Canceled vessel sailings cause logistics challenges for inland ag exporters

By Bruce Abbe, strategic adviser for trade and transportation

Canceled container ship sailings on the Trans-Pacific are continuing to cause turmoil for U.S. agriculture exporters – in particular for inland ag container shippers who are trying their best to meet demanding supply chain and overseas customers’ deadlines.

Particularly vexing for a number of Specialty Soya and Grains Alliance (SSGA) shipper members is dealing with unwarranted demurrage and detention penalties the ocean carriers or railroads try to charge them for missing cut-off dates early or late, even though the carriers are at fault for giving inadequate, short-notice schedule changes, sometimes after the cargo has started on its way from the plant.

Bob Sinner, president of specialty soybean exporter SB & B Foods and SSGA vice chair, explains there are four key logistics deadlines inland shippers focus on when sending loaded containers overseas: the arrival date overseas; the vessel sailing date at the ports; the ramp cutoff date at the inland rail terminal; and the early return date (ERD), which has become a pernicious problem of late.

ERDs have been put in place to try to set windows for managing export containers flowing into the ports to minimize congestion. If the container arrives too early, the shipper can get hit with demurrage penalties. Arrive too late, the cargo might miss the vessel sailing date.

Ocean carriers are having to reduce their sailings in the wake of a huge slowdown in non-essential cargo coming into the United States from Asia stemming from the COVID-19 economic decline that will continue throughout the second quarter and likely beyond. Unfortunately, some ocean carriers have resorted to short notice “blank sailings” or skipped ports of call, while failing to give adequate notice to shippers of changes in the ERDs.

Inland shippers need to load their containers and manage their cargo for a 10- to 14-day journey to the West Coast ports. When ERDs suddenly get changed – sometimes with two or fewer days’ notice of a later ERD and sailing date ­– the container may already be on its way. If the containers arrive at the port terminal a few days early, the shipper may see a demurrage bill for hundreds of dollars – thousands of dollars for a bunch of containers – even though they are not fault.

“This is a generic issue for all ag shippers,” Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC) told the Journal of Commerce in a story earlier this month.

SSGA and AgTC are pressing the container shipping industry to clean up abuses of unfair demurrage and detention charges, which have become increasingly common now during disruptions caused by changing vessel schedules and cut sailings. AgTC recently submitted a letter to the Federal Maritime Commission (FMC) documenting a range of unfair charges. SSGA and AgTC are pressing the FMC to fully adopt and enforce its proposed operational guidelines for the industry to standardize free time and these related penalties at the ports.

In particular, SSGA and AgTC would like to see an expanded minimum notice of changes in ERDs, ramp cutoffs and vessel sailings to at least five to seven days to allow shippers to have the ability to manage cargo flow and meet the cut-offs.

The recent Journal of Commerce story, “Changing loading windows challenge U.S. ag shippers” provides more detail. You can find it here.