Ever Given’s Owner Files Suit and Declares General Average
BY THE MARITIME EXECUTIVE 04-01-2021 06:00:00
The owner of the boxship Ever Given has filed suit against operator Evergreen in connection with the vessel’s grounding in the Suez Canal on March 23, according to UK outlet The Lawyer. The details of the filing are not public, but the defendants include Evergreen and all other parties who may claim damages in connection with the incident.
The Panama-flagged Ever Given is owned by Panama-based Luster Maritime, a subsidiary of Japanese shipowner Shoei Kisen Kaisha. She is chartered to Taiwanese carrier Evergreen, with ship management by Japanese firm Higaki Sangyo Kaisha and technical management by the Hong Kong division of BSM.
As the shipowner, Shoei Kisen Kaisha is widely expected to bear the brunt of damage claims from shippers and shipping interests. Egypt alone believes it is owed at least $1 billion in compensation for the six-day shutdown and the cost of the refloat effort, Suez Canal Authority chairman Osama Rabie told reporters Wednesday. He did not specify who should be liable to pay the damages, but he emphasized that Egyptian responders “saved [the shipowner] so much by rescuing the ship without any major damage or losses.”
“We could agree on a certain compensation, or it goes to court,” Rabie said. “If they decide to go to court, then the ship should be held.”
Shoei Kisen Kaisha has declared general average in connection with the disaster, indicating that it will impose a bond requirement on cargo interests before releasing containers from the ship. Richard Hogg Lindley has been appointed as the GA adjuster, according to The Loadstar.
GA charges are typically assessed as a percentage of the value of the cargo, and in the case of massive losses – like the catastrophic fire on the Maersk Honam – shippers may be asked to pay GA and salvage bonds exceeding half the value of their cargoes. No cargo has been damaged in connection with this incident, but the bonds may be used to recover the cost of the refloat effort.
For its part, Evergreen believes that as the charterer it has “very low” exposure to financial risk from the grounding, president Eric Hsieh told Taiwanese reporters on Thursday. “Our risk exposure from the Ever Given incident is very low – even if there are damages, it will be covered by insurance,” Hsieh said. “Evergreen is free of responsibility from cargo delays [under the terms of carriage].”
Suez Canal Update
Suez Canal to be re-opened soon – no more deviations via Cape of Good Hope
Hapag Lloyd reporting:
The vessel EVER GIVEN has refloated in the early morning and will be towed to Great Bitter Lake for inspection. Towage operations for the vessel should commence very soon during high tide. Damaged area of the canal will be inspected and repaired if necessary.
We expect transits to start later this evening. It is still not clear if any vessels might be prioritized for passage. Current backlog should be cleared within four days.
We currently do not know the exact ETA of our affected vessels, but we will do our utmost to optimize the rotations in order to minimize potential bottlenecks at ports and terminals.
Please be assured that we are tirelessly working 24/7 to keep the impact on our customers as low as possible. We will keep you regularly updated about the further developments.
Canada Border Services Agency Assessment and Revenue Management Project – coming soon!
The CBSA Assessment and Revenue Management (CARM) project is a multi-year initiative that will transform the collection of duties and taxes for goods imported into Canada. Through CARM, the CBSA will modernize and streamline the process of importing commercial goods.
Benefits
Once fully implemented, CARM will:
• simplify the overall importing process.
• provide a modern interface for importing into Canada.
• give importers self-service access to their information.
• reduce the cost of importing into Canada.
• improve consistency of compliance with trade rules.
The implementation of CARM is structured in a series of releases. The Accounts Receivable Ledger (ARL) was the first phase of the CARM project. For details on ARL, consult the Commercial payments and accounts section of our website.
Read more about the CARM features and on how to prepare for the CARM initiative.
Timeline
CARM Release 0: January 2021
The existing ARL system will be moved from its current data centre configuration to the more robust SAP S4/HANA system. External users of the system will not experience any change. Importers’ Daily Notices may be delayed a few days during the implementation of Release 0 for Electronic Data Interchange (EDI) clients.
CARM Release 1: Spring 2021
Release 1 will launch the CARM Client Portal, a self-service tool to facilitate accounting and revenue management processes with the CBSA.
CARM Release 2: Spring 2022
Release 2 will expand on the functionalities of the CARM Client Portal.
Stakeholder engagement
Join the CARM GCcollab group, an online forum for the trade chain community, where members can access the latest communications materials related to CARM. To join, simply create a GCcollab account and make a request to join the CARM group.
For questions about the CARM project and/or to register for future CARM-related communications, contact CARM Engagement (cbsa.carm_engagement-engagement_de_la_gcra.asfc@cbsa-asfc.gc.ca).
CBSA has also established a Trade Chain Partner Working Group, whose members continue to receive information on the CARM project.
Link: https://www.cbsa-asfc.gc.ca/prog/carm-gcra/menu-eng.html
Vestager to examine competition in red-hot container market
By Louise Wendt Jensen, Astrid Sturlason – Published: 08.03.21 at 14:59, ShippingWatch.com
EU Competition Commissioner Margrethe Vestager now plans to scrutinize the extreme situation unfolding in the global container market together with the industry. The EU will subsequently “consider ways forward,” a spokesperson tells ShippingWatch.
Copenhagen/Brussels
The European competition authorities will now – together with the industry – examine the current conditions in the global container market. Conditions that have so far been criticized by both US and Chinese authorities.
Rising freight rates, growing container shortages and major delays have long been the consequence of a red-hot market that has seen extraordinary demand for transporting goods from Asia to Europe and the US during the coronavirus pandemic.
“We are discussing with market participants, i.e. shippers, freight forwarders, port operators, carriers, to fully understand the current circumstances, and consider ways forward,” says a spokesperson for Margrethe Vestager, EU executive vice-president and competition commissioner, in a comment to ShippingWatch.
“It seems that these price increases were caused by a combination of factors, such as fluctuating high demand, port congestion, and shortage of containers, in markets which are intertwined at worldwide level,” the spokesperson continues.
This is the first time the EU exhibits such a clear reaction to the current situation in the container market, seeing as the EU’s stance is often more tentative and based on a requirement that evidence must first be presented – at least if it concerns a possible breach of the container liners’ particularly favorable competitive conditions.
The rate boom and current customer dissatisfaction with the low service levels have already led authorities in both the US and China to speak up. The Chinese authorities last year summoned the world’s largest container lines to a meeting in which they were urged to curb rates.
The Federal Maritime Commission in the US has also upped its surveillance of the three large container alliances, under which the world’s largest container lines have organized themselves.
Criticism of liner companies
Shipping companies such as Maersk have been under scrutiny from the US authorities, which now demand monthly updates from the carriers in order to monitor the market. Previously, these updates were only given quarterly.
Maersk has – like many of its competitors – acknowledged that its service is currently substandard, but the carriers also all refer to the extraordinary circumstances created by the Covid-19 pandemic.
“We’re actually dismayed by the level of service we’re forced to provide right now,” said Maersk CCO, Vincent Clerc, recently.
“It doesn’t feel like a big high five moment right now. It feels like a moment where too many customer promises are not being delivered on and we are all hands on deck in trying to alleviate the situation,” he said.
Maersk CEO Søren Skou has set a stated target of bringing the company’s reliability up to between 85 and 95 percent as early as 2021. In January this year, this figure sat at 46.3 percent for Maersk’s ships against 76.4 percent in January last year.
Criticism from US agriculture
In the US, associations like the Agriculture Transportation Coalition and transport associations such as HTA have voiced their opinions. Just last week, Global Shippers’ Forum also voiced its criticism.
In a new review, GSF criticized shipping companies for continuing to provide poor service while cashing in record-level rates.
The industry association’s quarterly survey, conducted by MDS Transmodal, examines eight key performance indicators (KPIs).
“Importers and exporters around the world are paying record high shipping rates but receiving appalling levels of service reliability,” asserts Global Shippers’ Forum in the review.
Difficult for shippers to resolve
Organizations the European Association for Forwarding, Transport, Logistics and Customs Services (CLECAT) and European Shippers’ Council (ESC) have previously urged the European Commission to take action against the container lines, which they believe to be taking advantage of their special position and special competition exemption.
But so far, this has not been possible.
Because in order to do something, the two associations must either submit a formal, well-founded complaint about the competitive conditions or wait for the EU to, at some point, begin their evaluation of the so-called Block Exemption Regulation (BER).
BER is a special competition regulation that allows the container majors to coordinate their efforts through alliances such as, for example, Maersk and MSC’s 2M alliance. With the alliances, container lines are able to coordinate their networks and utilize space aboard each others’ vessels, if their market share is lower than 30 percent, that is.
Derailment Impacting Intermodal Operations in Southern California
BNSF RAILWAY, BNSF.com | March 04, 2021
BNSF experienced a derailment yesterday afternoon at Ludlow, Calif., approximately 60 miles east of Barstow. As this incident occurred on the Southern Transcon, our primary route between Southern California and the Midwest, rail operations have been significantly impacted. Both main line tracks in this location are currently out of service.
Engineering crews and equipment were quickly deployed to the scene. The first main track is currently estimated to reopen this evening, with the second main line back in service early tomorrow morning. With the high volume of intermodal traffic to/from California, customers with shipments designated to move through this corridor should expect delays until operations have fully normalized.
Gate allocations are being utilized at our Southern California intermodal facilities to ease congestion due to elevated inventories and car supply issues. Limiting gate activity will help expedite the pace of our recovery efforts once the affected main line tracks reopen.
As always, we remind customers that prompt pick-up of shipments will help improve traffic flows, reduce lot congestion and provide the space needed for processing inbound freight as expeditiously as possible. BNSF has multiple tools available for customers to track their shipments.
We appreciate your cooperation and quick response as we work together to rebalance equipment flows. Our operating teams remain focused on safely restoring service to the level you expect from us.
Vaccinations for LALB and Severe Weather Affects Rail
Lots of news coming out today in the world of transportation. 800 longshoremen in the ports of Los Angeles and Long Beach have received their first COVID-19 vaccinations. This will significantly help to reduce potential service reductions due to labor disruptions. Hopefully more states throughout the United States will follow suit and vaccinate their port and transportation workers.
With the severe weather that is affecting the majority of the country the Union Pacific Railroad will be closing most of their intermodal network due to snow and icy conditions. These conditions have affected transportation the Pacific Northwest, Midwest and as far south as Texas.
BOC will continue to monitor these stories and all those that affect global trade.
Severe Cold Weather Impacts Train Lengths
We would like to update you on the severe cold weather conditions that we are currently experiencing in some parts of the network impacting trains length in the following corridors:
- Prince George/Kamloops to Edmonton: Tier 2 currently in effect
- Edmonton to Jasper: Tier 2 currently in effect
- Edmonton to Winnipeg: Tier 2 currently in effect
- Winnipeg to Toronto: Tier 2 currently in effect
- Winnipeg to Superior: Tier 2 currently in effect
Due to these extreme temperatures we reduced train lengths in accordance with our winter operations plan. Based on forecasts, we expect that Tier restrictions will remain in effect intermittently across the network during the month of February. We are actively monitoring traffic and will be in direct contact with customers with shipments at risk of delay.
For a daily snapshot of the current weather conditions across the CN network, our Winter Situation Report is now available on cn.ca. It is updated daily at 09:30 (ET). Severe cold and high snowfall present challenging conditions to safe railway operations, primarily to our braking system. As part of CN’s winter preparedness and train operating plan, when temperatures fall below -25C, to ensure safe train operations, trains length is restricted, resulting in longer transit times.
Trans-Pacific trade crashes into max-capacity ceiling
Voyages canceled as volume and congestion overwhelm capacity
Greg Miller, Senior EditorGreg Miller, Senior Editor
Excerpted from www.FreightWaves.com, 1/27/21
It’s official: Container volumes in the Asia-U.S. trans-Pacific trade have hit their limit. Massive port congestion in the ports of Los Angeles and Long Beach is forcing ocean carriers to take extreme measures. Sailings are now being “blanked” (canceled) not because of lack of demand, but because of lack of tonnage as ships are stuck awaiting berths.
When ships fall behind schedule due to long waits in port, carriers normally add “recovery vessels” to take their place and keep weekly services going. There are no recovery vessels left. According to Hapag-Lloyd, “as our fleets are fully deployed and stretched beyond capacity, this is regretfully currently not an option.”
As a result, Hapag-Lloyd has blanked 19 sailings in February. “It is important to emphasize that vessels will not be idling at any time and we will perform as many voyages as possible,” stressed the carrier. Hapag-Lloyd is a member of THE Alliance along with Ocean Network Express (ONE), Yang Ming and HMM.
‘Need-to-get-back-on-schedule blanks’
“Schedule reliability is horrible,” said Simon Sundboell, founder of eeSea, a company that analyzes ship schedules. “These are not ‘pull-out-capacity blanks.’ These are ‘need-to-get-back-on-schedule blanks,’” Sundboell told American Shipper.
Carriers usually blank sailings at this time of year due to lower exports during the Chinese New Year (CNY) holiday. Carriers initially opted to keep CNY sailings largely intact in order to clear the export pileup at Chinese ports. But the congestion in Los Angeles and Long Beach is leaving carriers short of ships. That means the pileup in Asia will take even longer to clear.
(eeSea) data as of Wednesday reveals an 11% dip in Asia-U.S. sailings in February versus January. This is despite continued high cargo demand.
Seaintelligence Consulting CEO Lars Jensen explained, “When you have all the vessels stuck waiting outside ports, they cannot make the return journey so they cannot start the sailing they were supposed to do. The blank sailings now are not a choice. They are an operational necessity.”
No letup in San Pedro Bay traffic jam
At any given time since the beginning of this year, there have been around 30 container ships stuck waiting at anchorages in San Pedro Bay offshore of the ports of Los Angeles and Long Beach.
The situation has not improved at all. According to the Marine Exchange of Southern California, there were 33 container ships at anchorages and 26 at berths on Wednesday. Including all ship types, there were 55 vessels at anchorages — a new record, with all Los Angeles/Long Beach anchorages full and all contingency anchorages off Huntington also full.
On Monday, many of those vessels had to leave anchorage and go to sea due to extreme storm conditions. Winds gusted to 55 mph and swells reached 15 feet. Marine Exchange Executive Director Kip Louttit exclaimed that he “could not recall a more complex situation with this many vessels and this bad a wind and sea condition for such a sustained period of time.”
Port congestion is being caused by high inbound volumes combined with surging COVID cases among dockworkers. A spokesperson for the ILWU dockworkers union told American Shipper that number of its members testing positive had risen to 803 as of Monday, up 16% from 694 as of Jan. 17.
“They can’t service the ships fast enough, which has led to waiting times of 10-14 days or even more, depending on the terminal,” said Nerijus Poskus, global head of ocean freight. “As of last week, there were almost 300,000 TEUs [twenty-foot equivalent units] waiting to get offloaded,” Poskus added.
Jensen put it another way. “It is the equivalent of pulling five full trans-Pacific services out of action as long as you have these waiting times,” he said. “The impact is massive.”
Deteriorating reliability, rising rolls
As previously reported by American Shipper, global schedule reliability has collapsed to around 50% versus normal levels of 70%-80%. Getting a box delivered on time is no better than a coin toss. In reality, the chance is much worse. Schedule reliability data doesn’t take into account blank sailings. Nor does it take into account cargo that is “rolled” — pushed off to a subsequent voyage.
Data on cargo rolls by the world’s top liners at the world’s top ports is compiled by Ocean Insights. According to Ocean Insights data released last week, the share of shipments that did not sail aboard their originally scheduled vessels rose to 37% in December. That’s up sharply from 29% in July and 25% in December 2019.
One importer moving goods from China via Los Angeles wrote to American Shipper: “We’re seeing over 60 days of additional transit time now. The entire process used to take 28 days. Now containers shipped in November have still not reached their final destination.”
Add it all up and U.S. consumers should see escalating shortages of goods on the shelves. That, in turn, should fuel import demand even further into 2021.
Light at the end of the tunnel?
One of the central drivers of today’s capacity crunch is a shortfall of containers. Or rather, a shortfall of containers positioned in the right place.
But there are some glimmers of hope. Data on container-equipment availability is tracked by the Container x-Change Container Availability Index. Availability of 40-foot high cubes (40HCs) remains extremely low. But availability of 20-foot dry cargo (20DC) and 40-foot standard dry cargo (40DC) units improved markedly this month.
An index level below 0.5 is considered a shortage. In the third week of January, the index in Shanghai for 20DCs was up to 0.34 and for 40DCs to 0.37. The index for 40HCs was still a very low 0.11.
Getting back to normal
Jensen expressed confidence that the container-equipment challenge will be resolved fairly soon. Chinese factories have been busy churning out new boxes.
“What’s happening now is exactly the same scenario we saw in 2010 after the financial crisis. If you look at 2010, they went on a building spree. It took about three months from when the problem arose to when it was resolved. If we put that in the context we have now, this should be resolved by Chinese New Year.
“The wild card this time around is the port congestion because that ties up a significant part of the ability to reposition the empty containers back into balance. That could delay things somewhat,” acknowledged Jensen.
As more containers are manufactured, liners should simultaneously work to get sailings back on schedule. “It appears the carriers plan to use the post-Chinese New Year period to get their vessels back on schedule,” said Jensen. “If that works out and if we get the port congestion sorted out — which is a big if — we could get back to normal levels [of service reliability] within a few months. But that’s the optimistic view.”
Hapag-Lloyd believes that container demand will remain high for the next six months
Excerpted from ShippingWatch.com, January 26, 2021
Uffe Østergaard, president of Hapag-Lloyd America, describes 2020 in the container industry as hectic, surprising and challenging. He expects the demand will remain high for another half year.
Hapag-Lloyd America President Uffe Østergaard projects that the container market will remain strong during the first six months of 2021, following a 2020 that was filled with an unexpected and huge boom in demand.
In contrast to other shipping markets, the container market has seen a boom in demand in 2020.
Østergaard explains that this has resulted in a hectic time for him and his employees and that there has been a lot of pressure on everyone to handle the situation, especially in terms of dealing with bottlenecks and delays – and thus their customers turning their phones red-hot with inquiries about their containers’ whereabouts.
“So that’s unexpected, in the sense that when we started on the Corona journey, in the early part of last year, we thought that the whole shipping business would drop significantly, which it did, but only for a short term. So since the summer, it’s been very hectic, trying to sort of catch up and, and deliver the goods wherever we can,” he says.
The US and, above all, the West Coast has become a symbol of the red-hot container market. As of this week, Østergaard confirms that there are still about 30 container ships anchored off Long Beach waiting for berths.
That number is similar to previous numbers that have been reported during the first weeks of January. On the 12th of this month, congestion at Long Beach counted 31 ships at anchor and 29 at berth, ShippingWatch reported. There were also 18 ships on their way to the port, which were expected to arrive within three days of the 12th.
“For the longest time, I said that I would expect that the market would come down after Chinese New Year. But that does not look to be the case right now. Both because the demand continues to be high in many of the major trades. And also because a lot of the bottlenecks still continue to linger, whether that’s in the terminals, where ships are waiting for days or weeks to get a berth, whether it’s equipment availability or truck availability, which is a big issue in North America.”
He adds that there are still plenty of discussions about additional stimulus plans, meaning more money pumped into societies both in Europe and the US. He believes that this will spur more demand, as people still cannot travel or go out and do activities, such as eating out, like they used to.
“A lot of that money will be sort of channeled into more spending. So, I think we definitely, first half of this year continue to see quite strong demand and continued supply chain challenges. With the delays and additional costs and so forth,” he says.
In addition, it looks like the contracts for 2021 are “starting to follow the common line so that the very low contract rates of 2020 are now being adjusted to the new reality.”
Hectic market, hectic home offices
Despite technology and remote working proving to be useful and a way of working going forward, even past pandemic life, Østergaard says it requires a different approach in communicating compared to when everyone is in the same place.
It puts more pressure on managers to be more proactive in sharing information and also being more active in checking in on everyone’s well-being and status at home.
“Dealing with frustrated customers and still maintaining your morale when you spend many hours listening to customers complaining about where’s my container, where’s my document? Where’s this? Where’s that? Why are you not doing this? Why are you not doing that? While you’re still trying to do your best, but simply because of external issues, you can’t get all the answers in time, that wears people down for sure,” the president for Hapag-Lloyd America says.
According to The Journal of Commerce, one has to wind back time to 2004 to find similar numbers of port congestion.
Østergaard says the company looks to come out of 2020 with a “sizable profit”, which he definitely did not expect at the onset of the pandemic last year.
