Freight costs rising as companies hit with shipping container return penalties

Calls are mounting for the government to step in and lobby shipping lines over the rising cost of freight.No caption

Photo: AFP

The Customs Brokers and Freight Forwarders Federation (CBAFF) said firms are being charged “detention fees” for failing to return empty shipping containers on time, despite there being no room for them at storage facilities.

Typically, freight forwarders hire containers from shipping companies and are required to return them or ‘dehire’ them to a storage facility by an agreed time.

However, surging consumer demand and delays at ports means there is a surplus of containers, with no available room for them to be dropped off.

“Some shipping lines, irrespective of a company’s ability to dehire containers, are continuing to charge detention for businesses keeping their containers longer than they have been contracted for,” CBAFF chief executive Rosemarie Dawson said.

She said in one instance, one of its members was invoiced more than $8,000 in detention fees and in most cases these costs will be passed onto consumers.

CBAFF was calling on the Ministry of Transport to lobby the shipping lines to place a six month moratorium on detention fees until the situation had eased, as it had done during last year’s lockdowns.

“The shipping lines acknowledge these capacity issues will not be resolved for some months,” says Dawson.

“So it is only reasonable that they provide that same flexibility, when containers simply can’t be returned on time because there is no space at their own contracted depots.”

Dawson said meetings with local representatives from the overseas shipping companies about the fees had stalled and was told a decision would need to come from the government.

When asked about what the government could realistically do, Dawson said that was a question to be put to the shipping companies.

RNZ approached one of the shipping lines, French company CMA CGM but they declined to comment, saying they were meeting with the Ministry of Transport and CBAFF next week.

Shipping challenges mount

Sudesh Kissun

Shipping disruptions caused by Covid have been exacerbated by Australian port industrial action and Port of Auckland capacity issues.

New Zealand exporters and importers are facing “a perfect storm” as global shipping challenges mount.

David Ross, chief executive at Kotahi, New Zealand’s largest containerised exporter, says a number of supply chain challenges have come together to create a perfect storm.

He told Rural News that this could be the “new normal” well into 2021.

For NZ exporters and importers, disruption caused by Covid has been exacerbated by Australian port industrial action and Port of Auckland capacity issues.

Ross says these continue to disrupt container availability flows and coupled with globally disrupted supply chains, few vessels are managing to run to schedule.

“This is putting pressure on service levels,” says Ross.

“This situation is being played out in most locations around the world, with shipping lines forced to make adjustments to their vessel itineraries to manage capacity, congestion and weather impacts with global shipping statistics reporting that on-time performance in the Asia-Pacific region has dropped to just 15%, from a norm of about 70-80%. That’s a big drop.”

Kotahi, founded in 2011 by Fonterra and Silver Fern Farms, has long-term strategic commitments with Maersk Line and Port of Tauranga to attract larger, more efficient ships to New Zealand.

 Ross points out that in these market conditions, the value of strong strategic partnerships come to the fore.

“Working collaboratively with our customers and partners, such as Maersk and Port of Tauranga, we have been managing this situation for a number of months and continue to operate at close to 99% container availability.

“There is an unavoidable small level of delay due to the scale of ship schedule slippage, however we are confident we will continue to get all our customers’ cargo to export markets,” he says.

The reliance on shipping is higher than ever as few planes are flying international routes.

ANZ agri analyst Susan Kilsby notes that demand for most goods has remained intact throughout the pandemic and it has been the service sector that has taken the brunt of the pain associated with lockdowns and physical distancing measures.

She says shipping costs are rising rapidly.

“Shipping schedules are constantly changing, with numerous schedules being cancelled or containers being rolled over and simply not being collected.

“This has left many empty containers stranded well away from where they are most needed, with refrigerated containers particularly difficult to source,” Kilsby explains.

“Shipping times are being extended due to delays at ports, resulting in product shortages and buyers bringing orders forward in order to offset the delays.”

NZ’s second largest dairy processor Open Country Dairy says it has had to manage through some shipping delays but is, overall, in a very good position, with shipments for the season being on track.

 OCD chief executive Steve Koekemoer says shipping orders continues to be a challenge globally.

“It affects all sectors due to Covid. Our supply chain team are doing a fantastic job managing the demand in this highly disruptive environment and our customers have been very appreciative of the efforts put in,” says Koekemoer.

IMO and WISTA International launch first Women in Maritime Survey


in International Shipping News 18/02/2021

The International Maritime Organization (IMO), and the Women’s International Shipping & Trading Association (WISTA International) have launched the Women in Maritime – IMO and WISTA International Survey 2021 to examine the proportion and distribution of women working in the maritime sector, from support roles to executive level positions.

The survey is part of a series of activities aimed at laying the groundwork for further discussions on how to build a more diverse workforce within the maritime sector, essential for a sustainable future. The data obtained by the survey will help build a picture of diversity and gender equality in the industry.

The launch of the study follows the 2020 signing of the IMO-WISTA Memorandum of Understanding (MoU) on promoting greater diversity and inclusion through enhanced cooperation activities in the maritime sector. The MoU was signed by IMO and WISTA International, an international organization whose mission is to attract and support women at the management level, in the maritime, trading and logistics sectors. The MoU aims to set a framework for both IMO and WISTA to promote gender diversity and inclusion as vital factors in providing a sustainable future for the shipping industry worldwide.

IMO Secretary-General Kitack Lim said:  ”Diversity in maritime matters. Empowering women fuels thriving economies across the world, spurs growth and development, and benefits everyone working in the global maritime community and beyond. We need solid data on female participation, as this will enable us to track and quantify our ambitions in what has traditionally been a male-dominated sector. I am pleased to invite all Member States and maritime stakeholders to take part in this important survey.”

​​​​​”Diversity in maritime matters. We need solid data on female participation, as this will enable us to track and quantify our ambitions in what has traditionally been a male-dominated sector. ” -IMO Secretary-General Kitack Lim​

Despina Panayiotou Theodosiou, President at WISTA International said: ”Having comparable data is a key component when creating programmes and proposing policies that will increase the participation of women in maritime. It is an essential step forward in creating a more diverse and inclusive environment in our sector. With our global reach we can amplify the strength of this survey to show real results and back our drive towards an inclusive maritime sector.”

to the just-launched survey, other initiatives under the IMO-WISTA MoU include developing a database of female experts in a wide range of maritime subjects who are available for speaking engagements. This will contribute towards more diverse panels.

Another key objective of the IMO-WISTA MoU is to strengthen cooperation and share best practices between the IMO-established regional Women in Maritime Associations (WIMAs) and WISTA International’s National WISTA Associations (NWAs).

In 2019, the IMO Assembly adopted Resolution A.1147(31) on Preserving the legacy of the World Maritime theme for 2019 and Achieving a Barrier-Free Working Environment for Women in the Maritime Sector (link) which urges firm action in coming years to advance gender equality throughout the maritime sector and help create an enabling work environment that embraces equality, diversity and reduces bias. The resolution was adopted following a year of action to promote diversity under the World Maritime theme, “Empowering women in the maritime community”. This work continues, including under the IMO women in maritime programme. (Read more here: https://www.imo.org/en/OurWork/TechnicalCooperation/Pages/WomenInMaritime.aspx )

Women in maritime survey

The IMO and WISTA International survey is open to IMO Member States, IGOs, NGOs, public and private companies in the maritime sector and maritime training establishments. There are two separate surveys to be completed by Member States and industry.

To access the survey:

Click here for Member State survey: Women in Maritime – IMO and WISTA International Survey 2021 (research.net)

Click here for NGOS/Companies survey: Women in Maritime – IMO and WISTA International Survey 2021 (research.net)

The deadline for the completion of the survey is 30 June 2021.

The 2021 inaugural survey is being carried out by IHS Markit on behalf of IMO The intention is to repeat the survey every three years. The aim is to support implementation of the United Nations Sustainable Development Goals (SDGs), in particular SDG 5 on gender equality, SDG 8 on decent work, and SDG 17 on partnerships. The data collected will assist in creating programmes and proposing policies that will increase the participation of women in maritime, thereby creating a more diverse and inclusive environment in our sector.
Source: IMO

How the port blockage threatens our global trade network

Nadia Trent05:00, Feb 22 2021

Port of Auckland’s automation issues and worker shortages have not only slowed imports but put our shipping routes at risk.
CHRIS MCKEEN/STUFFPort of Auckland’s automation issues and worker shortages have not only slowed imports but put our shipping routes at risk.

OPINION: The recent snarl-up at the Ports of Auckland (POAL) has rightly received a great deal of media coverage lately.

The congestion at this one port has been felt widely across New Zealand as supply chains, and ultimately consumers, absorb the costs.

And while the current congestion crisis is painful, it does seem to be short-term. The root set of causes have been identified, primarily automation and labour, and these are now receiving ample attention from port management, the unions, the Government, and the media.

The optimistic expectation is that operational issues at POAL will be resolved in a matter of weeks, issues that have been compounded by Covid-related disruptions.

What we are missing in the conversation, however, is the risk all this poses to New Zealand’s maritime connectivity and how decreasing connectivity could diminish the country’s trade competitiveness over the next few years if left unchecked.

Maersk’s decision to skip Auckland temporarily for Tauranga is a worrying trend.
JOHN BISSET/STUFFMaersk’s decision to skip Auckland temporarily for Tauranga is a worrying trend.

Why the Maersk announcement is a warning

As a small country at the bottom of the world, New Zealand is at the whim of international shipping companies, which have recently shown us they can make swift business decisions to bypass our ports.

Maersk announced that it will be temporarily suspending its port call at POAL, instead opting to only stop at its competitor, the Port of Tauranga, until the congestion issues are resolved.

This is a straight-forward business decision by the shipping line to stay competitive.

Not only do the delays at POAL cost Maersk dearly in terms of anchorage costs, underutilised labour, and unutilised shipping capacity, it bears reputational costs as well.

Delays at POAL have knock-on effects for all the subsequent port calls on Maersk’s service, damaging Maersk’s reputation both with port authorities and the freight forwarders who channel bookings to Maersk.

‘’We have to think carefully about how we continue to entice shipping lines to loop into our small corner at the bottom of the world.’’
JOHN BISSET/STUFF‘’We have to think carefully about how we continue to entice shipping lines to loop into our small corner at the bottom of the world.’’

Covid-19 disruptions have also clearly shown that the bargaining power in global trade lies with the shipping lines.

While there has been a squeeze on many industries, and a reduction in trade volumes, other factors have swung the demand-supply seesaw in the shipping lines’ favour.

As more air cargo is sent by sea and certain industries like electronics and pharmaceuticals increase volumes, we have also seen congestion at ports absorb the supply of available containers in a perfect storm.

Shipping companies have rightly shown they have the freedom to adjust their services with very short notice.

And while the supply strain has increased the cost of shipping a container by nearly 270 per cent, the larger shipping lines have profited handsomely, as their stock prices testify.

Dr Nadia Trent says post-Covid demand for freight had left shipping companies in an advantageous position.
SUPPLIEDDr Nadia Trent says post-Covid demand for freight had left shipping companies in an advantageous position.

Maersk’s stock price more than doubled from February 2020 to February 2021. Likewise, many of the other major companies continue to increase their profits.

It is clear these are not decisions being made to merely stay afloat, but instead to become even more profitable. This should raise a red flag for New Zealand’s competitiveness.

We need to think carefully about how we continue to entice shipping lines to loop into our small corner at the bottom of the world, and offer them a compelling business case, that includes working harder at port efficiency and reliability.

If we don’t, the wider and longer term impact will hurt our maritime connectivity, our international trade, and, ultimately, consumers’ pockets.

New Zealand’s maritime connections are strongly linked to the health of our trade.
RICKY WILSON/STUFFNew Zealand’s maritime connections are strongly linked to the health of our trade.

Our maritime connectivity is decreasing

The maritime connectivity of a country is strongly linked to the health of its international trade.

One way it is measured is using the Liner Shipping Connectivity Index (LSCI) maintained and published by the United Nations Conference on Trade and Development (UNCTAD).

The LSCI measures an economy’s integration within the global container shipping network. The larger an economy’s LSCI, the better connected it is.

China dominates the LSCI chart but countries like the United States, the Netherlands and Germany also rank highly.

There are also smaller countries with significantly lower trade volumes like Singapore, Morocco, or Panama, that rank highly because they are important transhipment cogs in the maritime network.

New Zealand is neither on one of the major trade routes, nor does it boast large volumes (comparatively). Therefore, our relatively low LSCI score is not surprising.

However, what is most concerning is New Zealand’s LSCI score has decreased between the first quarter of 2017 and the first quarter of 2020, while most economies’ scores have increased as maritime trade grew.

Key trading partners like China and the US connect New Zealand to a string of other ports around the world.
CHRIS MCKEEN/STUFFKey trading partners like China and the US connect New Zealand to a string of other ports around the world.

Our bilateral connections matter

This shows New Zealand is becoming more isolated from a maritime perspective and reversing this trend should be a strategic imperative.

Improving port efficiency and reliability would strengthen the business case for shipping lines.

Our efforts at increasing our connectivity should focus on our direct trade partners and other high-ranking LSCI hubs.

Currently our strongest maritime connections are with trading partners in Asia and with Australia. This is as it should be.

In addition to direct trade, China indirectly connects New Zealand to the majority of ports in the world. The predominance of China in New Zealand’s maritime network partly explains why we don’t have stronger connections with Singapore, Malaysia, and Japan.

The strong connections with Panama and the west coast of South America are also a result of geographic proximity on the routes from and to the US.

Connections with our EU trading partners and the United Arab Emirates are lagging significantly, however.

All of these connections and how we manage them are questions of equal importance to the ones about crane automation and expansion plans when it comes to New Zealand’s maritime strategy.

Fewer ship visits will make it more costly to import and export goods, which would eventually hurt consumers.
CHRIS MCKEEN/STUFFFewer ship visits will make it more costly to import and export goods, which would eventually hurt consumers.

A problem that must be fixed

The congestion at POAL is a dire and urgent problem that must be resolved and both port management and our government are addressing it.

But this crisis, in particular Maersk’s choice to temporarily bypass POAL, has highlighted the cut-and-dry business rules that govern shipping lines’ service design.

The corporate behemoths are not beholden to any country. If New Zealand’s ports, and POAL first and foremost, does not showcase world-class operational efficiency and reliability, it will be increasingly difficult to convince the shipping lines to loop their trade routes to our small corner of the world.

Decreased connectivity will make it more costly to import and export goods and this cost will eventually make it to the consumer’s pocket.

Dr Nadia Trent is an expert in supply chain management from the Waikato Management School at Waikato University.

Will the pandemic open new doors?


in International Shipping News 15/02/2021

If our industry can adapt and innovate like we have done throughout COVID-19, imagine what we can do to accelerate decarbonisation efforts if we apply the right thinking and the right resources, says David Loosley, BIMCO Secretary General & CEO.

The COVID-19 pandemic has shut down offices, ports, schools, and society. As the second wave hits many parts of the world, it may be tempting for governments and corporates to turn focus inwards, and deal with national or corporate matters, as opposed to fixing those on the horizon and common goals.

In our own industry, we need to remind ourselves daily that our focus must remain firmly on the long-term goal of decarbonisation, while continuously fight for the urgent issues such as the rights of crew to perform crew changes, despite the pandemic and the challenges it brings.

As closed as the world currently seems, I, in my capacity as Secretary General & CEO of BIMCO, continue to see optimism, creativity and positivity from industry players, members and leaders in shipping. What I find encouraging are testimonies from company leaders about the readiness of their organisations to adapt, change and innovate at incredibly short notice when the COVID-19 crisis hit.

Companies and staff worldwide took to working from home, from one day to the next, finding new digital solutions and rethinking how to not only go about, but also improve, functions and businesses. I find this both fascinating and reassuring. If our industry can adapt and innovate to this extent, this fast, imagine what we can do to accelerate decarbonisation efforts if we apply the right thinking and the right resources to the task.

Our industry urgently needs viable and commercially available technology solutions to reduce carbon emissions, and BIMCO advocates for an International Maritime Research Fund (IMRF) to drive innovation in the technology we need to cut carbon emissions by 50% in 2050, and ultimately eliminate those emissions.

For innovative solutions to succeed however, the right policy framework is needed too. BIMCO continues to call for global action on reducing CO2 emissions, as opposed to national or regional schemes. Therefore, we have voiced concern over the EU proposed implementation of a regional Emissions Trading System (ETS), as we fear the inclusion of shipping in the EU ETS will inhibit global action on reducing CO2 emissions. We fear that shipping risks getting hit by multiple emission trading systems; once the scalable technology is available, this will make any global MBM (Market Based Measure) much more difficult to achieve.

We therefore urge the EU to work with the international community at the International Maritime Organization (IMO) on this critical activity to ensure that the industry continues to operate on a level playing field.

If the shipping industry operates on a level playing field globally, companies can focus on all the invaluable lessons learned during the COVID-19 crisis in a bid to fuel innovation and speed up decarbonisation efforts.

David Loosley, Secretary General & CEO of BIMCO.

Source: Lloyd’s Register

Global supply chains choke under tsunami of freight


in International Shipping News 13/02/2021

With global supply chains buckling under huge order volumes and a confluence of disruptive forces, shippers should prepare for 2021 to be a perpetual peak season across all transport modes, logistics experts warn.

Competition for freight space is so fierce that companies will need to pay exorbitant premiums to get on planes and vessels and apply more flexible shipping methods to avoid delays.

And the unusual move to keep factories open during the long Chinese New Year holiday means freight transportation systems won’t have a chance to draw down shipments stacking up at ports and loading docks.

“There will be no slack season this year,” said Brian Bourke, chief growth officer at Chicago-based SEKO Logistics, during a video briefing for reporters on Monday.

How upside down is the market? With container vessels overbooked, shippers paying record rates and surcharges to secure space, and congested terminals forcing vessels to wait days for a berth, SEKO’s ocean freight sales team is now selling airfreight as an alternative mode for customers that need goods quickly, he said.

And airfreight, which is normally about eight times more expensive than ocean transport, is no panacea. Demand is expected to grow by double digits after recovering from the depths of the coronavirus crisis last summer, while cargo capacity remains about 20% below 2019 levels because of the extensive reduction in passenger flights.

On major trade corridors, planes are flying full and rates are two to three times higher than normal. Load factors on a key trans-Atlantic route, for example, were higher in January — above 80% on average — than in November and December, typically a much busier shipping period, according to CLIVE Data Services. So many flights are full that some carriers are telling customers they cannot guarantee capacity commitments.

Port congestion ripple effects

The import/export bottlenecks are all related to the COVID pandemic.

Companies are building up inventories that diminished when the global economy locked down last spring. Demand for medical supplies from China to combat the virus remains high. Meanwhile, consumers have shifted spending from services to things they can enjoy at home or outdoors while observing social distancing rules. Hot items on e-commerce platforms include treadmills, hot tubs, TVs, surround-sound systems, bicycles and ski equipment.

The U.S. Congress is also preparing a new coronavirus stimulus package, with more unemployment benefits and $1,400 checks for people making $75,000 or below, which is likely to spur another round of robust e-commerce purchases for goods made in Asia.

The V-shaped recovery in container shipping, with some 5 million twenty-foot equivalent units (TEUs) pushed from the first half of the year into the second half, has strained the industry’s capacity to the limits. Industry analysts say every available vessel is deployed, but it’s not enough to handle such a quick shift in volume.

Meanwhile, COVID infections and quarantines have reduced the number of available longshoremen in the Los Angeles-Long Beach port complex to work ships and get containers on trucks, leading to massive port congestion. Ships are falling behind schedule as they wait more than five days for a berth. It can take another five days to get containers through the terminals to surrounding warehouses or onto trains, with drivers waiting up to two hours to enter the gate.

There are currently 31 container vessels anchored offshore, with an estimated 310,000 TEUs worth of stranded goods, according to the Maritime Exchange of Southern California.

East Coast, European and U.K. ports are experiencing similar challenges, to varying degrees.

On-time reliability for vessels has dropped to 45%, according to Denmark-based maritime research and advisory firm Sea-Intelligence ApS. And the latest monthly report from Ocean Insights shows record-breaking rates of containers being rolled from a scheduled vessel to a later departure, with industry leader Maersk posting a 14% increase in January year-over-year.

(Source: Sea-Intelligence)

Vessel delays and a shortage of containers are having a corresponding effect in China, where shipments are also piling up.

Normally, shipping volumes hit a lull in late December, tick up for a few weeks in February and early March to make up the slack following the Lunar New Year and then ease back until late summer as companies stock up for back-to-school and the holidays.

Factories typically close during Chinese New Year for more than a week as people flock from coastal cities to inland provinces to celebrate with their families in what is considered the largest human migration in the world. Ocean carriers temporarily pull many vessels from their schedules to avoid sailing half empty. When businesses reopen, there is huge transportation demand to move postponed shipments. The schedule puts pressure on businesses to tightly manage inventory, production timelines and shipping deadlines to make sure they can deliver during the seasonal rush before and after the holiday window.

No shipping lulls

But the Chinese New Year holiday, which begins Friday, won’t provide much breathing room for transport providers this year. Chinese authorities are discouraging “nonessential” travel to contain a new wave of the coronavirus. Many manufacturers have announced they will continue production through the holiday period to clear backlogs of orders.

Congestion problems are expected to persist without the normal pause to help clear out shipments.

Last year, ocean carriers cut 112 vessel departures at Chinese ports, or about 20% of capacity. Through Monday, there were only 63 blank sailings announced for the holiday period, and the primary reason was because of the huge rotation issues, not a decrease in demand, said SEKO’s Akhil Nair, vice president of global carrier management and ocean strategy.

Air backlogs could also grow because a large number of freighter flights were canceled weeks ago in anticipation of a dead shipping period, according to Flexport, a San Francisco-based freight management company.

Chinese COVID safety measures are impacting freight transport in other ways too.

Truckers arriving at coastal ports from western provinces have to pass three different levels of COVID testing along the journey and the outbreaks have raised fears that domestic travel could be completely locked down by the government like it did a year ago, said Nair, who is based in Hong Kong.

Truck capacity is also scarce in logistics hubs because there was a large exodus of drivers who left before the Lunar New Year in anticipation of possible travel restrictions. Ocean Insight reported the truckers are subject to mandatory quarantine by traveling home and in some regions, especially the south, up to 95% of truckers will be unavailable.

And shipping along the Pearl River delta is disrupted after barge and small-vessel operators that feed the deepwater ports stopped accepting cargo for 10 days or more because of additional COVID testing in South China and Hong Kong. The entire region is switching to trucks to try and move cargo all the way to the Yantian International Container Terminal in Shenzhen and the Port of Hong Kong.

On Sunday, the Yantian terminal increased the cutoff time for deliveries to container yards from two days to a week before vessel departure in an effort to reduce truck queues that stretch for miles.

Meanwhile, there are no empty containers for trucks to take back because shipping lines only plan to release them five days before vessel departure. With nowhere to go, cargo is piling up in warehouses.

“You have a chicken-and-egg syndrome. If you get a container, you can’t get it back in for the ship. And if you don’t get a container anyway, which you were waiting for, you can’t move your cargo out,” Nair said.

He predicted the confluence of transportation woes — terminal restrictions, driver shortages, continued factory production and limited vessel supply — will reach a crescendo next week.

“These conditions will choke factory-port connectivity starting in about two weeks, with inventory backups lasting for months,” Ocean Insight said.

And that’s not all.

Vietnam’s Tet holiday coincides with Chinese New Year and many Chinese-owned factories there plan to keep operating this year, which will lead to large backlogs because shipping lines prioritize putting empties first in China. Intra-Asia feeder routes that carry raw materials and semi-manufactured goods for assembly plants also get second-class treatment so shipping lines can use scarce boxes for the high-yielding transoceanic markets.

Nair said if the equipment shortages continue in Vietnam and other countries, orders that left China when U.S. tariffs increased during the Trump administration could temporarily pivot back to China.

“Post-Chinese New Year is not going to be a recovery but a continuous elongation of this situation,” Nair said. “We’re not going to see a big spike in bookings because the bookings are already there, but we don’t have the equipment or the trucks [to ship goods] or the port won’t let them in.”

The situation underscores how China’s ports are intertwined with those around the world.

“It’s the first time in my career that I’ve seen almost every trade area in a peak,” Nair said. “Latin America, Africa, the Middle East and India — everyone is peaking at the same time, so no carrier’s equipment ratio is going to be OK and cover this type of continual peak.”

Some retailers are suggesting their ordering may normalize by June, but even so, logistics providers say there will be a strong shoulder season until the volumes start building in August for holiday in the West.

“It looks like there may be issues all year because you get to a certain point and then you get back into peak again,” Jim Monkmeyer, president of transportation for DHL Supply Chain North America, said in an interview. “I don’t think we’re going to catch a break.”

Pay the piper

Until very recently, ocean shipping was a commodity business with carriers undercutting each on price for market share. But ongoing financial hardship led to massive consolidation and capacity discipline, with some carriers offering differentiated services.

Last summer, carriers offered guaranteed vessel loading or terminal discharge for $800 to $1,750 per box. Today, the definition between standard and premium service is blurred on the import side. Just getting cargo on the ship requires a premium and those slots are going for $1,750 to $4,000, said Chris Capodanno, SEKO’s vice president of product development and strategic client solutions.

U.S. exporters, who normally enjoy lower rates because of less backhaul demand, are also forced to pay premiums to secure a box because carriers are so keen to get empties back to China as fast as possible. Agriculture producers and other shippers, often located far inland for ports, are crying foul, saying the carriers are violating shipping law by abandoning service commitments.

U.S. domestic intermodal and rail shipments out of Southern California are also experiencing heavy delays. DHL’s Monkmeyer noted that transit times to the East Coast could take a week longer than normal, which is impacting several technology companies that manufacture in the region or across the border in Mexico.

Railroads, much like parcel companies did during the pre-Christmas rush, are capping how much volume shippers can send through the system and charging a $1,500 surcharge for any containers above their limit, Monkmeyer said.

The latest TEU tender forecast on FreightWaves’ SONAR freight data platform shows imports into the Port of Los Angeles declining over the next month and increasing in Long Beach. The data suggests the conditions for greater congestion and tight truck capacity continuing, or even increasing, since Long Beach typically handles freight going out via long-haul truck and rail. And total outbound loaded rail container volumes out of the ports and Inland Empire are elevated as well, according to SONAR, which may partially explain why outbound truckload volumes have trended down in the past couple of weeks.

Logistics response

SEKO Logistics is managing the chaos with a number of efforts. At the top of the list is accurate forecasting.

Capodanno said the freight forwarder is partnering with customers to conduct rolling four- to eight-week demand forecasts and adding new digital tools to manage the entire booking process, from price quote to allocation. The company also closely monitors suppliers’ production schedules at origin to nail down cargo-ready dates for pickup at the port.

When the 40-foot containers arrive on the West Coast, they are immediately trucked to a cross-dock, sorted by destination and loaded into 53-foot domestic containers for expedited truck transport to other cities across the country.

Shipping lines are beginning to divert traffic to other ports and logistics providers like SEKO are helping customers find alternate routes, but the ports of Oakland and Seattle-Tacoma are also forcing vessels to wait as back ups begin.

Express shipping services have become a popular middle options between airfreight and standard multi-port schedules, but their value is decreased if there is no room to unload.

Peloton (NASDAQ: PTON) last week said it would spend $100 million to address supply chain bottlenecks that are slowing delivery of its bike equipment, including for airfreight and fast-ship services.
Source: Freight Waves

Ocean container losses topple annual average in 2 months


in International Shipping News 10/02/2021

The World Shipping Council issued an eye-opening report last July. What seemed like a steady stream of vessel fires, capesizes and container losses was in fact a small drop in the global ocean shipping bucket. A WSC study found a tiny fraction, about .0006%, of the roughly 226 million containers shipped on the world’s oceans each year were lost.

WSC reported on average only 1,382 containers were lost at sea per year between 2018 and 2019. So what’s going on? Between Nov. 30 and Jan. 31, more than 2,675 containers were lost in five incidents at sea. That’s almost double the annual average in just a two-month period.

MSC Aries

Most of the accidents have occurred in the North Pacific, including the most recent, the reported loss of 41 containers from the MSC Aries last Friday. All 41 containers lost overboard reportedly were empties being moved back to China to be refilled.

An MSC spokesperson did not confirm the number of containers lost but did tell American Shipper, “No cargo went overboard, according to preliminary reports from the vessel.”

The Aries is deployed on MSC’s Sequoia service, with a port rotation of the Port of Long Beach in California and Ningbo and Shanghai, China.

The ship “met with heavy weather while en route from Long Beach to Ningbo, impacting a limited number of empty containers,” the MSC spokesperson said.

The spokesperson said the MSC Aries berthed Thursday at the Port of Ningbo, “where a survey is taking place to assess the status of any containers damaged on board and any further action to take. We expect the vessel to resume service soon after the survey.”

Built in only 2020, according to VesselFinder, the container ship can carry a reported 14,300 twenty-foot equivalent units (TEUs).

Maersk Essen

The Maersk Essen lost 750 containers Jan. 16 while sailing from Xiamen, China, to the Port of Los Angeles. Maersk said the 13,100-TEU Essen “experienced heavy seas during her North Pacific crossing.”

The Essen changed course after the loss of the containers and sailed for the Port of Lazaro Cardenas in Mexico, where it berthed last Saturday.

Representatives from W K Webster, which describes itself as “the world’s leading service provider in the settlement of cargo claims,” are in Lazaro Cardenas and providing updates.

“Our team of surveyors are in place at Lazaro Cardenas to undertake surveys as cargo operations proceed and to ascertain the status of all the containers we represent. We are liaising with representatives of the vessel locally to agree to a protocol for the inspection of containers and the procedures for reloading containers, cross-stuffing cargoes into replacement containers and, in some cases, for the probable disposal/salvage sale of cargo considered to be a total loss,” W K Webster said.

It said the surveyors also were studying drone footage of the Maersk Essen as it approached Lazaro Cardenas. W K Webster said the footage was removed from its website at Maersk’s request.

“Following cargo operations at Lazaro Cardenas, the most likely scenario is that containers discharged ashore — or transloaded — will be reloaded to the vessel for on-carriage to Los Angeles as originally intended,” one update said. “Due to significant port congestion at Los Angeles/Long Beach, Maersk has not ruled out transshipping to alternative vessels or possibly rerouting containers by rail. Whichever plan is ultimately adopted, it is clear that there will be significant delay to cargoes reaching their final destinations.”

The operations in Lazaro Cardenas could take several weeks “given the complexity and dangers involved,” W K Webster noted.

“We continue to liaise with the vessel’s representatives regarding the status of the containers to accurately determine which containers were lost overboard and the stowage positions of those remaining on board,” it said.

A Maersk spokesperson told American Shipper the Essen is “undergoing standard discharge of damaged containers and weather-related repairs” at the Mexican port.

He said the Essen is estimated to sail from Lazaro Cardenas for the Port of LA between Feb. 12 and 16, “resuming regular TP6 string scheduled calls.” The TP6 service connects Asia and North America, with the only U.S. call at the Port of LA.

ONE Apus

In one of the worst cases of cargo losses on record, the ONE Apus lost 1,816 containers about 1,600 nautical miles northwest of Hawaii after reportedly sailing into a severe storm Nov. 30.

The Apus, which had been en route to the Port of Long Beach, turned around and sailed for the Port of Kobe in Japan, arriving there Dec. 8.

W K Webster also has a crew in Kobe and said that as of Wednesday, 638 containers had been discharged from the Apus, which has a carrying capacity of 14,052 TEUs.

“Progress is still relatively slow, although the rate of discharge does appear to be increasing slightly as the most severely damaged containers are discharged, leaving others that are more easily handled to be removed. It is still likely to be a few more weeks before discharge is completed and necessary repairs made to the vessel,” W K Webster said.

“Details of the status of each container still does not include details of those containers thought to be lost overboard as a result of the incident. It is presently unclear whether this will be revealed by a process of elimination as the discharge operation at Kobe concludes or whether earlier information will be made available,” it continued. “A declaration of general average now seems very unlikely. We are pressing [ONE] to formally confirm this so that this issue can be finally put to rest and our clients’ concerns allayed.”

General average basically requires shippers to contribute to the expenditures made to preserve a ship and its cargo. Most cargo insurance policies protect a shipper’s merchandise from physical loss or damage and cover general average losses.

What caused such a massive number of containers to fall from the Apus, which made its maiden voyage in the spring of 2019, reportedly has not yet been determined.

“Investigations into the cause of the incident continue, but a physical attendance by our appointed expert has been delayed as a result of the owner’s current refusal to grant access to the vessel, citing safety issues,” W K Webster said this week. “We still intend this inspection to take place in due course when permitted, including an inspection of all relevant physical evidence that [ONE has] agreed to preserve.”

A reply to American Shipper’s email to ONE for additional information simply said, “Discharging of damaged containers is still ongoing at Kobe. Kindly understand we disclose details only to the customers.”

The loss of 1,816 containers in a single incident certainly jumps out. But even with the case of the Apus subtracted, the number of containers lost in the last two months is by a far cry outpacing the annual average.

Ever Liberal

Taiwanese carrier Evergreen Marine’s Ever Liberal lost a reported 36 containers after encountering strong winds in the Pacific about 20 nautical miles off the coast of Kyushu, Japan, on Dec. 31. An additional 21 containers reportedly fell onto the deck.

The Ever Liberal had sailed from Busan, South Korea, bound for the Port of LA. Evergreen told the Taiwan News that the container ship diverted to Taipei to survey the damage.

According to VesselFinder, the Ever Liberal arrived at the Port of LA last Sunday and was due to berth in Oakland, California, on Thursday.

Built in 2014, the Ever Liberal has a capacity of 8,452 TEUs.

E.R. Tianping

Israeli carrier ZIM reportedly lost 76 containers last month from the chartered ship E.R. Tianping.

The incident also occurred in the Pacific as the container ship was making its way from South Korea to North America.

The 2006-built Tianping did visit the ports of Vancouver and Seattle at the end of January. It now is sailing for Busan, with an estimated arrival next Wednesday.

ZIM did not respond to American Shipper’s requests for comment.

Giulia 1

While no cargo reportedly was lost, rough seas are being blamed for the death of a crew member from the bulk carrier Giulia 1 off the coast of Nova Scotia, Canada, last Saturday.

According to reports, the Giulia 1 was about 320 nautical miles southeast of Nova Scotia when it was hit by the wave. One crew member, said to be a 30-year-old Filipino man, was killed and three others reportedly suffered injuries.

The bulk carrier reportedly had sailed from Norfolk, Virginia, and was bound for Africa when the incident occurred. The Giulia then diverted to the Port of Halifax, where it arrived Sunday.

Transport Canada told American Shipper that it inspected the vessel Wednesday and “issued a deficiency notice under the Maritime Labour Convention and the International Safety Management Code. The vessel will remain alongside at the Port of Halifax pending rectification of all items to the satisfaction of port state control.”

Transport Canada did not say what those deficiencies were.
Source: Freight Waves

Scania joins forces with other transport giants to make Scandinavia’s largest port fossil-​free

To speed up the transition to fossil-free fuels in the transport sector, Scania joins forces with Volvo Group, Stena Line, and the Port of Gothenburg. The collaboration will ensure a reduction in carbon emissions by 70 per cent by 2030 linked to the largest port in Scandinavia.

Trade and freight transport are vital to expand public welfare and ensure function and development of society. The transport sector is also a complex system, where different modes of transport and organisations collectively face big climate challenges.

“No single organisation or individual hold the key to the challenges ahead. Collaboration is crucial and we are pleased to bring on board two of the world’s largest truck manufacturers and the world’s largest ferry company. With our collective expertise, breadth, and market presence we can make a real difference,” says Elvir Dzanic, Gothenburg Port Authority chief executive.

Tranzero Initia­tive

Named the “Tranzero Initiative”, this venture focuses on the one million truck transports and the 55,000 tonnes of carbon emissions generated from road transports to and from the Port of Gothenburg annually. The Initiative also includes electrification of sea transport.

The companies involved will introduce a series of interlinked measures to accelerate the switch to fossil-free fuels. This has already commenced with a needs analysis and mapping of freight flows.

Gothenburg Port Authority will produce the necessary infrastructure and access to fossil-free fuels for heavy vehicles. Scania and Volvo will put commercial offerings in place for their heavy truck customers, ensuring that land transport becomes fossil free in accordance with the goals laid down by the port. Stena Line will also have a key role by ensuring new fossil-free vessels are brought into service on the Gothenburg-Frederikshavn route by 2030.

Welcomed by the Swedish govern­ment

The Tranzero Initiative is welcomed by the Swedish government and is in line with the ambition for Sweden to become the world’s first fossil-free country.

“We have had a long-standing exchange of views and ideas with the government regarding our challenges, and our goals are the same. The transport sector needs to move away from its reliance on fossil fuels and with the Tranzero Initiative we are taking a monumental step forward,” Dzanic concludes.