Competitive shipping: Container crisis dominates trade news

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Compiled by Bruce Abbe, SSGA Strategic Adviser for Trade and Transportation 

The leading international container shipping trade news media over the past week continued to focus on the current crisis in the global container shipping system. Here is an overview: 

“Trans-Pacific container system slows under Asia import surge” The Journal of Commerce (JOC) noted in a feature posted Friday that covered the proverbial waterfront on the issues at hand – the “… seemingly unending deluge of imports from Asia into North America …” clogging of the system and “slowing cargo through rail hubs including Chicago,” ever-climbing rate increases, and a reminder that this is occurring right before the traditional March start-up period of contract negotiations between shippers and ocean carriers. 

On a positive note, new services and efforts to find alternative gateways were also noted. 

“Logistics failures costing business: U.S. Exporters” Input from SSGA factored heavily in a separate JOC report that focused on challenges exporters are facing:   

(SSGA) which represents exporters of identity-preserved grains, peas, lentils, food-grade soybeans, and other agricultural products that move in containers, is hearing from its members that their problems start with a lack of communication from carriers when sailings are canceled, or departure times changed, or when vessels are overbooked and their shipments are “rolled” to subsequent voyages.  But the problems don’t stop there. 

“The ultimate kick in the teeth is when they charge you detention and demurrage for it,” (SSGA’s) Bruce Abbe said, referring to fees that carriers levy for containers that sit at the ports after free storage time elapses, or for the late return of equipment. Exporters say they are being charge for breakdowns in the supply chain that they did not cause.” 

Exporters have been urging ocean carriers to provide shippers with timely information, with adequate lead time, so that they can manage shipments and avoid costly unfair penalty fees. 

Agriculture Transportation Coalition Executive Director Peter Friedmann noted the issues at hand were addressed last year by the Federal Maritime Commission (FMC), which issued guidelines ocean carriers should follow to make such penalties serve the purpose of improving container flow system-wide. The carriers, he charged, “ignore” the FMC guidelines because they have turned detention, demurrage and other such penalties into profit moves, JOC reported.    

“Carriers are making money on these ancillary charges while their customers are losing their shirts,” Friedmann said. 

California wants FMC action, too California is also pressing the U.S. Federal Maritime Commission to take immediate action on the ocean shipping crisis to protect against the delays and rising costs buffeting the state’s huge agriculture export industry. 

California Lieutenant Governor Eleni Kounalakis laid out several possible steps in a letter to the FMC, including the suspension or reduction of detention and demurrage penalties and cancellation of “congestion surcharges”— another new onerous development at least one carrier is hitting shippers with. Better, timely communication with shippers and truckers on empty return times was another recommendation.   

“Immediate steps must be taken to help alleviate the multitude of challenges being experienced at the ports,” Kounalakis told the commissioners. 

New containers may not be enough to meet demand The head of one of the largest container leasing companies, CAI International, told Freightwaves last week the three large Chinese container manufacturing companies, which control 80% of the global trade, are not likely to produce enough containers for the industry to “build its way out of the equipment crisis.”     

They are “managing output to keep prices high,” he reportedly said. Other shipping industry consultants concurred.     

Hapag-Lloyd says COVID, congestion, container shortage make for ‘perfect storm’ German ocean carriers Hapag-Lloyd’s CEO Rolf Habben Jansen held a virtual global news conference Thursday, in which he explained developments that lead to the current crisis and what ocean carriers are dealing with. Coverage by Freightwaves. 

Logjam at LA/LB Last Wednesday there were as many as 62 ships anchored in San Pedro Bay off the ports of Los Angeles and Long Beach, waiting to get into one of the full berths to unload their cargo. A video featuring an aerial view of the anchored fleet was posted on YouTube.  

Federal Maritime Commission demands information from carriers

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SSGA applauds investigation, which includes marine terminal operators

The Specialty Soya and Grains Alliance applauds last week’s Federal Maritime Commission decision to issue an information demand to ocean carriers and marine terminal operators to answer questions on detention and demurrage practices, as well as policies and practices related to container returns and container availability to exporters.

In a press release issued Feb. 17, the Federal Maritime Commission (FMC) announced that Commissioner Rebecca F. Dye issued the order to determine if “ocean carriers operating in an alliance and calling the Port of Los Angeles, the Port of Long Beach and the Port of New York & New Jersey” are meeting their legal obligations, along with marine terminal operators (MTOs) at those ports. According to the FMC press release:

The orders are being issued under the authority Commissioner Dye has as the Fact Finding Officer for Fact Finding 29, “International Ocean Transportation Supply Chain Engagement.”  …

Failure of carriers and MTOs to operate in a way consistent with the Interpretive Rule on Detention and Demurrage that became effective on May 18, 2020, might constitute a violation of 46 USC 41102(c) which prohibits unjust and unreasonable practices and regulations related to, or connected with, receiving, handling, storing, or delivering property.

Information received from parties receiving demands may be used as a basis for hearings, Commission enforcement action or further rulemaking.

In October, SSGA was among the first national agricultural associations to shine a light on the disruption of the food supply chain and other critical problems facing containerized ag exports after members had been informed that some ocean carriers were suspending containerized and other overseas ag shipments in order to keep up with import demand of goods from Asia.

“In their haste to meet increased demands for foreign imports to the United States, the ocean carriers have left U.S. ag exporters behind while clogging the ports and disrupting the supply chain throughout the system, including rail and trucking,” said Eric Wenberg, SSGA executive director. “That’s why the Federal Maritime Commission needed to step in. But more needs to be done.

“Now, ocean carriers and marine terminal operators must cooperate with the FMC, and the hope is this can be resolved quickly so our members’ products and ingredients can get to the foreign food manufacturers who have been patiently waiting for them.”

On Feb. 9, SSGA representatives had the opportunity to give testimony to the FMC, along with a large contingent of national ag organizations, including National Grain and Feed Association and the Agriculture Transportation Coalition.

For more on the container shipping crisis, see the latest IP-ODCAST, in which SSGA Secretary/Treasurer and Competitive Shipping Action Team Chair Darwin Rader spoke about the ongoing situation.

Competitive Shipping: Container transportation bottlenecks not easing up yet

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By Bruce Abbe, SSGA Strategic Adviser for Trade and Transportation

The current crisis in global container shipping continues, and the end line seems to keep moving further out.

Today, representatives of the Specialty Soya and Grains Alliance (SSGA) participated in a virtual meeting, as part of a large working coalition of national agriculture organizations, with the Federal Maritime Commission (FMC) in an effort to impress upon regulators the urgency ag exporters are facing as they wait for supply chains to get unclogged and moving again.

SSGA reached out to member exporters late last week and received specific feedback on problems member shippers are experiencing inland and at the ports that the organization will be sharing with the FMC.

Meanwhile, the international business news media continues to become aware of the broadening impact of the crisis:

‘War of words’

“War of words escalates as exporters scramble for scarce containers,” Freightwaves reported last week. The problem of ocean carriers starting to ship containers empty back to Asia and denying space and equipment for ag exporters, first brought under the spotlight by SSGA in October, is now being documented and getting attention of more government leaders.

Global food crisis

“Food is piling up in all the wrong places, thanks to carriers hauling empty shipping containers,” Bloomberg news reported last week in a story about the crisis upending global food trade.

SSGA Executive Director Eric Wenberg was quoted in the story and noted the shipping problems will soon lead to higher prices for food products in Asia because of the logistics problems confounding the supply chains. Food price inflation, if it starts to kick in, can lead to impact on the overall global economy, Wenberg warned.

Container supply

Getting more containers into the system alone will not be enough to fix the global logjam, experts say. Ocean carrier Hapag-Lloyd CEO Rolf Habben-Jansen told the Journal of Commerce that while HL added some 300,000 TEU of containers in 2020, the accelerated production of containers “will provide only limited relief to supply chains out of Asia.”

Worsening port congestion on the U.S. west coast and European port hubs is putting a big kink in the chains. “Rising demand can’t stop blank sailings,”, JOC reported, as carriers apparently are prepared to cancel sailings despite demand if they can’t get through-put at the ports

Hapag is implementing a “comprehensive schedule recover plan” to get its ships back into their intended schedules, Habben-Jansen said. Unfortunately, he added, that plan “will result in some services not having a sailing for one to two weeks,” even though the vessels will not be idle during that time.

Clogged until late spring?

Terminal operators at the leading west coast ports of Los Angeles and Long Beach told Journal of Commerce they may not be able to dig out of the backlog of record container volumes, congestion and catch-up to vessel schedules at the ports until late spring.

“Terminals are full. There’s nowhere to put the containers. We’re 35 percent below what we normally do on deliveries (to truckers),” Ed DeNike, president of terminal operator SSA Containers, told JOC.

Labor shortages are now a critical problem with more dockworkers quarantined due to COVID, too: “The single biggest thing we can do is vaccinate,” Weston Bar, president of the Harbor Trucking Association said.

Executive order coming?

There are news reports just out that President Biden is preparing an executive order calling on several federal departments, including Homeland Security, Commerce, National Security Council and others to review critical supply chains and reduce U.S. dependence on imports for important pandemic-related supplies. The plan noted the U.S. is vulnerable across a range of supply chains besides medical supplies and “dangerously dependent on foreign suppliers.”

Of note, all of the major international steamship container lines are owned by foreign entities. It’s not only a matter of where important goods are manufactured; it’s also how we get critical cargo, including food, delivered to our country and to our foreign customers and partners.

TradeLanes research highlights intermodal havoc

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Costs and disruptions from detention and demurrage are wreaking havoc for our intermodal transportation partners, which, of course, affects our overall ability to deliver on time with a good customer experience, according to Specialty Soya and Grains Alliance (SSGA) member TradeLanes.

In a survey of hundreds of large trucking and rail organizations across the country, TradeLanes and the Harbor Trucking Association found that over half of respondents view this issue as having critical negative impacts on their business, threatening their ability to survive.

TradeLanes.co, also surveyed SSGA members and found that our community is negatively affected as well:

    • 33% of respondents are seeing a high negative effect from recent D&D issues, while 67% of members responding to our survey are affected by recent issues of D&D.
    • The average cost of an invoice is more than $500 for 50% of respondents.
    • Concerningly, these issues are wasting time and money, as 87% of the time, invoices are disputed, with 100% of respondents spending more than one hour to dispute and have of those spending two hours disputing each invoice!
    • The most common reason for dispute is ERD data change (75% of respondents).
    • Unfortunately, disputes rarely result in charge waivers, as the vast majority of respondents are successful less than 10% of the time.

TradeLanes has developed a Costings product to help automate the information needed for disputes – and help commodity shippers better manage their COGS.

SSGA Member Profile: Vijay Harrell, TradeLanes

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Imagine receiving a $1 million purchase order from an international client but turning it down because you didn’t know how to do the export paperwork.

In 2015, Vijay Harrell met a small Tennessee-based dock equipment manufacturing company that did just that. Harrell later met one of the largest grains traders in the world who suffered some of the same challenges with export documentation and export processes – difficulty in managing the trade execution process for selling (and buying) commodities.

At that moment, Harrell, a self-taught software engineer with a trading background, knew that technology could help overcome the problems of commodities trade execution by bringing trade execution entirely online, and the idea for the TradeLanes.co Trade Execution Platform was born.

“There has to be a better way,” said Harrell, TradeLanes’ founder and CEO. “What should this process be like? What needs to happen to fix this?”

TradeLanes is an SSGA member, and Harrell was the sponsor speaker during SSGA’s annual meeting in December. Before a virtual audience of more than 70 members and guests, Harrell gave a presentation about resiliency and the challenges and opportunities that exist along the IP value chain, stressing that “technology is a key to achieving resiliency.”

Global trade remains one of the last frontiers that has not been fully digitized, and exporters, including SSGA members, suffer as a result – with costly operational hassles, siloed data systems, delayed shipments, extra costs, and narrowed margins.

By bringing everything online with technology designed to integrate with existing systems, Harrell set out to turn the complex process of trade execution into a series of mouse clicks. That allows teams to focus on delivering strategic value instead of spending time scrambling to get shipments right.

TradeLanes allows exporters to generate contracts, start shipments, book logistics, manage loading, generate documents, manage workflow and track and view the entire transaction – from a single screen.

Technology can overcome the main issues of trade execution – paper.

SSGA annual meeting attendees likely noticed the two signs hanging on the wall behind Harrell in his home office. On them are printed the words “PAPER DOCS” inside a red circle with a slash through them – “Ghostbusters”-style.

Eliminating paper in favor of one shared data record, creates flawless documents with all of the information for logistics put online. Any changes that need to be made are simple. TradeLanes’ platform streamlines the entire execution process (saving lots of time and money), provides end-to-end visibility, connects all parties to the transaction online and delivers an Amazon-like e-commerce experience to customers.

“It makes no sense that someone would have to re-do an entire set of documents for a split shipment,” Harrell said. “There is no way a company can win the future of trade if it’s not agile. With TradeLanes, we’re automating and digitizing the entire process, so that it takes 30 seconds, not 3 hours. And we do that for every step – from the sales/purchase order through to delivery of goods at destination.”

TradeLanes takes the view that trade execution can be a competitive advantage. That is where the margin for commodities is made, and that is where the biggest opportunity for process improvements lie.

“We’re coming at it with an industry perspective,” said Harrell, who spent more than two years on site in commodities trade rooms of global companies and small local brokers, figuring out ways to improve trade execution with technology. “This product was born on a trade room floor.”

TradeLanes is working with top innovators in grains, dairy and meats to help them gain competitive advantage, make more money and refocus on delivering strategic value to their customers.

“People said it couldn’t be done – but we’ve done it,” Harrell said. “And next up, we’re applying machine learning so that our customers really have a leg up.”

Harrell is a member of the International Grain Trade Coalition’s working group on electronic trading documentation, which actively supports the International Plant Protection Convention’s ePhyto Industry Advisory Group and is committed to working alongside the industry to digitize and leverage technology to modernize standards.

TradeLanes recently partnered with SSGA on a survey to better understand the scope, extent and cost of detention and demurrage.

Container shipping crunch could extend further into year

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Chinese New Year break may offer catch-up period but won’t fix supply imbalance

By Bruce Abbe, SSGA Strategic Adviser for Trade and Transportation

Many transportation industry observers are hoping the upcoming Chinese Lunar New Year holiday break in Asia will offer a respite that will enable the congested ports, ocean carriers, truckers and railroads to catch up and work their way out of the current gridlock in global container shipping.

Right now, that is looking like anything but assured.

The latest shipping forecasts point to a continuation of the recent six-month surge in demand for consumer goods imports to North America and Europe, fierce competition for short supply ocean containers and high rates for shipping to the U.S. that are leading to a severe shortage of containers for ag export shippers.

CNBC reported Monday that the critical shortage of containers in Asia is causing major delays and driving up shipping costs. Import companies are waiting weeks to see their goods made in China or other Asian country finally make a vessel headed to the U.S. Then they must pay premium rates and, more likely than not, await delays for unloading at the destination port – particularly if the port is Los Angeles or Long Beach.

While long-term contract rates for shipping a container from Asia to the West Coast might run $1,200-1,500, spot freight rates to Europe and the U.S. have surged some 300%. Import rates from Shanghai to LA/LB are running more than $4,000, with premium, guaranteed rates running $6,000 or more. The contract rates set last spring won’t last for long. Those high rates are driving ocean carriers to get containers back to Asia as soon as possible, leaving U.S. exporters with few, if any, pickings for containers and vessel space. The lower-priced, backhaul rates from the U.S. to Asia also have started to rise, though not as steeply.

“The reason for this is the Chinese are being so aggressive about trying to get empty containers back,” a supply chain analyst told CNBC, “that it’s hard to get a container for U.S. exporters.” Three out of four containers leaving the U.S. for Asia are going back empty, he said.

The Journal of Commerce reported that 37% of containers at Shanghai, the world’s busiest port, were “rolled” (held over) from their scheduled vessel in December, up 7% from November. The “rollover rate” at Port Klang in Malaysia was 55% and Singapore’s was 42%, up 9% and 2% respectively.

Lunar New Year different ’21

The Lunar New Year holiday is a time each year when factories and businesses shut down and workers go back to their home areas. It also corresponds with a time when global container shipping from Asia scales back and the ocean carriers “blank” or cancel many of their scheduled sailings. This often results in U.S. ag exporters having more limited access to containers to serve their customers.

This year, Chinese New Year starts on Feb. 12, and the festival lasts 15 days until Feb. 26. Industry observers have been forecasting that the current severe congestion crisis in container shipping would last through the Chinese New Year and perhaps the end of the first quarter of the year before returning to more balance in imports and exports, and more reliable supply chain flows. That is looking more and more like overly optimistic thinking.

The heavy demand for home goods and e-commerce just keeps on coming, as consumers shift their buying habits and work locations away from offices and stores. Exports from China rose 18.1% in December over a year earlier, with shipments to the U.S. up a whopping 34.5%, according to the Journal of Commerce.

JOC also reported that more Chinese factories are planning to work through the Lunar New Year. That’s unusual, but the world is in unusual times. Many of the factories need to catch up, but COVID is having an impact too. There have been new outbreaks of the virus in northern China, and the government wants to slow travel during a period when so many people drive, fly or ride buses or trains to their home areas. Mass travel poses a greater risk factor for spreading the virus.

“The space situation will continue to remain tight after Chinese New Year as there is a heavy backlog of orders and most factories already received orders up to the second quarter of 2021,” one executive told JOC.

China’s government reportedly will impose quarantines on workers at their destination cities and when they return as a way to discourage travel.

Battling port congestion

On Monday, there were faint signs of some easing of the choking congestion at the busy Ports of Los Angeles and Long Beach, which together handle 45% of all imports coming into the U.S. There were 20 ships still anchored out in San Pedro Bay waiting for a terminal berth to unload their cargo, but that’s down from the average of 30-35 waiting off-shore over the past couple of months.

Freightwaves reported last week how the Port of LA is funding a new incentive program – to the tune of $7.5 million – that is being offered to terminals for improving their efficiency over the next year. Improving truck turn times and completing “dual transactions” – when a container is dropped off and a new one picked up on the same trip into the terminal – is the goal.

One supply chain intelligence analyst shared with SSGA that some ocean carriers appear to be starting to shift some cargo deliveries further north. He cited a CMA container vessel that skipped LA/LB and went to Oakland and Seattle before returning to China. Unfortunately, the same analyst reported how carriers are now limiting the movement of containers inland – where SSGA ag shippers should have access for exports.

Shortages of chassis that have been crippling movement of containers at the ports now appears to have moved inland too. The supply chain analyst reported that there have been chassis shortages by national operator TRAC in Chicago and even Minneapolis. Most, if not all, SSGA shippers from the Minneapolis rail terminals use independent trucking companies that have their own chassis, but apparently TRAC serves some large import shippers and rail yards.

Positive note

On a more positive note, Container-news.com reported recently that the Federal Maritime Commission (FMC) is ramping up its verification of allegations that come ocean carriers are refusing to carry export cargo during this period, which could be construed as a violation of the U.S. Shipping Act.

FMC Commissioner Carl Bentzel said that the commission is independently examining information that the steamship lines “in their haste to get boxes back to Asia for (U.S.) imports have not been paying attention to their obligations to provide services to our exporters.” He noted the commission has the authority to levy penalties if appropriate.

SSGA joins letter to Biden team regarding ag transportation priorities

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By Bruce Abbe, SSGA Strategic Adviser for Trade and Transportation

The Specialty Soya and Grains Alliance (SSGA) joined an informal coalition of 49 national food and agriculture organizations that on Jan. 7 sent a letter outlining agriculture transportation priorities to the transition team of President-elect Joe Biden and Vice President-elect Kamala Harris.

The joint statement laid out for the incoming administration recommendations for federal regulations, programs and initiatives for the trucking, freight rail and water transportation sectors:

  • Trucking: Motor carrier recommendations covered rules addressing driver hours-of-service regulations overseen by the Federal Motor Carrier Safety Administration and state departments of transportation, driver shortage, harmonizing trucking weight limits on interstate highways and state roads, and more.
  • Rail: Recommendations included following through on steps to strengthen the Surface Transportation Board’s ability to address needed rail competition, meaningful rail rate reform and shortcomings posed by current exemptions to STB regulatory oversight.
  • Water: Recommendations included continuing federal investment in infrastructure for the inland waterways system and for strengthened oversight of ocean shipping regulation by the Federal Maritime Commission (FMC).

A current critical issue for SSGA export container shippers, the coalition (which includes the National Grain and Feed Association, American Farm Bureau Federation and national commodity organizations, among many others) expressed strong support for the FMC’s investigation of detention and demurrage abuses, export container availability and container return practices by ocean carriers and terminals at the ports.

Read the entire letter here..

 

 

 

CN set to launch New Richmond, Wis., intermodal terminal

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Railroad cites SSGA in announcement of facility serving Upper Midwest

Canadian National railroad on Dec. 10 officially announced the launch of its new inland distribution rail terminal in New Richmond, Wis. The new multipurpose facility will include an automotive compound for finished vehicles and an intermodal container terminal to serve intermodal shippers and receivers in the Minneapolis-St. Paul metropolitan area.

The terminal is scheduled to open March 1, 2021 and will provide direct CN intermodal service to the Twin Cities market. The new service will enable customers to better serve that large consumer market and provide an alternative shipping option to a growing marketplace. The New Richmond terminal will link shippers to CN’s far-reaching three-coast network and serve a range of import and export industries, including soybeans and grain, as well as automotive and finished consumer goods and forest products.

The Specialty Soya and Grains Alliance, including its members based in western Wisconsin, played a role in supporting the development of the new CN intermodal terminal, encouraging support from the railroad, the state of Wisconsin, local government officials and area export shippers.

In a press release announcing the New Richmond facility, CN quoted Bruce Abbe, SSGA’s strategic adviser for trade and transportation:

“CN’s development of the New Richmond facility will provide vital access to containers for agricultural exporters to meet customer demand in Europe and Asia,” Abbe said. “Competitive container shipping is vital for American agriculture to serve the growing global consumer market for high value, specialized grain, soy and food ingredients. Intermodal rail service also offers the additional environmental and transportation cost reduction benefit of helping reduce long distance highway truck traffic that now is extensively hauling inbound international container freight from Chicago to the Twin Cities. We are hopeful this new facility will further solidify the Twin Cities and western Wisconsin as a major regional transportation logistics hub.”

According to the release CN’s presence in Wisconsin includes:

  • Capital investments of approximately $970 million in the last five years, including $100 million in 2020
  • Approximately 1,413 employees
  • 1,428 railroad route miles operated
  • Community partnerships totaling $165,000 in 2019
  • Local spending of $240 million in 2019
  • $21 million in cash taxes paid in 2019

“CN’s new intermodal terminal in New Richmond will be a very important asset for our state’s exporters, particularly farmers, hardwoods producers and manufacturers based in northern and western Wisconsin,” said Craig Thompson, Wisconsin Department of Transportation secretary-designee. “Our Freight Advisory Committee identified intermodal transportation as their top priority, and I want to thank everyone who worked together toward this goal.”

See CN’s full announcement here.

FMC warns ocean carriers to stop refusing U.S. exports

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Responding to numerous complaints from U.S. agricultural exporters, including members of the Specialty Soya and Grains Alliance (SSGA), about shipping delays or canceled bookings, the U.S. Federal Maritime Commission (FMC) is ramping up pressure on global ocean container carriers to live up to their obligations under the U.S. Shipping Act.

Awareness has been growing about the negative impact of the current global container shipping imbalance. Extraordinarily high rates and high demand for Asian exports to the United States have led some carriers to send empty containers back to Asia for the lucrative head haul, rather than to inland U.S. for lower-revenue export shipments.

SSGA first drew attention to the growing problem in a news release in late October. The Agriculture Transportation Coalition (AgTC) has further put the spotlight on the issue, sending reports of delayed shipments, canceled bookings and denied new bookings – even months ahead of time – from ag shippers nationwide.

Last week, FMC commissioners Carl Bentzel and Daniel Maffei sent a letter to the World Shipping Council, which represents the leading international ocean carriers, expressing concern about reports of carriers refusing to accept export bookings.

“We recognize that operational changes to ocean carrier scheduling have been implemented (in response to the surge in imports), but the U.S. export market should not be excluded,” the letter said. “We want to stress the point that in responding to import cargo challenges, ocean carriers should not lose sight of their common carriage obligations to provide service to U.S. exporters. We appreciate the efforts some carriers have made, but there is more than should be done.”

Read more in-depth coverage of the situation in Freightwaves and Journal of Commerce.

Crunch may last until spring or beyond

Meanwhile, forecasters keep pushing the time lag for the severe current container access shortage for ag exporters out further into 2021, predicting it will last until early or mid-March.

The impact of COVID-19 has led to a huge surge in demand for consumer and home goods, largely from e-commerce providers like Amazon and big box stores like Target and Home Depot. An estimated 60% of those goods are made in China. Major West Coast ports, notably Los Angeles and Long Beach, have become clogged with containers and chassis unable to move fast enough while ships are moored off-shore unable to unload.

Analysts say the container shortage could last until after the Chinese New Year observance, and prominent global economist Paul Bingham of HIS Markit told participants in AgTC’s Major Midyear Meeting the import surge could even last all the way through 2021.

Read more coverage of the AgTC meeting in the American Journal of Transportation.

Carriers undergo expansions

Some carriers are taking steps to expand their capacity during this time of unprecedented demand. Swiss-based Mediterranean Shipping Company reportedly has purchased 16 second-hand container vessels for $260 million, and major French-owned ocean carrier CMA-CGM reportedly is increasing its capacity by 10% on its busy Asia-Europe trades. Hopefully that will eventually spell more capacity for the Trans-Pacific.

Journal of Commerce reports that the surge in demand has led ocean carriers to up their orders for new containers, nearly all of which are manufactured in China.

Compiled by Bruce Abbe, SSGA strategic adviser for trade and transportation. Email him at babbe@soyagrainsalliance.org.

Union Pacific announces intermodal service to Twin Cities

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Compiled by Bruce Abbe, SSGA Adviser for Trade and Transportation

Terminal will connect Upper Midwest customers to LA/LB

Union Pacific railroad announced the opening of the Union Pacific Twin Cities Intermodal Terminal on Nov. 20, launching intermodal service to Minneapolis to start in January 2021.

The Specialty Soya and Grains Alliance (SSGA) and its predecessor organizations have long pursued expanding intermodal rail options from the Twin Cities and other Midwest locations to better serve more exporters. Expanded service from UP has been sought because of the potential to add direct service to the Los Angeles and Long Beach container port complexes, which provide more direct ocean service to Southeast Asia.

Union Pacific said the new service will feature domestic intermodal service between the Twin Cities and Los Angeles, expanding its customers’ reach to key Upper Midwest markets. Domestic intermodal refers to rail moves of larger, 53-foot containers, standard semi-truck size for U.S. roads, which carry cargo transloaded at the ports from smaller ocean-going containers. SSGA is inquiring to learn if UP plans to also handle inbound ocean containers at the new Twin Cities operation.

“We are excited to introduce an intermodal terminal strategically located in the heart of the Minneapolis-St. Paul metropolitan area that offers efficient access to Union Pacific’s intermodal network,” said Kenny Rocker, UP executive vice president, marketing and sales. “This new marketplace alternative will give regional shippers and receivers fast, direct and reliable intermodal service to key markets.”

Union Pacific has the largest intermodal network in North America, with the most direct services from coast to coast. It will evaluate additional service expansion opportunities into the Twin Cities Intermodal Terminal throughout 2021. More information is available in the intermodal section of Union Pacific’s website.

Container crunch could last until March – or longer

Don’t look now, but the unprecedented imbalance in the container shipping – which has led to a major shortage of containers to serve U.S. exporters – could last into March of 2021 “or longer,” some experts are saying.

American Shipper quoted consulting services who said the heavy consumer demand for container consumer goods will last through the Chinese Lunar New Year into March, although, they added, predicting the timing of the let up is very difficult.

The pressure on the ocean carriers to get containers back to Asian manufacturers as fast as possible is so acute, some carriers have resorted to temporarily suspending export bookings from North America, including food and agriculture shipments, that would add time to the equipment turn-around.

Meanwhile, the Journal of Commerce reports that French-owned ocean carrier CMS CGM announced this week it is temporarily suspending taking bookings between Asia and North Europe until the end of December because sustained heavy demand has overwhelmed the container supply chain, creating equipment shortages.

The container supply crunch has also led to congestion at the leading West Coast import destination ports of Los Angeles and Long Beach. Reports show more than 20 ships moored in San Pedro Bay waiting to unload, while more than 20 are now tied up on dock.

SSGA learned this week that Class 1 intermodal railroad has embargoed sending additional container *

Competitive Shipping Action Team meets

SSGA held most of its 2020 Annual Meeting last week, but the last session took place on Tuesday morning with a meeting of its Competitive Shipping Action Team. The virtual meeting was held prior to the Agriculture Transportation Coalition’s (AgTC) Major Midyear Meeting.

The Competitive Shipping Action Team meeting included a robust agenda that included presentations on expanded opportunities for shippers, including:

  • Russ Perdue and Gordon Graham of Canadian National Railroad on the new intermodal terminal development in New Richmond, Wis.
  • Ashley Ritteman of Valor Victoria Logistics on a new intermodal model in Shell Rock, Iowa
  • Bob Sinner, SSGA chair, on the intermodal rail service development in Minot, N.D.
  • Peter Hirthe of the St. Lawrence Seaway Authority on Great Lakes agricultural shipping
  • Nicholas Raspanti and Cory Wyatt of the Port of New York and New Jersey on strengthening ag exports service for the Midwest.

There was also a discussion by the group, which included around 35 attendees, on container access issues inland exporters are currently facing., and Peter Friedmann of AgTC joined the group for an update just prior to his organization’s meeting.