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.

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.

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

Sky rocketing rates and demand for container imports to the US leading to service challenges on the Trans Pacific

The transportation news media over the past week has continued to cover the latest trends in container shipping, most notably the ongoing surge in demand and sky rocketing rates for high value imports on the Trans Pacific trade lanes coming into the U.S. While U.S. exports haven’t yet seen the rate increases, that surge had led to extraordinary pressure on ocean carriers to get containers back to Asia – China in particular – and it is starting to have a downstream impact on service for exporters.

Import surge creating imbalances
Two industry experts told Freightwaves news site last week that bookings of imports into the U.S. are up nearly 90 percent, year-over-year compared to 2019. The combination of projections of reduced trade due to COVID-19 leading carriers to cancel sailings early in the year – when, in fact, there was a surge in demand for personal protection equipment, E-consumer and health products – has led to the high rate increases and bulge in demand during the fall peak season.

The ocean carriers are reaping high profits now on imports, but the two experts predicted the current freight boom will be followed by a ‘substantial dip.’ Go here for the full story.

Container shortages rising – Freight forwarders advised the Journal of Commerce (JOC) that container shortages are “intensifying” across much of Asia due to the demand in China for shipping “high-yield” trans Pacific freight to North America. While there are struggles to find containers in some locations, there are reports of carriers loading empties on ships in various locations to reposition them to China. Go here and here for full related JOC stories.

US exporter shipment schedules pinched
The drive by ocean carriers to get containers back to China has even started to affect U.S. export shipping schedules.

At least one Specialty Soya and Grains Alliance (SSGA) exporter reports his company has had containers sitting at ports ready to be loaded for shipment to a non-China Asian destination rolled to a later vessel because the carrier is loading empties for direct voyage to China. That will mean at least a two-week delay in a food ingredient delivery to a customer. Needless to say, the shipper is not happy.

Will governments intervene?
The imbalances in service, high rates and space shortages following earlier cancelled sailing by the ocean carriers has now caught the eye of government regulators.

Chinese regulators were first reported to look into what has been going on, and reportedly suggested it’s time for the ocean carriers to add more capacity back into the trade lanes and “less aggressively” raise rates on the trans-Pacific. Go here for a more detailed story by JOC.

The volatility in rates and service has also caught the eye of the U.S. Federal Maritime Commission (FMC).

Hellenic News reported late last week that the FMC is reviewing ocean container shipping for possible non-competitive practices after east bound trans-Pacific rates recently hit record levels. The impact of cancelled or “blanked” sailings is a key focus of FMC. Globally the carriers reportedly cancelled more than 400 sailings between February and May in the early stages of the pandemic. Go here for the full story.

Freightwaves also provided more insights after reporting that China’s ministry of Transportation and Communication questioned ocean carrier representatives on Sept. 10. That meeting caught the industry by surprise, noted one expert. At least one ocean carrier has announced it is withdrawing a planned general rate increase (GRI).

One expert told Freightwaves that, unlike years past, when high rates led to over-capacity then lower rates, things may be different now for two reasons. The dozen leading container ocean carriers are now operating in just three major vessel-sharing alliances. That means it’s easier for the carriers to engineer capacity cuts, he speculated. The second reason, he said, is the practical reality that it will be difficult for the carriers to “stop blank sailings.” While the carriers might need to find some way of meeting new stringent rules if the Chinese institute the, it will be difficult for the carriers to give them up, “…because you’re talking about taking away the only thing that has worked for the carriers in the past 10 years.” Go here for the full story.

Katie Farmer named president and CEO of BNSF Railway

Congratulations to Katie Farmer, who last week was named president and chief executive officer of BNSF Railroad, succeeding the retiring Carl Ice, who had been with BNSF for 42 years of his career.

Farmer becomes the first woman to head a U.S. class one railroad, and a key railroad serving many export shipper members of SSGA.

“I have had the pleasure of working with Katie and am impressed,” said Bob Sinner, chairman of SSGA’s Competitive Shipping action team. “Katie is customer-focused and has taken the time to listen and consider alternative solutions to our container issues in rural America. Her new promotion is well-deserved and SSGA looks forward to working with Katie.”

Farmer is a longtime member of the BNSF leadership team, most recently serving as executive vice president of operations.

During his tenure, Ice led a team that orchestrated the merger and integration of the Burlington Northern Railroad and Santa Fe Railroad in 1995. Since then, the company grew to become the largest class one railroad in North America. Ice will retire at the end of 2020, but remain on the BNSF board of directors.

Go here for the BNSF announcement.

Largest container ship yet calls on East Coast ports

While it may not be as big as the huge 18,000 twenty-foot-equivalent (TEU) container ships or the mammoth 24,000 TEU ships that are starting to ply the Asia-to-Europe trade lanes, the CMA CGM Brazil at 15,072 TEU’s is no small potato among container vessels.

Last week the Brazil became the largest container ship to call on East Coast North American ports, and it made the news and captured public attention at each stop.

Halifax, Nova Scotia was the first stop, steaming in after departing from the Port of Colombo.

New York-New Jersey was the second stop on Sat., Sept. 12, where photos captured it steaming under the Bayonne Bridge to dock at APM Terminals.

The Port of Virginia in Norfolk was next, followed by Savannah on Friday morning. It pulled into the Port of Charleston Sunday, and was set to leave late Monday, for a return voyage to Shenzhen, China.

Go here and here for more coverage of the New York and Charleston news.

By Bruce Abbe, SSGA Strategic Adviser for Trade and Transportation

Major transportation legislation awaits action in Washington

As the country closes in on one of its most contentious national elections a little more than two months from now, a number of key issues await action in congress and will require bipartisan support to get approved. Among them are transportation and infrastructure bills that are critical for agriculture and trade.

The Specialty Soya and Grains Alliance (SSGA) recently joined with a host of other mainstream national and state agriculture organizations in joint communications to Congressional leaders urging passage of a Highways omnibus bill as well as a 2020 version of the Waterways Resources Development Act (WRDA).

Highways bill
On Aug. 6, more than 100 ag organizations, including SSGA and the National Grain & Feed Association (NGFA), sent a joint letter to the U.S. Senate Commerce Committee urging the Senate to move forward on a highways transportation package that spelled out a number of key concerns and needs of ag shippers. Funding for the current highway bill expires on Sept. 30.

The ag working group letter identified a number of key needs for agriculture shippers. The Agriculture Exemptions to Hours-of-Service rules, first approved in in 1995, “remain vitally important for the food and agriculture industry.” The coalition urged incremental changes to the hours-of-service ag exemption and further clarifications in the related eligible agriculture commodity definitions to enhance the needed flexibility the rules offer, including adoption of a 10% “load-shift” tolerance for truckers hauling bulk good and maintaining current trucking minimum financial responsibilities for insurance purposes.

Go here to view the joint letter.

The full U.S. House approved its version of the highway bill, H.R. 2, the Invest in America – Moving Forward Act of 2020, and reported it to the Senate on July 20. The vote was 233-188.  Go here to view a summary overview, details and actions from Congress.

Waterways bill
On July 29, the U.S. House of Representatives unanimously passed H.R. 7575, the Waterways Resources Development Act (WRDA) of 2020. SSGA joined more than 20 other national agriculture organizations in supporting passage of the bill.

The House bill included two key priorities for agriculture and other waterways, ports and inland river shippers – full use of the Harbor Maintenance Trust Fund (HMTF) dollars (rather than holding or diverting them for other uses) and an increase in the federal share of funding for inland waterways projects.

The legislation, still awaiting consideration in the Senate, would allow access to the current $9 billion plus balance of unused HMTF funds. The bill also would change the cost-share formula now used for funding inland waterways projects from the current 50% general revenue dollars and 50% Inland Waterways Trust Fund (IWRF) dollars, which are raised from barge fuel taxes paid by commercial uses of the inland waterways, to 65% general revenue and 35% IWTF.

Go here for coverage from NGFA, and here for a more detailed report from the National Association of Counties.

Go here to view the agriculture organizations joint letter.

Shippers eye Port of Montreal shutdown as longshoremen launch general strike

The Port of Montreal is a key gateway for North American trans-Atlantic container shippers, including U.S. ag exporters in the Upper Midwest that have access to rail service to Montreal by Canadian Pacific and Canadian National railways.

Now, a rolling series of strikes by union longshoremen at Montreal has gotten more contentious. On Aug. 10, the port shut down 1,100 workers of the Canadian Union of Public Employees and 150 workers from the International Longshoremen Association joined in a general, indefinite length strike when negotiations broke down. The CUPE has held a series of temporary strikes over the past six weeks.

According to reports, some ocean carriers have begun diverting incoming container ships to other east coast ports, while keeping an eye on the negotiations. Hapag-Lloyd is reportedly shifting the port call of its Detroit Express vessel from Montreal to Saint John in New Brunswick, and at least two MSC vessels skipped Montreal, going from Halifax direct to New York-New Jersey.

Go here for more detailed coverage.