ports of Los Angeles and Long Beach, replacing the current congestion pricing model with an appointment-based system that uses a single flat fee on both daytime and nighttime container moves.
The members of the West Coast MTO Agreement (WCMTOA)—the 12 marine terminal operators at the two adjacent ports—reached the decision after an 18-month process of consultation with industry stakeholders, and an analysis and survey by industry consultants.
Port users have expressed a desire for changes to increase flexibility and reduce the bunching up of trucks that often occurs before the start of the nighttime OffPeak shifts. Subject to regulatory approval, the revised OffPeak program is expected to begin in August.
“The industry has been demanding ‘PierPass 2.0,’ and we are responding,” said PierPass President John Cushing. “The original OffPeak program was an innovative and highly effective solution to the challenges we faced in 2005. But it was fairly inflexible, whereas an appointment-based model is scalable and can evolve to meet changing industry needs, technology and practices.”
Under the current program, OffPeak charges a Traffic Mitigation Fee (TMF) on weekday daytime cargo moves to incentivize cargo owners to use OffPeak shifts on nights and Saturdays. The revised OffPeak program will replace this two-tier fee structure with a single flat TMF during both shifts, and use appointments to spread traffic across the two shifts.
Applying the TMF to both day and night cargo will allow a reduction of more than 55 percent in the TMF while still providing funding to operate extended gates. The current TMF of $72.09 per TEU (twenty-foot equivalent unit) will be replaced by a new flat fee of $31.52 per TEU; the rate for all other container sizes will be a flat fee of $63.04.
“The Port of Long Beach is pleased with the progress PierPass has made in working with industry stakeholders to improve night gate operations in our terminals,” said Port of Long Beach Executive Director Mario Cordero. “As ships are getting bigger and volumes increase, efficient gate management is critical to our ability to move cargo in a reliable, predictable and expedient manner.”
“I’m pleased and encouraged that PierPass members are taking a significant step forward to improve efficiencies at the San Pedro Bay port complex,” said Port of Los Angeles Executive Director Gene Seroka. “We, as well as the trucking community and all of our stakeholders, look forward to increased cargo velocity and customer responsiveness at Port facilities.”
The process of reviewing OffPeak alternatives has included a series of meetings beginning with an October 2016 workshop where WCMTOA met with more than 70 leaders representing importers, exporters, trucking companies, logistics providers, elected officials, government representatives, port authorities and other supply chain stakeholders. After a series of subsequent stakeholder meetings to delve into potential alternative models, PierPass retained industry consultants to conduct a detailed analysis. The consultants’ findings were presented and discussed at a follow-up industry workshop on March 8, 2018. WCMTOA members then worked through the remaining issues to arrive at the final plan for the revised OffPeak program.
“The California Trucking Association appreciates the proposal put forth by PierPass regarding its re-structuring of the TMF,” said Alex Cherin, Executive Director of the CTA Intermodal Conference. “This is the culmination of many collaborative discussions between the marine terminal operators and trucking communities over the last few years, and we look forward to supporting these efforts.”
“The HTA has worked hard with our marine terminal colleagues to create a more efficient and environmentally sustainable port complex,” said Weston LaBar, CEO of the Harbor Trucking Association. “This new direction for PierPass is another example of cross-industry collaboration and is a giant step in the right direction. It shows that the San Pedro Bay Port Complex will continue to be the preferred gateway for moving America’s cargo.”
A Q&A about the revised OffPeak program is available at www.pierpass.org/wp-content/uploads/2018/04/QA-on-New-OffPeak-Program_4-16-18.pdf. The West Coast MTO Agreement is a discussion agreement filed with the FMC. For more information and to track continuing developments, please go to www.pierpass.org.
Shippers who rely on suppliers to furnish cargo insurance or who rely on their carriers to take responsibility for losses may be in for a big surprise. Protecting your investments by insuring your goods provides peace of mind.
Buying CIF: Who’s really responsible if your product is lost or damaged in transit? According to internationally accepted trade terms, referred to as Incoterms, suppliers selling “CIF” (Cost, Insurance, Freight) are responsible for arranging cargo insurance. But just because your supplier has the obligation to arrange insurance under CIF terms, it doesn’t mean that they are ultimately responsible if your product is lost or damaged during transit. The ultimate burden of loss falls upon you, the buyer. This is why many experts recommend importers change their buying terms to EXW, FOB, FCA, CFR or similar terms in order to control the selection, and thereby the quality, of insurance coverage.
How much is that insurance really costing you? Foreign suppliers and their forwarding agents often tack on placement fees to the insurance costs. Those added fees often inflate the cost of insurance well beyond market pricing for the same coverage purchased in the United States. Find out how much you’re really paying and then compare quotes received from BOC International.
Is the coverage your supplier purchased for you adequate? Importers relying on their suppliers to arrange insurance run the risk of having inadequate insurance coverage. Cargo insurance policies can vary widely in levels of coverage, deductibles and special restrictions. Ask your supplier for a complete copy of the insurance policy or for a certificate of insurance detailing all the policy terms and conditions
What’s the financial health of your supplier’s insurance company? Recent financial and catastrophic events have exposed the vulnerability of insurance companies to sudden economic devastation. Importers are encouraged to make certain their suppliers use insurers with a favorable financial rating supplied by a respected financial rating service. A.M. Best, Standard & Poor’s and Moody’s are among some of the world’s most respected. BOC’s insurance company, underwriters at Lloyd’s of London, has an A.M. Best financial rating of A (Excellent).
How will your claim be handled? If insurance is arranged overseas, will you be forced to deal with an inexperienced, sub-contracted independent adjuster unfamiliar with the assessment of transportation related losses? Ask your supplier for a list of insurance claims adjusters contracted by the insurance company. Adjuster and surveyor networks approved by Lloyd’s of London and AIMA are among the most credible. BOC has a vested interest in your insurance needs and will directly handle cargo claim documentation requirements to ensure prompt processing and timely settlement.
Every Shipper Needs Cargo Insurance
Global trading involves risk; however, broad insurance coverage minimizes your financial risk. Don’t leave your livelihood up to chance! Statistics show that one ship sinks each day and you will experience a General Average loss every eight years. If you are depending on the carrier to cover losses, their responsibility is limited by law as follows:
Ocean Carriers $500 per shipping unit
A shipping unit may be defined as one ocean container.
Air Carriers $9.07 per pound
Truckers $.50 per pound
The insurance we offer is competitively priced and insures approved merchandise against physical loss or damage from external causes. By purchasing cargo insurance, you can avoid inconvenience and frustration. Contact your BOC Representative at 617-345-0050 for your free quote.
What Every Shipper Needs to Know About Declared Value vs. Cargo Insurance
In the transportation industry, the words declaring and insuring are often interchanged resulting in great misunderstanding and confusion among shippers. Here’s an explanation of what to expect when declaring value with your forwarder/carrier versus purchasing cargo insurance.
Declared Value Coverage
Declared value coverage is not insurance for shippers. One of the most significant distinctions of being paid on a claim under declared value is that the shipper must prove that the carrier’s negligence directly resulted in the loss or damage to cargo.
Declaring value simply raises the financial legal liability of the carrier beyond the limitations stated on the carrier’s or forwarder’s freight bill, tariff or other contract of carriage. For example, many domestic forwarders and carriers limit their liability to 50 cents per pound. Declaring value takes that amount up to the amount declared.
The majority of these transportation providers have transferred that risk to an insurance company who issues an insurance policy that gives shippers the option of upping the carrier’s liability by declaring value and paying premium.
Although subject to the transportation provider’s policy conditions, shippers rarely see the insurance policy containing important facts such as deductibles, exclusions, warranties and policy limits.
In the transportation industry, the words declaring and insuring are often interchanged resulting in great misunderstanding and confusion among shippers. Here’s an explanation of what to expect when declaring value with your forwarder/carrier versus purchasing cargo insurance.
Declared Value Coverage
Declared value coverage is not insurance for shippers. One of the most significant distinctions of being paid on a claim under declared value is that the shipper must prove that the carrier’s negligence directly resulted in the loss or damage to cargo.
Declaring value simply raises the financial legal liability of the carrier beyond the limitations stated on the carrier’s or forwarder’s freight bill, tariff or other contract of carriage. For example, many domestic forwarders and carriers limit their liability to 50 cents per pound. Declaring value takes that amount up to the amount declared.
The majority of these transportation providers have transferred that risk to an insurance company who issues an insurance policy that gives shippers the option of upping the carrier’s liability by declaring value and paying premium.
Although subject to the transportation provider’s policy conditions, shippers rarely see the insurance policy containing important facts such as deductibles, exclusions, warranties and policy limits.
- What are some of the things not covered when we declare value?
- Three significant areas not addressed by declaring value are: (1) that the shipment is not covered “door-to-door.” Declared value is valid as long as cargo is in the care, custody, and control of the transportation provider; (2) other losses commonly not provided for include “Acts of God” and any other incidences outside the control of the carrier; and (3) reimbursement of freight charges, packing expenses, forwarding fees and similar costs are also not covered when buying declared value vs. cargo insurance.
- We’ve been shipping for years without a serious loss. Isn’t it throwing away money to start buying coverage now?
- No. Experienced risk managers will tell you that insurance shouldn’t be purchased only when a company can afford to sustain a significant loss. Think of the maximum value of a shipment. Imagine that entire load being destroyed in an airplane crash or truck overturn. Picture your company being without that money forever. If the shareholders can sustain that kind of loss along with all the other little nuisance losses that occur throughout the year, and can do it without a sleepless night, then your company may be a good candidate for self-insuring.
Declared Value vs. Cargo Insurance At-a-Glance | Cargo Insurance | Declared Value |
Provides door-to-door protection | Yes | No |
Pays whether or not transportation provider’s negligence is proven to have caused the loss | Yes | No |
Pays for losses occurring outside control of the carrier | Yes | No |
Pays shipper for the full invoice value of cargo lost or damaged plus freight and other associated costs | Yes | No |
Can pay for expediting replacement goods | Yes | No |
Dense Fog Continues to Cause Delays – China
China – Dense Fog in Shanghai Causes Vessel Delays |
Dear Valued Customer, The terminals in Shanghai are gradually reopening as the dense fog that has been affecting the area starts to dissipate. An intense fog had been hanging over the Shanghai and Yangtze River Delta Area over the past two weeks, causing disruptions to port operations and ocean carrier services. Port operations at both Wai Gao Qiao and Yangshan terminals in Shanghai are gradually resuming. However, the Shanghai Maritime Safety Administration has advised that it may take two to three weeks for operations to return to normal in Shanghai. Customers can expect delays to their shipments on the vessels affected. We are pleased to inform you that APL has started calling the newly opened Yangshan Terminal 4. Strategically located near the open seas, this will add to our customers options. Please be assured that APL is working closely with the terminal operators to expedite your cargo flow. In the meantime, we seek your patience and understanding and will continue to keep you apprised of any update or development. For assistance, please contact your local APL Customer Service Representative. We thank you for your business and continued support. Sincerely, APL |
Heavy Fog Continues in Shanghai Port / Yangtze River Area
Only weeks after the last fog in late March and early April, Shanghai port has not yet fully restored
Its normal production order. In recent days, Shanghai port and the Yangtze River estuary deep-water
Channel are again shrouded in fog. This has caused Yangtze River’s North trough & South trough to close, and further delay ships.
The Yangtze River channel has been closed for days. Meanwhile, Ningbo coastal area has also been affected, with many vessels delayed for a week. This may result in reloading fees, causing origin local fees to be higher than usual.
Labor Disruption Averted
CP Rail Customer Bulletin
https://www8.cpr.ca/cpcustomerstation/bulletin/view?id=11590 April 20, 2018
Customer Advisory: Labour Disruption Averted
This evening, we reached an agreement with both the Teamsters Canada Rail Conference-Train & Engine (TCRC) and the International Brotherhood of Electrical Workers (IBEW), which averts the potential work stoppage of 12:01 am Eastern time tomorrow, April 21, 2018.
As such, CP’s embargoes for shipments routing to and from CP Canadian locations has been cancelled effective immediately. CP will immediately begin to execute a safe and structured start-up of its train operations in Canada.
Customer Advisory: Intermodal Terminal Gates Open During Work Stoppage
Dear Valued Customer,
During the embargo which begins Saturday April 21 at 00:01, intermodal terminal gates will remain open, in so far as practicable and so long as capacity permits, in order to reduce the impact of the work stoppage by CP’s unionized employees represented by the TCRC and IBEW.
If at origin, customers will be able to request pick up or ingate containers until terminals have reached their capacity. Private perishable protective service equipment and international reefers are excluded and will not be allowed in the terminals at this time as they require fueling/monitoring.
If a container has arrived at its destination terminal, customers will be able to request delivery or pick up containers from the terminal.
CP will not be providing over-the-road train service during the work stoppage.
CP will communicate to customers when terminals are nearing capacity to avoid loads being turned away at the gate.
Update-CP Canadian Network shutdown due to TCRC & IBEW strike
Canadian Pacific (CP) has received notice from the Teamsters Canada Rail Conference – Train & Engine (TCRC), and by the International Brotherhood of Electrical Workers (IBEW) that members of the respective unions will be withdrawing their services to operate freight and passenger trains and to maintain CP’s signaling systems in Canada, effective 0001, Saturday, April 21, 2018.
CP has commenced and will continue to execute a safe and structured shutdown of its train operations in Canada.
An embargo application for shipments routing to and from CP Canadian locations is now in place to be effective 0001, Saturday, April 21, 2018. This embargo applies to:
- All shipments originating in Canada which are billed to any Canadian or US destinations
- All shipments originating in the United States which are billed to any Canadian destinations
- The embargo can be rescinded at any time.
CP will continue to bargain in good faith with the TCRC and the IBEW and remains committed to achieving a win-win solution for the company and the two unions. CP urges both unions to work closely with the company and federal mediators to achieve a positive outcome as soon as possible.
For up-to-date information on specific impacts to your shipments or other problem resolution inquiries please contact Customer Service at 1-888-333-8111. You can also reach Customer Service through the Log an Issue tool on Customer Station or via email at customer_service@cpr.ca.
Thank you in advance for your continued patience and support.
James Clements
Vice-President, Strategic Planning and Transportation Services
Canadian Pacific
Teamsters and IBEW unions give strike notice to CP Rail
Job action now possible within 72 hours
The Canadian Press · Posted: Apr 18, 2018 9:16 AM ET | Last Updated: an hour ago
Two unions representing about 3,400 workers at Canadian Pacific Railway Ltd. have formally served the company with 72-hour notice of their intent to strike.
The notice comes at a difficult time for the railway, which is under pressure from shippers to move backed-up grain shipments and supply more locomotives to the pipeline-constrained oil industry in Western Canada.
Both the Teamsters Canada Rail Conference, representing about 3,000 CP Rail engineers and conductors, and the International Brotherhood of Electrical Workers, with about 365 signal and communications workers, cite a lack of progress at the bargaining table.
Absent a negotiated settlement, the unions say their workers will walk out at 12:01 a.m. on Saturday.
The company confirms it has received the strike notices but says it is committed to achieving a “win-win solution.” It says it presented the Teamsters with new three- and five-year agreement options on Monday and plans to present the IBEW with three- and five-year options today.
Both unions reached a tentative deal with Canadian National Railway Co. last month for new contracts for about 1,700 CN Teamsters workers and over 700 IBEW members.
Teamsters workers voted 94.2 per cent and IBEW workers voted 98 per cent in favour of strike action against CP Rail earlier this month.
“Serving a strike notice is part of the bargaining process that unions must follow if they want to be able to strike,” said Canadian Pacific CEO Keith Creel in a statement.
“We remain committed to achieving a win-win solution and urge the two unions to work closely with us and the federal mediators to achieve a positive outcome as soon as possible in the hours leading up to the deadline.“
Canadian Pacific workers voted 94.2 per cent on April 6 in favour of strike action to support their contract demands. (CBC)
Major Congestion in North China, Korea and Japan Due to Severe Fog
The heavy fog is still delaying many containers.
For example, the triangles below are ships in Shanghai at anchor waiting because the fog is too heavy and there is no place to dock in Shanghai.
Congestion exists throughout China, Korea and Japan.