Peter Tirschwell | Jul 09, 2021 2:53PM EDT, JOC.com

The inclusion of ocean shipping in President Joe Biden’s executive order issued Friday encouraging competition across several sectors will add urgency to the Federal Maritime Commission’s pursuit of unfair carrier practices, particularly in the area of detention and demurrage.

The FMC already believes that certain carrier actions such as a blanket refusal to carry exports violates the Shipping Act of 1984, and separately as of last fall began proactively investigating unfair detention and demurrage practices without requiring a formal complaint from a shipper, which it had required in the past, signaling a more aggressive approach to an issue that for years has defied easy solutions.

In other words, the regulatory landscape was already dominated by two issues which the sweeping executive order doesn’t change: complaints by politically influential exporters’ about inadequate access to capacity, and allegations of excessive and unfair detention and demurrage bills, an issue that long predates COVID-19, but which has been exacerbated by pandemic-driven congestion at ports and railheads.

Other issues raised as part of the announcement of the executive order were less clear as to their likely impact.

How exactly the FMC would “work with the Justice Department to investigate and punish anti-competitive conduct,” as White House Press Secretary Jen Psaki told reporters Thursday, is unclear. Though the Justice Department has long opposed ocean carrier antitrust immunity, testifying to that effect at congressional hearings over the years, a multi-year DOJ-led investigation of container line alliances, consortia, and related pricing activities failed to return any indictments and ultimately is believed to have terminated sometime in 2018 or 2019. Other nations’ investigations of container line collusion similarly failed to yield evidence sufficient for prosecutions to materialize.

But the core issues remain. Outside of a few instances of alleged unreasonable export practices by a few ocean carriers that FMC commissioners have indicated they believe represent Shipping Act violations, the disruptive and costly impact of the pandemic on all shippers – importers and exporters — makes it difficult to conclude that US exporters are being unfairly singled out, or to envision a clear path towards a policy solution.

On the other hand, however, allegedly unfair detention and demurrage bills are a longstanding grievance of shippers, to the point that a US shipper group in a rare move recently proposed legislative changes to shift the legal burden of proof in detention and demurrage billing from shippers to carriers. Interest by the FMC in the issue goes back to 2014 when it held a series of port forums where the issue surfaced as a “palpable” concern of shippers.

Shippers say that despite a 2020 interpretive rule by the FMC stating that importers, exporters, intermediaries, and truckers should not be penalized when they are unable to retrieve containers from, or return containers to, marine terminals due to circumstances beyond their control, they say they have noticed no significant change in behavior by carriers or their marine terminal partners. The FMC is now trying to get tough on detention and demurrage by beginning to self-initiate investigations versus waiting for relatively infrequent complaints to surface, in order to ward off a threatened legislative solution, and the executive order will only embolden the agency to toughen its enforcement.

The executive order directs the FMC to “vigorously enforce the prohibition of unjust and unreasonable detention and demurrage charges,” as well as to consider further rulemaking in this area and to request recommendations from the National Shipper Advisory Committee to improve detention and demurrage practices, the law firm Venable said Friday.

In a statement issued on Saturday, National Industrial Transportation League Executive Director Jennifer Hedrick said: “We’re especially pleased to see the administration’s calls for vigorous enforcement towards ending unfair detention and demurrage practices that are crippling the maritime supply chain.”

On the question of access to capacity, the issue remains one of shippers criticizing carriers and carriers responding that the capacity simply isn’t there to handle the surge in demand. The supply-demand imbalance is reflected in the rates, which have been driven to all-time highs due to combination of a surge in volumes – US containerized imports are up 40 percent in the first five months of this year alone versus the prior year, according to IHS Markit — and reduced systemwide capacity, due to everything from social distancing and labor shortages on docks and within warehouses, to containers and chassis not being returned quickly.

“Ocean carriers are employing all available capacity and pulling out all the stops to manage the operational disruptions brought on by COVID-19. This is not the fault of any supply chain actor. Supply chains simply cannot efficiently handle this extreme demand surge,” the World Shipping Council, representing container lines, said on Friday.

Marine chassis dwell up 20 percent

In one example of how the system is incapable of handling demand, dwell time of US marine chassis is 20 percent higher than it was a year ago, which has effectively removed the equivalent of 60,000 chassis from the US market, causing shortages across the Midwest, according to one executive. In another example, in the first four months of 2021, the average turnaround time for vessels doing 6,000 lifts or more at Los Angeles-Long Beach was 194 hours, a 64 percent increase versus the same period in 2019, according to IHS Markit port performance data. Turnaround time is defined as anchorage time and on-berth time to complete cargo operations.

The worldwide surge in demand for containerized cargo space is seen in breakbulk carriers seeing a surge in requests to carry containers and in surging container ship charter rates. The Harpex index of container ship charter rates skyrocketed over 600 percent between early 2020 and July 2021.

“Congestion, reliability and cost issues are hitting port, businesses, and ocean-linked transportation not just in America, but worldwide,” FMC Chairman Daniel Maffei told the same Congressional hearing on June 15. “The primary reason for the congestion, high prices, and lack of reliability is that demand for cargo shipping has outstripped the supply.”

With ocean shipping having been largely deregulated through laws passed in 1984 and 2008, rates fluctuate based on free market forces. When the market experienced overcapacity as it did for most of the decade following the financial crisis, rates were low and many shippers came to expect year over year reductions in contract rates and never complained about issues like access to vessel capacity outside periodic spikes in demand when cargo rollings would temporarily increase. And when demand outstripped capacity across the system of ships, ports, trucking, and rail — painful as it is — rates have moved sharply in the other direction.

“For years the increasing supply of cargo space and bigger and bigger ships kept ocean freight rates on the low side, but now Covid and its effects have created record demand for shipping and record freight rates as well,” Maffei said.

“We have the authority to enforce the detention and demurrage piece. It is another question whether we have the authority for the exporters,” he said.

Whitehouse Briefing Room Statementhttps://www.whitehouse.gov/briefing-room/statements-releases/2021/07/09/fact-sheet-executive-order-on-promoting-competition-in-the-american-economy/

Wildfires Affect Western Canada and Rail Operations

Customer Advisory

British Columbia Wildfire impact on service

Dear Valued Customer,

We would like to update you on the situation in Western Canada in relation to the wildfires in the Lytton, BC area which has impacted the key access route towards the ports in Vancouver.

Transportation modes impacted: Both CN and CP Rail were granted access to the rail tracks to determine the necessary steps to resume safe rail operations. They are currently assessing the damage and estimating the time needed for repair.

CP Railways update:

  • One line belonging to CP has been opened and CP is restarting the operations and trains following through the area at reduced speed.
  • Westbound export in-gate embargo is in place requiring truckers to report to problem area to clear through Remote Operations Center (ROC). Embargo holds are being actively worked out by CP to ensure terminals accept containers in line with trains ramp-up.

CN railway update:

CN is currently working on directing traffic via alternative routes either by using the CP line on a co-production agreement or by collaboration with BNSF via different gateway. At this time an embargo has been issued on traffic going Westbound and Eastbound.

As mentioned on yesterday’s update, it is anticipated that regular flow in and out of port of Vancouver will be impacted for at least one week. We will see increased congestion at terminals and expect vessel delays.

We are working closely with different stakeholders to understand the impacts of the delays on terminal operations and to develop a contingency plan.

Impact to Maersk operations: Our offices are open and working – and not impacted since most of our staff are working from home. Our warehouses are open and working.

Your business is important to us and we pledge to keep you fully informed as more details become available.

Should you have any questions on the situation, please feel free to contact your local Maersk professional.

Sincerely,

Your Maersk Team

Notice to Customers

Pacific North West (PNW) Services Update

Dear Valued Customers,

Further to previous advisory, we would like to update you on the operational situation related to the wild fires in Lytton, BC area. CN Rail is working with local authorities to inspect the area, assess the damages and time needed for repairs and resuming operations. In the meantime, CN has moved some traffic by utilizing CP lines’ networks with limited capacity and will continue to plan rail movements whenever possible.

In terms of terminal operations, currently there are two ZP8/ZP9 vessels in Vancouver and pending operations.

  • ZP8: Santa Ines (JK6 V.8N) is tentatively scheduled to start operations in Centerm terminal on July 9 local time.
  • ZP9: Maersk Lins (YE4 V.10N) at Deltaport terminal is pending operations as she is not only affected by the wild fires but also a Covid case. Her operations start time is to be updated.

Thank you for your attention and understanding on this matter. We will continue to keep you posted of any further developments.

ZIM Integrated Shipping Services Ltd    

www.ZIM.com

Congestion and Shipping Law

Congestion at US west coast ports will ‘get worse before it gets better’

Excerpted from Loadstar.com, by Ian Putzger in Toronto, 24/06/2021

Over the past couple of months, the congestion at the main US west coast gateway complex has eased and vessel turn times improved, but importers and logistics companies are in for more grief in the coming months.

For ten consecutive months, the port complex (LA/Long Beach) has handled record or near-record volumes of imports: in May, LA processed 1,012,048 teu, the first time a port in the western hemisphere handled more than a million teu in a month.

Total US-bound containerised shipments were up 47.1% on a year ago and 18.3% above the May 2019 tally. Imports from China climbed 51.1% year on year, while imports from the rest of Asia increased 44.5%.

Despite this relentless flood of imports, turn times at the docks and truck gates at LA/LB have improved from their levels in January, but the respite will likely be shortlived. The port of LA announced two weeks ago it had received notice from Chinese carriers BAL Container Line and China United Container Line that they intended to bring services to the port this summer. And HMM has signalled plans to boost its transpacific sailings. Back-to-school traffic will be heavy, as children and teenagers did not get new clothes last year due to the lockdown, he pointed out. Likewise, fashion imports will be strong.

Moreover, the US economy has been going at full throttle. The OECD predicts 6.9% GDP growth in the US for this year – the fastest pace since 1984. The volumes pouring into the major gateways are elevated further because the container lines have consolidated their calls at US ports and unleash more boxes on the big ones.

An additional spurt of volumes is expected from the port of Yantian, which finally resumed full operations this week via cargo that has piled up at the port and in warehouses nearby.

The chiefs at the ports of LA and LB have emphasised that the congestion that had plagued them was not a reflection of their capacity. Gene Seroka, executive director at LA, pointed out that the volumes his port handled last year were not significantly higher than in 2019, a year that saw no serious congestion problems. The current congestion is due to the strain on the entire surface network, extending far into the interior. Lately there have been reports of Asian carriers refusing bookings to some inland destinations, such as Indianapolis, Minneapolis and Toronto.

“It’s kind of going to be a rolling blackout over the course of the next months, where certain ramps are going to be shut down from an IPI perspective, and certain ramps will place moratoriums on any more inbound containers,” he said. While it is hard to predict where and when these occur, Chicago and Dallas were always going to be problematic, he added. At Chicago, the number of grounded containers had kept growing. Customers cannot access them but are still charged storage fees, he noted. The carriers, in turn, are stung by storage charges because they have to halt their trains at the major rail ramps near Los Angeles, as the terminals impose moratoriums on containers, he added. “This congestion is coming at a cost to everyone,” he said.

And, as more cargo pours in from Asia, the situation will deteriorate further, he predicted. “It’s going to get worse before it gets better.”

US lawmakers are in the process of drafting legislation to force ocean carriers to accept US export bookings rather than rush empty boxes to China, where they can get better yields. If that happens, it will further exacerbate the congestion on the surface, Mr Grossgart predicted.

Rewriting of US shipping law filled with risk, opportunity

Excerpted from JOC.com, Mark Szakonyi, Executive Editor | Jun 23, 2021 1:38PM EDT

Congress is drafting legislation to change US maritime law for the first time since 1998, offering a path to update regulation to a markedly different container shipping industry but risking overreach and overreaction to an unprecedented but likely temporary global crisis.

Reps. Dusty Johnson, R-S.D., and Rep. John Garamendi, D-Calif., told a House hearing last week that they are drafting legislation, and Washington sources say the Senate is doing similarly. While there is no guarantee that Congress will ultimately pass legislation updating the deregulatory Shipping Act of 1984, which was further deregulated by the 1998 Ocean Shipping Reform Act, nevertheless the Pandora’s Box — or container — has been opened.

The first Congressional hearing on June 15 focused on agricultural exporters’ accusations of being refused bookings clearly revealed the risks of trying to cure a temporary illness with too strong a dose of medicine. To tighten up common carriage responsibilities under shipping law, Johnson and Garamendi say they want to go so far as barring carriers from refusing exports.

“We have a problem in which the shipping industry is able to discriminate against American exporters, plain and simple,” Garamendi said at the hearing, adding that he sees the draft legislation as “prohibiting ocean carriers from declining all cargo bookings for exports.” The legislation they are drafting would also require carriers to include a statement of compliance with US maritime regulations, bar carriers from refusing exports, and require the Federal Maritime Commission (FMC) to publicly disclose on its website false certifications and resulting penalties.

If passed, that would be a leap from current legislation loosely requiring container lines to serve exporters to one that could force carriers to take loss-making exports. Unsurprisingly, the container lines — speaking through the World Shipping Council — warn that proposals shifting the industry toward a utility would ultimately hurt service for importers and exporters alike.

The policing of carriers’ common carriage responsibilities would be a new role for the FMC, said Peter Friedmann of the Agriculture Transportation Coalition (AgTC). Under his group’s proposal, legislation would require carriers to take export cargoes if they can be shipped safely to destinations, and the FMC wouldn’t wait for a complaint from an exporter to self-initiate an investigation.

“Frankly, everyone — port directors, longshore labor, truckers, and terminal operators — can attest to the large numbers of empty containers being loaded, even while exporters’ bookings are being denied or canceled,” Friedmann wrote in a JOC commentary. “In fact, carriers have been honest, either publicly stating policies to decline export bookings in order to expedite the return of containers to Asia, or informing shippers individually when declining or canceling export cargo bookings.”

Hapag-Lloyd was singled out during the Congressional hearing for telling customers in October that it would suspend some agricultural listings. The container line has since stressed its work to help exporters and pointed to how accepting export cargoes from inland destinations without a good import balance extends roundtrip transit, hurting importers under pressure to get Asian cargoes into the United States. Nonetheless, the explicit prohibiting of exports is a violation of shipping law, and sources close to the matter say an Asia-based carrier is also being investigated by the FMC for similar messaging to exporters.

AgTC is also advocating that Congress requires container lines to certify that they honored the agency’s interpretive rule on detention and demurrage when issuing fees. The FMC in spring 2020 backed a clarification that storage and equipment fees should incentivize cargo flow rather than function as a revenue generator, as some shippers and truckers allege. Under the AgTC proposal, the onus of proving that detention and demurrage was reasonable – in that the shipper could pick up the container or return equipment and was not prohibited by events outside their control, such as port congestion, severe weather, etc. — would shift from shipper to the carrier.

Regulating during crisis

These are major proposals in how the agency has walked the fine line between regulating service levels — but not rates — and tried to curb illegal behavior without imposing new rules onto the industry, risking unprovoked consequences to a complicated and interconnected sector. The unprecedented surge of Asian imports, spurring carriers to prioritize generally higher-paying imports and racking up storage fees at congested ports, has drawn Congressional attention and pleas from shippers to update regulation. The National Industrial Transportation League (NITL) got the process rolling in May when it made a series of proposals to Congress dialing back the antitrust immunity the shipper group advocated for and got via the Ocean Shipping Reform Act of 1998.

Now, NITL argues the industry has changed, requiring some additional regulatory teeth. There’s no doubt the industry has changed, going from some 20 major east-west container lines to just 10 in roughly five years. Vessel-sharing agreements aren’t new, but the degree to which carriers have been able to pool capacity together via alliances has. The trouble arising from how detention and demurrage is calculated and when it’s reasonable has only become starker, thanks to congestion at major port gateways. An argument can be made that the FMC needs more resources for more intense monitoring of alliances and shipping law abuses.

There is a danger, however, in legislating during a crisis. The import-export imbalance will ultimately ease as US consumers let up on their buying of goods as the economy shifts into a new phase of pandemic recovery. And the FMC’s ability to self-initiate investigations regarding the alleged refusal of export bookings and of detention and demurrage has only recently awakened.

A November supplemental order to its investigation of carrier practices at the ports of Los Angeles, Long Beach, and New York and New Jersey has area representatives at ports looking into unofficial complaints from shippers and truckers of unfair practices. The agency no longer needs to wait for a formal complaint, of which there’s been a lack of owing to perceived or warranted fear of retribution from carriers. The degree to which the agency trots out civil penalties for bad behavior may dull some of the more radical calls for upending the maritime regulatory system.

DOT meets with container lines, retailers on US port congestion

Excerpted from JOC.com, JOC Staff, Jun 24, 2021 2:00PM EDT

The US Department of Transportation (DOT) on Wednesday met separately with groups representing major container lines and retail importers, saying afterward the federal government is looking at possible solutions to mitigate the capacity crunch as cargo volumes are expected to stay elevated through year-end.

The DOT met with John Butler, president and CEO of the World Shipping Council (WSC), which represents top ocean carriers; and with the National Retail Federation (NRF) and its members from the Tractor Supply Company, The Michaels Companies, American Signature, and Macy’s.

In its meeting with WSC, DOT officials discussed US export delays, detention and demurrage practices, and ways to better share data tied to port performance. DOT said it and the WSC had agreed to “stay in touch and coordinate on supply chain disruptions.”

The unprecedented Asia imports clogging major gateways and inland hubs began in mid-2020, and container lines, ports, and industry analysts do not expect it to ease until early 2022 at the earliest. Frustration with export services and rising storage fees has spurred Congress to consider new legislation giving maritime regulators greater power.

The NRF last week publicly called for a meeting with the Biden Administration to address port congestion, warning that weeks-long delays threaten retail sales and broader economic growth. Following the meeting with NRF, DOT said it “had discussed solutions and how to work between government, industry, and labor to address supply constraints.”

There is a narrow path for federal action on port congestion beyond prioritizing infrastructure investments that would add exporter capacity. A bipartisan group of senators on Thursday said they had reached a deal on an infrastructure package, with sources telling CNN.com that it would total $1.2 trillion over eight years and include $559 billion in new spending.

It is not clear how much money would go toward port investment. In President Joe Biden’s $2.3 infrastructure proposal, less than 1 percent, or $17 billion, would have gone toward inland waterways, coastal ports, surface ports of entry, and ferries. US ports need $29 billion over the next five years, according to the American Association of Port Authorities.

Huge demurrage bill for BCO highlights Chicago rail meltdown

Excerpted from JOC.com, Ari Ashe, Senior Editor | Jun 24, 2021 12:14PM EDT

A Midwest importer was forced to pay $11,000 in storage fees to secure a container with some $266,000 worth of goods inside that was tied up at a Chicago rail terminal for two months, illustrating what draymen and truckers say is the worst congestion in history.

The plight of Michigan City Paper Box is familiar to fellow importers struggling to get thousands of containers at Union Pacific Railroad’s (UP’s) Global IV terminal in Joliet, Illinois, as the western US railroad struggles to handle more ocean containers than it has ever seen during springtime come into the Midwest.

Al Hoodwin, owner of Michigan City Paper Box, tried phone calls, emails, and sending truck drivers into the terminal, but UP could not tell him where his container was located, or when it would be available for pickup. He said communication with UP was poor and the information was “conflicting and puzzling.”

He finally received his cargo of jewelry pouches and other items on June 21 after 50 days in limbo when chassis provider TRAC Intermodal stepped in on his behalf.

Hoodwin’s ocean container was one of thousands stacked in UP’s Global IV terminal — inaccessible, yet still subject to rail storage fees, a form of demurrage. While UP declined to provide an exact number of containers, JOC.com estimates the total to be between 1,500 and 2,500 based on conversations with draymen, non-vessel-operating common carriers (NVOs), and chassis providers, although some sources peg the number closer to 3,000.

“Each of those containers is a story probably of a small business just like me,” Hoodwin told JOC.com. “Many small businesses cannot afford [the storage fees], and there are probably hundreds just like me with a story, if not more.”

There are currently 139 container vessels anchored off the coast of China, about 50% more than the average from mid-April to early May, according to Bloomberg analysis of vessel data.

China’s Worse-Than-Suez Ship Delays Set to Widen Trade Chaos

By Bloomberg News (Bloomberg)

The global shipping industry, already exhausted by pandemic shocks that are adding to inflation pressures and delivery delays, faces the biggest test of its stamina yet.

When one of China’s busiest ports announced it wouldn’t accept new export containers in late-May because of a Covid-19 outbreak, it was supposed to be up and running again in a few days. But as the partial shutdown drags on, it’s further snarling trade routes and lifting record freight prices even higher.

Yantian Port now says it will be back to normal by the end of June, but just as it took several weeks for ship schedules and supply chains to recover from the vessel blocking the Suez Canal in March, it may take months for the cargo backlog in southern China to clear while the fallout ripples to ports worldwide.

“The trend is worrying, and unceasing congestion is becoming a global problem,” A.P. Moller-Maersk A/S, the world’s No. 1 container carrier, said in a statement Thursday.

The situation in South China is another “in a string of disasters we’ve seen plague the global supply chain,” according to Nerijus Poskus, vice president of ocean strategy and carrier development for Flexport Inc., which makes software that helps companies manage their supply chains.

He estimated the congestion in Yantian will take six to eight weeks to clear.

That timetable is a problem because it extends the disruptions into the late-summer period of peak demand from the U.S. and Europe, where retailers and other importers restock warehouses ahead of the year-end holiday shopping rush.

Usually cheap and invisible to companies and consumers, ocean freight that’s now more expensive than ever has become a double-edged threat to the world economy: by acting as both a drag on commerce and a potential accelerant for inflation. In the U.S. on Wednesday, Federal Reserve policy makers raised their inflation forecasts partly because bottlenecks have formed as supply fails to keep pace with demand.

Drewry Shipping data released Thursday showed no let-up as container rates on several routes kept climbing, including an increase to $11,196 for a 40-foot box to Rotterdam from Shanghai. That’s a nearly seven-fold increase from a year ago.

Ships Diverted

While the situation at the Chinese port is improving, on Wednesday there was still an average waiting time of 16 days, according to a separate statement from Copenhagen-based Maersk, which is diverting most of its ships elsewhere in June.

But the rerouting by Maersk and other companies will likely only add to the congestion and delays at nearby ports, the statement said.

Even without the Suez blockage or port backlogs, the global transportation system would probably still be struggling with maxed-out capacity. Exports from China and other Asian nations are at record highs, as U.S. and European economies reopen and other markets such as India buy medical goods to help with their ongoing outbreaks.

China’s trade boom shows no sign of letting up, with exports the third-largest on record in May and the third and fourth quarters usually the biggest periods for trade in any given year.

“There are still a number of problem spots that will pose challenges to global trade and logistics activities in the second half of 2021,” according to Nick Marro, lead analyst for global trade at the Economist Intelligence Unit in Hong Kong. “The biggest risk will be recurring Covid-19 outbreaks, which we can probably see as inevitable owing to the new variants, but this will also include mismatched supply and demand for container space and existing logistical bottlenecks in major Western ports.”

Some of the goods that couldn’t leave China through Yantian were diverted to other nearby terminals, such as the one run by Guangzhou Port Co. That’s caused periodic delays there, although the congestion has eased a lot, a worker who only gave a family name of Lin said Thursday.

Even so, that’s not been enough to make up for the disruptions at Yantian, which may have affected the equivalent of about 1 million 20-foot containers so far, according to Peter Sand, chief shipping analyst at Bimco. Yantian handles about 13 million a year.

“Adding another disruption on top of the current state of emergency is obviously making a stretched supply chain even more fragile,” he said.

Anchor Line

There are currently 139 container vessels anchored off the coast of China, about 50% more than the average from mid-April to early May, according to Bloomberg analysis of vessel data.

Some goods have stopped shipping altogether. Chong Junxiong owns a clothing firm called Genesis Group Pte. Ltd. in Singapore, and contracts production to a manufacturer in Dongguan, near Shenzhen. Not only has his supplier been shuttered due to Covid, but he can’t get any deliveries as shipments have also halted.

“There are bottlenecks in ports all over the world because of Covid outbreaks — people are not going to work in the same numbers and aren’t working at the same speed as they did before the pandemic,” says Bjorn Hojgaard, CEO of Anglo-Eastern Univan Group, a company that manages operations for a fleet of 700 ships globally, including everything from tankers to bulk to container ships.

“It’s taking longer for shipping to recover than what was expected a few months ago, but I’m hopeful that going into the fourth quarter in 2021 and the first quarter in 2022 we will see the resumption of activity in many parts of the global economy and certainly a normalization of some of the challenges we face in shipping.”

–With assistance from Brendan Murray, Kevin Varley, Niu Shuping, Christian Wienberg and Alaric Nightingale.

© 2021 Bloomberg L.P.

Carriers cut North Europe hubs as port bottlenecks grow

Greg Knowler, Senior Europe Editor | Jun 21, 2021 3:11PM EDT

Poor schedule reliability is driving up port congestion at North European hub ports, with delays in vessel handling forcing carriers to temporarily cut certain key ports out of their Europe rotations.

Hapag-Lloyd is the latest carrier to make such a move, citing Monday “the ongoing congestion situation” in Rotterdam as the reason it was terminating an eastbound call at the Dutch hub on its Far East Loop 4 for seven consecutive weeks from this week.

That follows last week’s announcement by the 2M Alliance of Maersk and Mediterranean Shipping Co. that it was extending a shift in calls by its AE7/Condor service from a congested Hamburg to Bremerhaven until the end of July, which affects eight consecutive sailings.

While carriers give congested ports as a reason for their network adjustments, terminals and forwarders say it is the poor on-time performance by container ships that is creating the port handling difficulties.

“There is still a high workload on the terminals due to the ongoing ship delays,” a spokeswoman for HHLA terminal in Hamburg told JOC.com Monday. “It is not possible to reliably predict when this is expected to clear.”

Helge Neumann-Lezius, head of FCL for Europe, Middle East, and Africa at DHL Global Forwarding, said vessels on nearly all services were not calling during agreed and reserved operation windows at the North Europe terminals.

“This leads to the situation where terminal operations have for weeks been running on first-come, first-served basis,” he told JOC.com. “As soon as schedule reliability is back to a more normal level, delays will disappear.”

Neumann-Lezius said too many vessels were arriving at the same time — out of their windows and asking for berths, making it difficult to plan hinterland capacity, which was moving from scheduled services towards ad hoc services.

Port pressure reaching inland

European barge operator Contargo noted in its latest advisory that waiting times for barges in Rotterdam was currently at 66 hours, and at 38 hours in the nearby Belgian hub of Antwerp.

Thorsten Diephaus, director of strategic accounts at rate benchmarking platform Xeneta, agreed that missing port calls placed pressure on the entire container handling system.

“Schedule reliability can hardly get worse, and the terminals in Europe are full so it is difficult for carriers to get berthing windows,” he said. “If a vessel can’t make its berthing window, it may have to offload more cargo at a different port that may not be able to efficiently handle the volume.”

The latest schedule reliability data for the Asia-North Europe trade is for April, when vessels’ on-time performance — arriving within one day of the published arrival — was just 24.4 percent, according to Sea-Intelligence Maritime Analysis. That was down from 72 percent during April 2020.

“Demand remains very strong at the moment, and I don’t think we are going to get out of this very soon,” Hapag-Lloyd CEO Rolf Habben Jansen told reporters during a press briefing last week. “Congestion will remain an issue for the coming months. Waiting times for ships that is normally 1-1.5 days (global average) is now well over three days.”

Sri Laxmana, vice president of global ocean product at C.H. Robinson, explained in a blog posting that as ocean carriers introduced more blank sailings or skipped ports to recover schedules thrown out by port delays, the freight that was skipped would have to be added to the backlog of containers.

“It’s likely we won’t see a large shift in congestion until the demand levels out,” he said, adding that the global logistics system was already brittle and grappling with a range of challenges, including equipment shortages and poor schedule reliability.

However, the chances of demand on the Asia-Europe trade slowing down soon are slim, according to Michael Amri, global head of sea freight and FCL for Hellmann Worldwide Logistics

Contact Greg Knowler at greg.knowler@ihsmarkit.com and follow him on Twitter: @greg_knowler

No easy recovery ahead for container shipping

Lars Jensen, CEO & Partner, Vespucci Maritime, and JOC Analyst | Jun 02, 2021 11:34AM EDT

Let us try to sum up the most pertinent elements of the container shipping market right now.

  • Spot rates are vastly exceeding any previous records. In a webinar hosted by Flexport last week, the forwarder indicated that trans-Pacific spot rates, including equipment charges and space priority premiums, have risen to between $8,000 and $11,000 per FEU from Asia to the US West Coast and between $11,000 and $20,000 per FEU to the US East Coast.
  • On the Asia–Europe trade, various spot rate indices are exceeding $10,000 per FEU, and this is before paying add-ons for equipment and capacity assurance. Increasing anecdotal evidence of rates approaching $14,000 to $15,000 per FEU from Asia to North Europe is emerging.
  • Schedule reliability on both trades remains atrocious. The newest data from Sea-Intelligence Maritime Consulting show that despite improvements, 78 percent of vessels arriving at US West Coast ports are late, with an average delay of 10 days.
  • According to Flexport, the transit time from cargo being ready for loading in Shanghai to delivery at warehouses in Chicago has risen from 35 days prior to the COVID-19 pandemic to 73 days now because of delays at every possible hand-over point in the international and domestic supply chain.

This is a clear and acute problem, but it is also a problem that can no longer be seen as “new.” The operational challenges within container shipping have now persisted for half a year, and they are seemingly nowhere nearer to getting resolved. If anything, they mainly appear to be getting worse.

Aside from the pandemic itself, there is not a single root cause of these maladies. The situation is one of intertwined bottlenecks of port congestion, vessel shortages, equipment shortages, chassis shortages, rail shortages, and truck shortages. Perhaps we should take to calling it the “everything shortage.” On top of that, shippers are attempting to service a massive boom in consumer demand for imported goods.

In essence, there is not a shortage when purely measuring the number of containers and ships available versus the amount of cargo in need of shipping. The problem is that it now takes much longer to move the cargo — and the equipment — which in turn soaks up large amounts of capacity.

This also means that we are now a point where, very literally, there is not enough capacity to move the cargo in need of transportation. This is what has caused the extreme surge in freight rates as shippers weigh the choice between losing the sale of the cargo versus paying the highly elevated rates.

Perhaps worse, the extreme shortage of capacity means there is absolutely no buffer capacity to handle the more typical disruptions seen in freight transportation. A simple engine malfunction, for example, suddenly has become a major problem because there are no idle vessels to serve as potential replacements. The cargo booked for the stricken vessel cannot be accommodated on the next sailing either, as all vessels are fully booked far into the future.

The industry is pushing a growing pile of cargo in the hope that bottlenecks will ease and we will finally get surplus capacity able to move this pile of goods, but every small operational mishap causes this pile to increase. This includes vessels put into quarantine because of COVID-19 infections among the crew, ports slowing down because of the pandemic, vessels unavailable because of mechanical failure, ports shut down because of weather or strike issues, or vessels afflicted by accidents such as fires.

Under normal circumstances, many of these would be smaller, localized problems. Right now, every one of these incidents increases the pile of cargo we are pushing ahead of us, and the larger the pile gets, the longer it will take to revert back to normal.

With Malaysia about to go into lockdown amid a new wave of the pandemic, the Port of Yantian partially closed because of a COVID-19 outbreak, and Hamburg now badly afflicted by congestion, it appears the direction of the market for now is to continue to increase the proverbial pile of cargo.

This is not good news for anyone needing to move goods from Asia to North America or Europe. However, shippers in the current market environment need to plan based on a realistic assessment of the conditions — whether they like those conditions or not is an entirely separate issue. Realistically, not everyone will get their cargo moved in the coming weeks.

Aluminum License Requirements, Updated

A Rule by the International Trade Administration on 05/21/2021

Please note the CBP Cargo System Messaging Service (CSMS) concerning the June 28, 2021 Aluminum License requirement.

Key requirements that the IOR is required to report include:

•        Country of Largest Smelt

•        Country of Second Largest Smelt

•        Country of Most Recent Cast

The CSMS provides the websites that have all the requirements and offer virtual demonstrations:  https://www.trade.gov/updates-aluminum-import-licensing. Look for Registering for a Virtual Demo under Calendar of Updates. 

AIM prepared a schedule of upcoming  virtual demos. New demos may be announced here as they become available. Please be advised that registration for these demos will close 30 minutes before the demo start time. Here are the types of virtual demos planned, and the dates on which you can attend them:

Getting Started with the AIM License System

1.         Thursday, January 7th, 2021 @ 1:00 PM EST – Completed

2.         Thursday, January 14th, 2021 @ 10:30 AM EST – Completed

3.         Thursday, January 21st, 2021 @ 3:00 PM EST– Completed

4.         Wednesday, June 23rd, 2021 @ 2:00 PM EST

5.         Monday, June 28th, 2021 @ 2:00 PM EST

E-mail aluminum.license@trade.gov to register for an AIM License System demo and specify the number for the virtual demo you would like to attend (e.g. 3,4, and 5). Each demo will cover the same material.

Cargo Systems Messaging Service

CSMS #48350723 – ALUMINUM IMPORT MONITORING AND ANALYSIS SYSTEM (AIM): STAY OF REGULATIONS AND DELAY OF COMPLIANCE DATE

This message contains important information regarding the U.S. Department of Commerce’s new Aluminum Import License program. 

Commerce has published a notice in the Federal Register responding to public comments about the AIM system and confirming that compliance with the rule “Aluminum Import Monitoring and Analysis System” will be required on June 28, 2021.  See Aluminum Import Monitoring and Analysis System: Effective Date and Response to Comments, 86 FR 27513 (May 21, 2021) available at https://www.federalregister.gov/documents/2021/05/21/2021-10747/aluminum-import-monitoring-and-analysis-system-effective-date-and-response-to-comments

Consequently, brokers and importers are notified that imports of most aluminum products will require an aluminum import license for each entry beginning on Monday, June 28, 2021.  Please see the list of aluminum products subject to the new licensing requirement at: https://www.trade.gov/aluminum-products-hts-codes.   The aluminum import license number obtained from Commerce for each shipment, as well as the License Type Code (28), must be reported on the corresponding entry summary or electronic equivalent in ACE.  

The new licensing system is available at https://www.trade.gov/aluminum and is currently open for account registration and license applications.  Importers, brokers, and other license applicants will need to register for an account in order to apply for a license. The Trade is advised to plan accordingly and obtain any licenses needed for entry in advance of June 28, 2021, from the Commerce website.  The new aluminum license system will use the same platform as the licensing system for the Steel Import Monitoring and Analysis (SIMA) System, therefore users with an existing steel license account do not need to create new accounts.  

Commerce previously published a final rule concerning the aluminum license.  See Aluminum Import Monitoring and Analysis System, 85 FR 83804 (December 23, 2020) available at https://www.federalregister.gov/documents/2020/12/23/2020-28166/aluminum-import-monitoring-and-analysis-system.  This final rule details the new system, including license requirements and the platform for the license application. 

To assist the Trade with using the Commerce portal to register new accounts and complete license applications, Commerce has developed a series of instructional videos, users guides, FAQs, and virtual demonstrations.  For more information and to sign up for a virtual demonstration, please visit: https://www.trade.gov/updates-aluminum-import-licensing.  Should you have questions, please contact the Commerce aluminum licensing team at:  aluminum.license@trade.gov.

NOTICE TO CUSTOMER

Port of Yantian Closure

26 May 2021

Dear Valued Customer,

The Port of Yantian stopped taking in loaded containers as berth congestion deteriorates and as local health authorities tighten their anti- virus measures within the port facilities.

The restriction will be implemented from 2200 hrs local time on May 25 to 2359 hrs on May 27. The restriction will only be partly lifted for export boxes with expected vessel arrival at the port within the next four days.

Pickups of import or empty containers is allowed during this period.

We expect the Yantian port congestion to persist for some time and are working on contingency plans and service recovery.

ZIM Transpacific Business Unit

Re: YICT (Yantian International Container Terminal) – Outbound Cargo Receiving Arrangement

盐田国际码头出口重箱最新还重安排

Dear Valued customers,

尊敬的客户:

This is to share that upon YICT terminal’s information: Due to increasingly serious update in shipping schedules, the storage yard in Yantian Port has a very high density, which seriously affects the efficiency of terminal operations and also causes traffic congestion around the port area. In order to improve the above problems, Yantian International decided to:

  1. During the period from 22:00 on 25th May to 23:59 on 27th May, export heavy containers will not be accepted into the gate; during this period, import heavy containers and empty containers will maintain normal operation. 5 月 25 日 22:00 至 5 月 27 日 23:59 期间,不接收出口重柜入闸;在此期间,提进口重柜及空柜维持正常操作。
  2. From 00:00 on 28th May, the acceptance of heavy containers will resume, and only ETA-4 (that is, the export heavy containers within four days before the expected arrival date of the ship) will be accepted. This measure will be implemented from 28th May to 3rd June. 5 月 28 日 00:00 时起, 恢复接收重柜,只接收 ETA-4(即船舶预计到港日期前四天内)的出口重柜,此措 施实施时间为 5 月 28 日至 6 月 3 日。

Please well check the latest arrival date via below link before gate in, or you could check with terminal on the acceptance date upon the necessity.

关于船舶最新到达盐田国际码头日期,请通过以下   “易物流盐田”    网站做查询参考,或可联系盐田国际码头核查可接收重柜的日期。

易物流盐:

https://www.156yt.cn/pqs_revision/pages/jsp/voyQuery.jsp?modify=query&etb_time=&ship_name=MSC%20NE W%20YORK&voyage_code=

Using this opportunity, we would like to express our sincere appreciation for your continual support. Please do not hesitate to contact us if we could be of any assistance.

借此契机,我司衷心感谢贵司一如既往的支持。如有任何疑问,欢迎垂询。

Yours faithfully,

MSC (HK) Ltd.

As Agent for Mediterranean Shipping Company S.A.

25-May-2021

82 Trans-Pacific Blank Sailings for May & June 2021 & Cyclone Tautkee effecting Indian Ports

Loading BranchUpdated (Date)CarrierAllianceDestination RegionService StringGatewaySlip Vessel ETDETD Week
Shenzhen12/May/21MSC2M+ZIMAmericasEMERALDEC15/May/212021_19
Shenzhen12/May/21MSC2M+ZIMAmericasEAGLEPSW19/May/212021_20
Shenzhen12/May/21MSC2M+ZIMAmericasEMERALDEC22/May/212021_20
Shenzhen12/May/21MSC2M+ZIMAmericasPERALPSW17/May/212021_20
Shenzhen12/May/21MSC2M+ZIMAmericasEAGLEPSW26/May/212021_21
Shenzhen12/May/21MSC2M+ZIMAmericasEAGLEPSW31/May/212021_22
Hong Kong12/May/21CMAOcean AllianceAmericasDASPSW05/May/212021_18
Shenzhen12/May/21CMAOcean AllianceAmericasDASPSW05/May/212021_18
Qingdao12/May/21CMAOcean AllianceAmericasEX1PSW13/May/212021_19
Qingdao12/May/21CMAOcean AllianceAmericasBOHAIPSW21/May/212021_20
Qingdao12/May/21CMAOcean AllianceAmericasEX1PSW20/May/212021_20
Qingdao12/May/21COSCOOcean AllianceAmericasCENPSW21/May/212021_20
Shanghai12/May/21CMAOcean AllianceAmericasEX1PSW22/May/212021_20
Shanghai12/May/21CMAOcean AllianceAmericasEX1PSW29/May/212021_21
Shenzhen12/May/21CMAOcean AllianceAmericasGGBPSW05/Jun/212021_22
Tianjin12/May/21COSCOOcean AllianceAmericasCENPSW22/Jun/212021_25
Shenzhen12/May/21ONEThe AllianceAmericasEC1EC07/May/212021_18
Shenzhen12/May/21ONEThe AllianceAmericasEC4EC11/May/212021_19
Shenzhen12/May/21ONEThe AllianceAmericasEC6EC19/May/212021_20
Shenzhen12/May/21ONEThe AllianceAmericasFP2PSW22/May/212021_20
Shenzhen12/May/21ONEThe AllianceAmericasPN3PSW17/May/212021_20
Shenzhen12/May/21ONEThe AllianceAmericasPN3PSW31/May/212021_22
Taiwan12/May/21ONEThe AllianceAmericasPN1PNW04/Jun/212021_22
Taiwan12/May/21ONEThe AllianceAmericasPS4PSW04/Jun/212021_22
Ningbo13/May/21ZIM2M+ZIMAmericasZX3EC11/May/212021_19
Qingdao13/May/21MSC2M+ZIMAmericasAMBERJACKEC23/May/212021_20
Qingdao13/May/21ZIM2M+ZIMAmericasZCPEC23/May/212021_20
Ningbo13/May/21CMAOcean AllianceAmericasHANGZHOU BAY BRIDGEPNW11/May/212021_19
Ningbo13/May/21ONEThe AllianceAmericasPN4PNW12/May/212021_19
Ningbo13/May/21YMLThe AllianceAmericasPN4PNW11/May/212021_19
Ningbo13/May/21ONEThe AllianceAmericasNEW EC6PNW23/May/212021_20
Ningbo13/May/21YMLThe AllianceAmericasEC6EC23/May/212021_20
Qingdao18/May/21MSC2M+ZIMAmericasORIENTPSW26/May/212021_21
Xiamen18/May/21MSC2M+ZIMAmericasPEARLPSW27/May/212021_21
Qingdao18/May/21MSC2M+ZIMAmericasORIENTPSW02/Jun/212021_22
Xiamen18/May/21COSCOOcean AllianceAmericasMPNWPNW28/May/212021_21
Xiamen18/May/21ONEThe AllianceAmericasPS4PSW14/Jun/212021_24
Ningbo19/May/21MSC2M+ZIMAmericasEAGLEPNW22/May/212021_20
Ningbo19/May/21MSC2M+ZIMAmericasMAPLEPNW19/May/212021_20
Ningbo19/May/21MSC2M+ZIMAmericasORIENTPSW23/May/212021_20
Ningbo19/May/21MSC2M+ZIMAmericasSEQUOIAPSW21/May/212021_20
Ningbo19/May/21MSC2M+ZIMAmericasEAGLEPNW29/May/212021_21
Ningbo19/May/21MSC2M+ZIMAmericasMAPLEPNW26/May/212021_21
Ningbo19/May/21MSC2M+ZIMAmericasEAGLEPNW05/Jun/212021_22
Ningbo19/May/21MSC2M+ZIMAmericasEmpireEC02/Jun/212021_22
Ningbo19/May/21MSC2M+ZIMAmericasMAPLEPNW02/Jun/212021_22
Ningbo19/May/21COSCOOcean AllianceAmericasAACPSW11/May/212021_19
Ningbo19/May/21COSCOOcean AllianceAmericasAAC2PSW11/May/212021_19
Ningbo19/May/21COSCOOcean AllianceAmericasEPNWPNW16/May/212021_19
Ningbo19/May/21COSCOOcean AllianceAmericasMPNWPNW15/May/212021_19
Ningbo19/May/21COSCOOcean AllianceAmericasAACPSW18/May/212021_20
Ningbo19/May/21COSCOOcean AllianceAmericasCPNWPNW17/May/212021_20
Ningbo19/May/21COSCOOcean AllianceAmericasCPNWPNW24/May/212021_21
Ningbo19/May/21COSCOOcean AllianceAmericasMPNWPNW02/Jun/212021_22
Shenzhen19/May/21OOCLOcean AllianceAmericasVCEEC31/May/212021_22
Ningbo19/May/21ONEThe AllianceAmericasEC3EC15/May/212021_19
Ningbo19/May/21ONEThe AllianceAmericasPN1PNW11/May/212021_19
Ningbo19/May/21ONEThe AllianceAmericasPS5PSW11/May/212021_19
Ningbo19/May/21ONEThe AllianceAmericasPS6PSW26/May/212021_21
Ningbo19/May/21ONEThe AllianceAmericasPN1PNW05/Jun/212021_22
Ningbo19/May/21YMLThe AllianceAmericasPS6EC02/Jun/212021_22
Ningbo19/May/21ONEThe AllianceAmericasPN4PNW15/Jun/212021_24
Ningbo19/May/21ONEThe AllianceAmericasPN1PNW26/Jun/212021_25
Shanghai20/May/21MSC2M+ZIMAmericasSANTANAPSW24/May/212021_21
Shanghai20/May/21MSC2M+ZIMAmericasSEQUQIAPSW24/May/212021_21
Shanghai20/May/21WANHAINon – AllianceAmericasAA5PSW27/May/212021_21
Shanghai20/May/21CMAOcean AllianceAmericasPNWPNW29/May/212021_21
Shanghai20/May/21CMAOcean AllianceAmericasTPXPNW28/May/212021_21
Shanghai20/May/21COSCOOcean AllianceAmericasAWE6EC27/May/212021_21
Shanghai20/May/21OOCLOcean AllianceAmericasPNW4PNW26/May/212021_21
Shanghai20/May/21OOCLOcean AllianceAmericasVCEEC27/May/212021_21
Shanghai20/May/21OOCLOcean AllianceAmericasVCSPSW27/May/212021_21
Shanghai20/May/21CMAOcean AllianceAmericasPNWPNW02/Jun/212021_22
Shanghai20/May/21CMAOcean AllianceAmericasPNWPNW05/Jun/212021_22
Shanghai20/May/21OOCLOcean AllianceAmericasPNW2PNW31/May/212021_22
Shanghai20/May/21CMAOcean AllianceAmericasSAXEC10/Jun/212021_23
Shanghai20/May/21ONEThe AllianceAmericasEC3EC24/May/212021_21
Shanghai20/May/21ONEThe AllianceAmericasEC6EC24/May/212021_21
Shanghai20/May/21ONEThe AllianceAmericasPS8PSW27/May/212021_21
Shanghai20/May/21ONEThe AllianceAmericasEC3EC31/May/212021_22
Taiwan20/May/21ONEThe AllianceAmericasPS4PSW18/Jun/212021_24

Cyclone Tautkae effect on Indian Ports

  • The port was nonfunctional for 72 hours all Import vessel operation was suspended.
  • The Ports (JNPT/Mundra/Hazira) has suspended vessel berthing at Nhava Sheva port waiting for landfall of cyclone Tauktae by Saturday evening, and suggested ships at berth to cruise out.
  • Pipavav Terminal has severely affected due to Cyclone Tauktae.
  • Currently there is no electricity in the terminal and the rail connectivity has been totally stopped.
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