Competitive Shipping Roundup: ‘Historic’ infrastructure bill passes – finally!

By Bruce Abbe, SSGA Strategic Adviser for Trade & Transportation

Late last week the U.S. House of Representatives finally approved a $1.2 trillion infrastructure funding package that is being called “historic” – perhaps due to its size (even though it whittled down from earlier proposals by the Biden Administration) or perhaps due to it finally getting done after decades of similar past proposals getting left undone in the congressional dust bin. President Biden has indicated he will sign the bill, which was approved by the Senate in August. 

Here are a few highlights of the package: 

• A five-year reauthorization of the recurring Federal Highway Bill, funded at $273 billion for roads and bridges, the highest allocation in decades. 
• $550 billion in new spending, including $110 billion for roads, bridges and other major infrastructure projects. 
• $17.4 billion in new spending for inland and coastal waterways and ports infrastructure. 
• $66 billion for freight and passenger rail. 
• $25 billion for airports to improve runways, gates and multi-modal connections. 

• $73 billion for upgraded electrical power. 
• $65 billion for broadband access expansion. 
• $55 billion for clean water 
• $5.7 billion for electrical vehicle charging stations 

The package also includes a range of other programs groups have been pursuing. Among them are a younger-truckers pilot program that will make 18- to 21-year-olds eligible for interstate truck driving, additional trucking safety protections and an hours-of-service exemption for certain ag haulers. 

More detailed coverage can be found in the American Journal of Transportation, Freightwaves and The Associated Press (via St. Louis Post-Dispatch). 

Ocean carriers bristle at congestion fees 
Last week, much of the chatter in the transportation media focused on the consternation ocean container carriers were feeling about the announcement that the ports of Los Angeles and Long Beach are about to assess fees on carriers for containers with imports that overstay their time on port property, which has clogged the system.    

The fees are not cheap. For containers sitting on the docks more than nine days, the charge is $100 per container for the first day, $200 for the second, $300 for the third, and so on. 

Then late last week, two terminals at the port of Tacoma, part of the Northwest Seaport Alliance, announced they, too, will be instituting overstayed container fees on import containers. Husky Terminal and Washington United Terminals, which serve mostly The Alliance carriers, including ONE, Hapag-Lloyd, HMM, and Yang Ming, will assess surcharges of $315 and $310, respectively, for import containers that have exceeded 15 days on the terminals, beginning Nov. 15. 

It remains to be seen if these efforts, reluctantly taken by the ports, will yield success in unclogging the ports.  

Ocean carriers are used to assessing these demurrage fees on shippers and truckers, not being the recipient of the penalties. Naturally, some of the carriers indicated they will pass them on to their customers.    

There’s been no end of finger pointing at other parties: Carriers blame import customers for not picking up containers or bringing the empties back. Importers blame big retailers who often negotiate long “free time” provisions in their ocean carrier contracts and leave cargo on docks and on chassis for long periods at the ports. Truckers blame terminals for gates not being open and warehouses for not having space and accepting containers.   

After prodding by the Biden Administration, more ports and terminals are trying to extend hours of operation, but it’s been slow going, and terminals and carriers say not enough truckers use the extended hours to make it worthwhile. 

But at some point, something must be done. The penalty fees definitely have caught the attention of the steamship lines. So far – cross our fingers – no such penalties have been announced on export-loaded containers, which shippers want to push through the ports as soon as they can and are not deemed to be part of the on-dock, delay/congestion problem. 

More coverage can be found in Freightwaves and Journal of Commerce. 

Seeing signs of rate relief
Container News reports that, since September, some shippers have seen some relief from the exorbitant east-bound rates for imports to the U.S. from Asia.    

The digital freight-forwarding company Shifl said the China-U.S. spot rates (which have hit $20,000, $30,000 and even higher) dropped in October by more than 50%. Shifl pegged the spot rate from China to Los Angeles as dropping from a high of $17,500 in September to $8,500 in October. New York-based Shifl indicated China to East Coast U.S. spot rates are around $13,800 per 40-foot container currently, a 29% decrease from September’s rates of $19,500. Mind you, those West Coast rates were below $3,000 18 months ago. 

Shifl believes the decline is due to the peak season rush to bring in consumer goods for the holidays is largely over, despite a good share of those goods still sitting on ships offshore. Hopefully, the downward trend will continue. 

Ocean carriers banking more profits
Despite all the turmoil, the steamship lines keep reporting ever higher and higher profits. 

At the beginning of the month, Hapag-Lloyd upped its 2021 operating profit projections by an extra $1 billion. That’s on top of the $4 billion rise previously forecasted.    

Not revenue. Not profit. But rise in profit. 

Hamburg, Germany-based Hapag forecast its 2021 operating profit will be in the vicinity of $12 billion to $13 billion (U.S.). That’s up from a previous projection of $7.6 billion back in March. Read more on Journal of Commerce. 

Meanwhile, at Denmark-based Maersk, the profit picture looks every bit as rosy. Third-quarter record revenues reached $16.6 billion. The company tripled its rise in earnings before interest, taxes, depreciation and amortization (EBITDA) to $6.9 billion (U.S.), with the ocean carrier sector accounting for $6.3 billion. Maersk is forecasting the full-year EBITDA to yield $22 billion to $23 billion, reports Container News.

New container dray operation opens in Minneapolis
On a more positive note, Container Port Group (CPG), a 50-year-old major container drayage company, recently has opened a new trucking terminal in Minneapolis, a key container rail market used by many SSGA exporters. 

CPG, with 23 terminals along the East Coast and Gulf Coast, recently added three new terminals in entirely new markets, according to a report in the American Journal of Transportation. The new Minneapolis terminal is one of the new market operations. New Orleans and Greer, S.C., are the other two. 

Container shippers interested in checking out CPG’s rates and service should contact Eddie Fuchs at Eddie.Fuchs@containerport.com. 

CPG’s president was recently featured in a story in the American Journal of Transportation commenting on dealing with current challenges for the industry.