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.

SSGA supports Federal Maritime Commission’s investigation

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FMC to look into shipping practices that have disrupted U.S. ag exports

The Specialty Soya and Grains Alliance (SSGA), which recently voiced concern about major disruptions in the agricultural export supply chain, applauds the Federal Maritime Commission’s decision to expand its fact-finding authority and investigate ocean carrier and marine terminal practices that are leading to delays and other hardships.

The FMC is investigating whether “potentially unreasonable” policies and practices related to detention and demurrage, export container return practices and export container availability are in violation of the U.S. Shipping Act.

“The time has come to resolve the most serious impediments to port performance. …” Commissioner Rebecca Dye said Friday in an FMC statement. “The Order emphasizes I, as Fact Finding Officer, have all enforcement options at my disposal to address the crisis that exists in our major port gateways.”

SSGA also congratulates and thanks the Agriculture Transportation Coalition (AgTC) and its members in efforts to brief commissioners, members of Congress and other officials in federal and state government about practices that are greatly hindering the timely export of agricultural products, especially from rural and inland suppliers in the Upper Midwest.

Last month, after hearing concerns from its members, SSGA raised the matter that a major container ocean carrier had informed exporters that it was suspending overseas agricultural container shipments from North America. Rather than reposition empty containers to inland marketplaces such as Minneapolis for critical food and ag products, containers would immediately and directly be sent back to Asian shipping centers, forgoing any U.S. export shipments to keep up with demand for high-value consumer imports.

Besides bookings being canceled and denied, the supply chain of agricultural exports has been disrupted by lack of communication about changes in early return dates deadlines, inefficient use of free time, lack of notice and rejected cargo, as well as by extreme costs in unwarranted demurrage and detention penalty charges.

SSGA joins AgTC in calling for a prompt response and vigorous enforcement of the law in order to quickly stop the bleeding and heal the injury caused by these dysfunctional practices at a critical time for export shipments to serve overseas food-manufacturing customers.

“Our members have heard from customers in Asia that they question whether the United States and its agricultural exporters can continue to be reliable suppliers based on the difficulties of intermodal shipping today,” SSGA Executive Director Eric Wenberg said. “Ocean carriers need to work with us to solve these transport problems and get our goods back to Asian ports. The U.S. reputation of being a strong exporter of quality food to foreign customers is on the line. We have to act.”

SSGA will continue to reach out to and work with government agencies and officials and industry allies to keep these issues on their radar until they are resolved.

Competitive Shipping: Coverage of exporter challenges, FMC action

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Compiled by Bruce Abbe, SSGA Adviser for Trade and Transportation

Here are additional industry news reports and links from the past week to provide deeper background on the current crisis in the global container shipping system and the Federal Maritime Commission’s decision to investigate carrier practices at U.S. ports, particularly at the ports of Los Angeles, Long Beach, New York and New Jersey, port complexes where the import surge and congestion has been the worst.

American Shipper/Freightwaves columnist Lori Ann LaCrocco offered insights and commentary Nov. 16 on how U.S. agriculture exporters and trucking industry were urging the FMC to regulate ocean carriers. On Nov. 20, LaRocco reported on the FMC’s decision to investigate for CNBC,  noting that the FMC could assess civil penalties on foreign shippers.

Ag imports stymied

The Journal of Commerce reported on Nov. 19, the day before the FMC action was announced, how container shortages and vessel delays were stymieing U.S. agricultural exporters.

The JOC report highlighted how the clog at Los Angeles and Long Beach impacts the rest of the system: “The biggest problem is that the ships are late leaving Southern California” due to labor shortages and congestion, one terminal operator president noted, leaving the vessels often a week late getting up to Oakland for their next stop to off load and load containers.

Ron Brown, Port of Oakland Marketing and Commodities representative, explained to JOC: “With the recent surge of import cargo along the West Coast to make up for earlier blank sailings, our agriculture exporters are seeing changes in sailing schedules, and in some cases canceled books as carriers are repositioning containers to Asia.” Brown urged carriers to consider the impacts of their decisions to forego export loads to return empties to Asia on “an important sector of the U.S. economy.”

Call for D&D penalty suspension

The Agriculture Transportation Coalition, the southern California-based Harbor Trucking Association and the Pacific Coast Council of Freight Forwarders and Customs Brokers organization jointly called on the FMC to suspend detention and demurrage penalties at the ports of Long Beach, Los Angeles and New York-New Jersey until the current congestion crisis at the ports dissipates.

Containers are ‘new gold’

Shipping containers, now in short supply like never before, have become the “new gold amid a black swan box squeeze” according to Freightwaves.

Ocean carriers doing just fine, thank you

Meanwhile, earnings reports from the global ocean carriers have been coming out, and with rate increases for east-bound Trans Pacific and Asia-Europe shipments of imported boxes from Asian manufacturers hitting record levels, the ocean carriers have been doing just fine.

Carrier earnings have been forecast by one leading shipping consultancy to be the best in a decade.

French carrier CMA CMG reported this week its profits were up more than 500% in the third quarter – and the fourth quarter reportedly “looks even better”.

Israel ocean carrier ZIM reportedly crushed its all-time earnings record, with record net profit of $144 million in the third quarter, up 2,818% from the $5 million in profits earned in third quarter 2019.