Let’s go! Transportation Go! conference puts focus on Great Lakes for ag exports

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With great investments coming to the Great Lakes, the time is right to focus on the United States’ inland seas and the St. Lawrence Seaway for agricultural shipping.  

Transportation Go!, the premier conference for soybean and grain transportation and trade issues in the Upper Midwest, will take place March 3-4 in Milwaukee, Wisconsin, home to Port Milwaukee, one of the gateways to the Great Lakes and the St. Lawrence Seaway. 

With growing and emerging markets in Europe, North Africa and the Middle East, there is more than enough capacity on the Great Lakes to increase agricultural trade to those regions, and that should only grow considering: 

  • The Port of Cleveland’s Cleveland-Europe Express liner service expanded with ocean carrier Spliethoff adding a dedicated container vessel to its schedule in the fall of 2021.  

Formerly known as the Northern Commodity Transportation Conference, Transportation Go! will bring in the industry’s top stakeholders, from boots-on-the-ground commodity growers and organizations to traders and shippers of specialty crops, along with representatives from key ports along the Great Lakes and more. 

This highly engaging conference will provide the opportunity for in-depth discussions about the global supply chain and how it affects the vital movement of agricultural products both domestically and around the world. It will be an opportunity for attendees to weigh in on solution-seeking ideas and identifying priorities, whether it’s reimagining rail service in the Midwest or solving the container-access crisis. 

Transportation Go! will feature a robust agenda that includes discussion on these topics and more, including a market development and outlook panel featuring commodity organization leaders from the U.S. Grains Council, U.S. Wheat Associates and the U.S. Soybean Export Council; as well as presentations from invited leaders from the Surface Transportation Board and the Federal Maritime Commission 

Transportation Go! will take place March 3-4 at the Hyatt Regency in Milwaukee, Wisconsin. Register today at transportationgo.com. Early bird pricing is available through Feb. 8. Special hotel rates are also available through Feb. 8.  

Competitive Shipping Roundup: UP to expand intermodal; Port congestion getting worse

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

UP to expand intermodal
During a fourth-quarter stock earnings call last week, Union Pacific railroad executives announced plans for the western Class I railroad to expand its intermodal container infrastructure.    

Of keen interest to many of SSGA’s Upper Midwest shippers, UP said it will expand its recently restarted intermodal facility in Minneapolis from a “pop-up” to a full intermodal terminal. 

UP officials said the railroad will also be adding capacity to its facilities in the Inland Empire area of Southern California east of the ports of Long Beach and Los Angeles, and it will be concluding a project to install wide-span big gantry cranes at its Global IV facility in Chicago. 

Its capital investment plans also include adding more rail cars, more sidings and other upgrades. Go here for the full story. 

Port congestion getting worse
Danish global container shipping consulting firm Sea-Intelligence recently analyzed data it receives from ocean carriers and concluded there are no signs yet heading into the new year that port congestion and bottlenecks are easing up.   

The analytical firm ran the numbers and determined that 11.5% of global container shipping capacity was taken out of the market in November due to ships being parked off ports, notably U.S. West Coast ports. That was marginally better than 12.5% taken out of the market in October. Add that lost capacity to what Sea-Intelligence said was an increase of global demand by 7%, and you’ve got the crunch shipping is now experiencing. 

Sea-Intelligence CEO Alan Murphy indicated available data shows congestion issues worsening as 2022 begins, without signs of improvement yet. Go here for the full story. 

Ocean carriers post $150 Billion profit year
Bloomberg News and the American Journal of Transportation reported last week the leading ocean container carriers earned an estimated $150 billion in profits by year end 2021, thanks to extraordinary high rates for consumer goods imports. Yet reliability – ships arriving within scheduled arrival times – hovered between only 33 to 40% during the year. 

Spot rates for 40-foot containers shipped from Asia to the U.S. topped $20,000, up from $2,000 just a few years ago, and recently has been holding around $14,000. Not all shippers pay those rates, thanks to long-term contracts, but new contract negotiations will be getting underway during a period of high existing rates. Smaller importers and exporters in many countries are feeling the heat, with the situation magnified by the market concentration of the ocean shipping lines.  Go here for the detailed report. 

Not all shippers suffer the same 
Not all importers and exporters have been suffering to the same degree. Prominent shipping analyst Lars Jensen, CEO of Vespucci Maritime, told the Journal of Commerce that despite the huge delays at the delays and shut downs in some trade lanes, many of the biggest consumer product companies are reporting record profits as well – among them Walmart, Target, Home Depot, Lowes and Dole Food.   Those are companies in the center of the consumer product demand surge. Go here for the full story. 

U.S. ports report record volumes
With 2021 behind us, the United States’ main container shipping ports are reporting much-increased, and, in many cases, record container traffic for the year. The sharpest increases are in imports handled.  Exports were strong too – if you include empties among the exports. For loaded exports, including agricultural exports, the story is far different with the West Coast ports showing declines, while East Coast ports held their own or increased as well: 

  • Northwest Seaport Alliance: The jointly operated ports of Seattle and Tacoma (NWSA) saw its container traffic hit 3,736,200 20-food-equivalents (TEU) – up 12.5% from 2020. Imports were 1,554,671 TEU, up 16.8%. Exports were at 1,427,449 TEU. However, full loaded exports declined by 12.5%.  Go here for a full report. 
  • California ports: The Port of Los Angeles (POLA), the largest in the U.S., hit a yearly annual record of 10.7 million TEU in 2021 – up 13% from 2020. The Port of Long Beach (POLB), its next door neighbor and second-largest, posted a total of 9,384,368 TEU, up 15.7% and the first time it has topped 9 million TEU handled. However, loaded exports have been down nearly all year at the big southern California ports. The Port of Oakland handled 2,448,248 TEU, down 0.5% for the year. Oakland has been a focus of efforts by the industry regulators and experts to diversify incoming cargo to try to relieve congestion pressure. Go here for more information. 
  • East Coast, Gulf ports: Over on the East Coast and Gulf Coast, container traffic at region ports have also been setting records, with the story more positive for exports. The Port of Virginia in Norfolk handled a record 3.5 million TEU, up a whopping 25.2% from 2020. That included an increase in loaded exports of 11.6% to 1.05 million TEU. Loaded imports were up 27.5% to 1.68 million TEU. The Port of Charleston handled 2.75 million TEU at its terminals – up 19% from 2020, and up 13% from 2019.  Imports were up 25% to 1.29 million TEU at Charleston, while loaded exports were also up posting a 5% increase to 814,94 TEO. The Port of Mobile, Alabama on the Gulf of Mexico posted increased container cargo by 19% to a record 502,623. Go here for the full story.

Porcari addresses container crisis
John Porcari, the Biden Administration’s port envoy and head of the administration’s task force to address the supply chain crisis, recently spoke to the International Propeller Club of the United States, a major shipping industry annual event.    

Porcari covered a full range of steps the administration has and is taking to address the crisis, including a host of infrastructure investments and pressing for service improvements.    

He also addressed the problems U.S. exporters have been facing finding space for containers on ships.    

“It is not acceptable to disadvantage U.S. exporters,” he said. 

Go here for the full story. 

Transportation Roundup: Container futures coming (again); aim to ease freight rate volatility

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

A new attempt to bring futures contracts that aim to provide a tool to lessen severe ocean freight rate volatility will get underway in late February. Six freight futures contracts will be traded on the Chicago Mercantile Exchange (CME) that will provide shippers a means to hedge future freight rates. 

The six daily Freightos Baltic Index (FBX) indices will cover trade routes in the Trans Pacific and Asia-Europe trade lanes, and be used to settle the CME Group’s freight futures. 

“Importers and exporters, forwarders and shipping lines impacted by volatile ocean container rates will now be able to mitigate their freight price risk,” the Baltic Exchange said in a Dec. 16 press release. 

While the futures contracts aim to address volatility in freight rates (Trans Pacific import rates have reportedly fluctuated wildly from $4,222 to $20,586 over the past year) there is no guarantee the contracts will help drive rates back lower. There has been some easing of the high import spot rates of late. 

This is not the first-time freight futures contracts have been attempted. Investment banker Morgan Stanley launched a container futures contract effort in 2010, aided by freight forwarder TSC in the agriculture shipping market. At that time, the initiative did not gain substantial use in the market. 

For more detailed coverage in maritime media, go to Splash247 ; or here for Gcaptain.com; and here in the Journal of Commerce (JOC).  

Congestion easing outlook? Not until at least mid-2022, says Maersk
The world’s largest ocean shipping line – A.P. Moller-Maersk – forecasted last week that the container shipping’s congestion and equipment shortages will continue throughout many global markets through at least mid-2022, reports Container News. 

A variety of factors are contributing to congestion, including operational preventive measures for COVID-19; limited trucking and chassis availability in the U.S.; high demand for consumer products in many markets, including India; shortage of labor and limited port infrastructure. 

Nevertheless, the waiting time for ships at several ports in the Indian subcontinent and Middle East is two days or less, much less than Los Angeles and Long Beach, where 90 vessels were at anchor waiting to berth. 

Prominent Danish maritime consulting agency Sea-Intelligence last week also said data on congestion it has analyzed from major Alliance ocean carrier HMM indicates that congestion peaked in September 2021, then briefly improved in early October, only to climb back to a record high plateau based on a scoring system it developed.  

The data trend suggests the congestion is worsening in North America and Europe. It is likely to get worse, before it gets better – particularly over the next six weeks – if demand keeps growing to get ahead during the run-up to the Chinese-New Year, the period where manufacturing in China normally slows down. Go here for more details. 

Worth noting: A mid-2022 timeframe for congestion easing will be past the normal time frame for shippers and NVOCC freight forwarders to negotiate their contracts with the ocean carriers. 

Seattle-Tacoma ports see increased volume in November; Los Angeles on track for annual record
The Northwest Seaport Alliance (NWSA) ports of Seattle and Tacoma posted a container through-put increase of 7.8% in November, compared to a year prior.  

NWSA handled 325,604 TEU of containers, with imports up 4.6% at 133,827 TEU. Exports also climbed by 7.1% at 130,034 TEU. However, 45.3% of those were empty container exports, not loaded with freight. For the current year, NWSA’s volume has grown by 15.4% at 3,482,104 TEU overall. Go here for more NWSA coverage. 

The Port of Los Angeles (POLA), the U.S.’ largest container port, handled 811,460 TEU total in November, a decrease of 8.8% from the year before – in large part due to more smaller ships arriving with fewer containers that take almost as long as the bigger ships to unload, officials said.  

Imports dropped by 13.2% compared to November 2020. Loaded exports continued to show a decline at POLA, down 36.8% to only 82,741 TEU for the month, year-over-year. Empty containers in high demand in Asia were up 10.6% at 325,275 TEU compared to 2020. 

For the year, however, Los Angeles port is projected to set a record for containers handled. Port officials anticipate the yearly volume to reach 10.7 million TEU, nearly 13% above its previous record set in 2018. Go here for more POLA coverage. 

Empties? Having a banner year. 59% of containers leave U.S. with no cargo
Container News recently reported numbers on the explosion of empty container shipments back to Asia and the problems faced by U.S. exporters, despite all the attention being given to congestion and backlogs of ships with imports waiting to berth at U.S. ports. 

“A whopping 59% of containers left the U.S. ports unattended with goods in the first 10 months of the year,” the report said, citing MarketWatch Data. 

“The better money-making opportunity pushes the ships and shipowners to rush back to Asia with empty containers and return with loaded vessels on the ‘diamond route’ surfing ‘Richie-rich’ waves of the Asia-U.S. route.”  

The U.S. trade deficit hit $705 billion through the first 10 months of the year, up 29.7% from a year earlier. Export logistical hang-ups are part of the problem. Go here for the full story. 

U.S. shipyards invited to bid to build four hybrid river containerships to serve on Mississippi
A highly-watched, ambitious project to bring container shipping to the Mississippi River took another step forward last week when American Patriot Holdings (APH) issued a request for proposals to seven U.S. shipyards, inviting them to bid to construct four hybrid container vessels designed to move at higher speeds on the river. 

APH is spearheading the effort to establish a new container terminal under development in Plaquemines Parish, Louisiana, south of New Orleans, that would serve large ocean-going container ships; as well as unique, advanced-technology river-going container vessels.  

The design incorporates an Exoskeleton Structure to help reduce weight and was developed by Naviform Consulting and Research. It is said to be designed to operate at over twice the current river traffic speeds – 13 mph against a current of 4 to 5 mph — and has a patented, minimum wake bow to help prevent shore erosion. 

The vessels will be 595 feet long, with a beam of 106 feet and can operate at a maximum depth of nine to 10 feet. The vessels’ capacity is reportedly 1,864 TEU.  

The bids from the shipyard are due by Feb. 11, and APH anticipates awarding the construction contract by April 1. The initial four vessels are reportedly expected to begin service between Plaquemines port and a new terminal to be built in Memphis by April 2024. A second design vessel is also in the works intended to serve the river and its tributaries. 

Go here for more detailed coverage in Maritime Executive, and here in Maritime Magazine. 

‘Amazing’ transit times: From China, it’s faster to reach New York than LA
That was the headline for a feature story December 15 by Freightwaves and MSNBC reporter Lori Ann LaRocco. The lead paragraph reads: 

“Time is the most valuable commodity in the world of trade. It’s priceless. A new report out on transit times from digital freight forwarder Shifl shows the impact the massive congestion off the coast of Los Angeles and Long Beach has had on transit times.” 

Indeed, increased transit times become a huge worry for Specialty Soya and Grains Alliance member exporters trying to manage their grain and oilseed ingredient shipments to serve their food manufacturing customers in Asia and Europe.  

Go here for the full story.

Transportation Roundup: Despite signs of progress, port congestion continues

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

The container ship and container logjam at West Coast ports particularly in Southern California, is continuing despite some signs of progress. 

Port of Los Angeles (POLA) Executive Director Gene Seroka said Friday that the number of containers overstaying their time at the port had declined by 60% after the port announced a planned penalty fee – a move it has avoided implementing three times.

However, area truckers say that, while the containers piled up too long on-dock may be declining, the boxes are still piling up off-dock. Harbor Trucking Association CEO Matt Schrap told Bloomberg that containers are clogging up space elsewhere around the port and continue to use up scarce chassis needed to move other inbound containers. 

Ships backed up … way offshore
Cargo ships waiting to unload at POLA and the Port of Long Beach are still at unprecedented levels as new ships keep arriving intent on unloading freight destined for area warehouses and railroads to inland terminals that importers have designed their supply chains around.

Backed-up ships have numbered in the 90s in the last couple of weeks – some nearby in San Pedro Bay, and others repositioned 100-plus miles offshore.

Freightwaves even noted earlier this month that some ships destined for Southern California are even being held back off Japan, Taiwan and Mexico, rather than heading for SoCal.

New round of blank sailings
Perhaps more concerning to export shippers looking for containers and vessel space is word that the logjam on the West Coast is causing an rising number of blank – or cancelled – sailings and sliding sailings as ocean carriers skip ports in Asia and the U.S. in an effort to try to recover their sailing schedules.

In some ways, it’s understandable as ocean carriers want to get pack to predictable schedules, but it’s also concerning because of added limitations in trying to move containers where they need to go – loaded or empty.

The Journal of Commerce reported last week that the West Coast has been hit hardest by the new blank sailings, rising from a weekly average of 7.7 per week for the first nine months of 2021 up to 13 blank sailings in recent weeks. The article quoted the head of Sea Intelligence, a noted maritime consulting service.

“We’re not seeing the same pattern to the U.S. East Coast or on Asia-Europe,” he said.

The Japanese-owned carrier Ocean Network Express (ONE) reportedly cancelled 29 sailings in December, 22 of them to the West Coast.

Gulf, East Coast ports see opportunities
While they, too, face some congestion issues – notably trucking shortages – East Coast and Gulf ports seem to be handling the surge in imports and traffic better. There is also more growth in capacity in the works.

California’s supply chain issues open up a business opportunity for Gulf Coast ports noted a story on Mississippi Public Radio. The Port of Mobile saw container volume go up 27% in September compared to a year ago, while the Port of South Louisiana had more than 47% more tons of cargo flow through its port during the second quarter.

Last Friday, the Port of New Orleans (NOLA) welcomed the delivery of four new post-panamax gantry cranes for its Napoleon Avenue Container Terminal. The big cranes made a 15,643-nautical-mile journey from Shanghai, as part of a $112 million investment, including $49 million for the cranes’ construction and delivery, plus $63 million for landside dock improvements.

The Port of Savannah in Georgia achieved its 16th consecutive month of record growth in November, processing 495,750 TEU of containers – up 6.7% from a year earlier. Savannah has been the No. 1 export port for the U.S. at times in recent months.

Savannah is undergoing a series of expansions that are projected to increase the port’s handling capacity by 25%, reports Container News.

Last week the Georgia Ports Authority (GPA) announced in a news release Savannah will speed up its addition of 1.6 million TEUs of on-terminal container capacity by this June. The GPA board also announced it had approve a $24.4 million purchase of nine electric-powered, rubber-tired gantry cranes to support the expansion.

FMC’s Bentzel grades U.S. logistics system D+
Federal Maritime Commissioner Carl Bentzel pulled no punches when asked in an interview about the status of the U.S. shipping logistics system.

Asked by Freightwaves and CNBC reporter Lori Ann LaRocco to grade the U.S. logistics system, Bentzel said: “Regretfully, I would have to give it a D-plus, solely based on the level of congestion and price increases.”

Bentzel, who spoke at the Global Trade Exchange last August, said that the U.S. supply chain not only needs major physical improvements, but it also needs 21st-century data improvement to manage the country’s supply chain.

Data sharing is a big part of the problem today. SSGA shipping leaders have raised that issue to FMC and other regulatory agencies, noting the lack of timely, accurate information about container availability and status of shipments.    

No end in sight for demand boom
While everyone is wondering how long the congestion logjam will last, Sea Intelligence said last week that, while it sees declines in some categories of imported freight demand, it sees growth in others. Together, it doesn’t see a near term end to the demand boom in the U.S.

In fact, U.S. government data shows consumption of services is running at near pre-pandemic levels, and consumption of goods is continuing to increase.

Transportation news and analysis roundup

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Compiled by Bruce Abbe, SSGA strategic adviser for trade and transportation

According to news reports out this week, rail service to the Port of Vancouver, British Columbia, may restart this week. Vancouver, one of the most used gateway ports for SSGA export shippers, was hit hard last week when a severe rainstorm with devastating flood waters and landslides took out rail lines in British Columbia between Kamloops in the interior and the port.

Canadian Pacific (CP) and Canadian National (CN) railroad crews have been working to repair sections of their rail lines that were washed out and caused disruptions at the port.

As of Monday morning, there were reportedly 47 ships at anchor off the Port of Vancouver, including six container ships, 12 coal ships and 19 grain ships.

Other updates from the Gateway Ports: 

Rupert: The Prince Rupert Port Authority posted on LinkedIn that the northern container port served by CN Railroad has not been impacted by the extreme weather and has remained fully operational. Moreover, the port said its terminals have the capacity to handle additional cargo. CN brings containers to and from Chicago, Indianapolis and western Wisconsin, including small container yards in Chippewa Falls and Arcadia, as well as a brand-new CN intermodal facility in New Richmond that serves the Twin Cities market.

NWSA: According to a weekly Gateway Performance and Outlook report last Friday from the Northwest Seaport Alliance, there were 11 ships at anchor or drifting in Puget Sound waiting to berth to unload and load cargo. That’s down slightly from the 14 or 15 ships that were waiting, according to reports from the previous two or three weeks. All 11 were waiting for a slot at the Seattle port’s busy T-18 terminal, which serves several ocean carriers. Other terminals, including Husky, Washington United and PCT in Tacoma and T30 in Seattle, reported no ships waiting for those berths.

Friday’s report also said that, as of Friday, there were 85 ships at anchor or drifting off Los Angeles and Long Beach and two off the Port of Oakland.

Los Angeles/Long Beach: News reports say that implementation of the somewhat controversial penalty fees on ocean carriers for import containers that overstay their allotted time at the Ports of Los Angeles and Long Beach was postponed last week – apparently because the threat of them is working.  

Port of LA Executive Director Gene Seroka said there has been progress in moving more overdwelling import containers off the terminals. The fees would start at $100 per container and increase daily for containers that dwelled on terminals nine days or more for trucked containers and six days or more for those to be moved via on-dock rail. The number of overstayed truck-moved containers dropped by 32%, and rail-moved containers dropped by 67% between Nov. 1 and Nov. 16.

The fees, which still could be implemented, were to be assessed to the ocean carriers. Carriers threatened to pass them on to shippers, and shipper interests have asked the Federal Maritime Commission (FMC) to clarify if any passed-on fees would fall under the FMC’s interpretive guidelines for detention and demurrage fees use. It could get thorny for ocean carriers to pass the fees on in situations in which import and export shippers don’t have ready access to moving their containers.    

Rail service improves
Container rail service from congestion-plagued BNSF Railway and Union Pacific Railroad to and from the West Coast has apparently improved, and the two big Class I railroads are no longer “metering” or restricting the number of containers they move inland to the U.S. Midwest.

“Additionally, our rail network and terminals are fluid with sufficient capacity to move more volume,” a Nov. 10 UP statement said. “Union Pacific is encouraging our customers to ship more IPI (international ocean containers shipped inland) volume from the West Coast ports by rail as a means of easing port congestion.”

There have been reports, disturbing for ag export shippers, that the ocean carriers and railroads have begun to restrict the number of IPI containers they will allow to go inland. Read more information from the Journal of Commerce.

How long?
Despite what any expert forecasts say about how long the supply chain congestion crisis will last, no one really knows with any certainty. But differences of opinion are cropping up.

Some analysts on industry virtual meetings have said the delays and capacity crunch could well last all the way through 2022 and into 2023 (some say even longer). However, it’s not a given that the congestion will last that long.

At the Global Shippers Forum held last week in Zurich, Global Shippers Forum Director James Hookham posed that rising consumer inflation, coupled with national central banks’ expected moves to raise interest rates, might not slow down the surge in demand for consumer goods shipped from Asia. Just about every shipping line is predicting that there will major congestion, he acknowledged, saying, “And why wouldn’t they when they are collectively expecting to turn profits exceeding $150 billion this year? But there is good reason to query the hype of continues congestion.”     

The carriers are or will be engaged in contract negotiations soon with large shippers. More details at Journal of Commerce. 

Respected intermodal analyst Lawrence Gross, president of Gross Transportation Consulting, told the American Journal of Transportation that he sees a migration of ocean carrier sailings and  cargo from the busy dominant U.S. ports of Long Beach and Los Angeles to East Coast ports. Gross said he is seeing signs that congestion will east.

What about rates?
Another prominent international research and data firm, Denmark-based Sea Intelligence, is forecasting that higher rates for container shipping could continue for as long as 18-30 months before returning to normal. They based their examination on historical patterns and data from the composite China Containerized Freight Index. Container News has more detailed coverage.

Impact on American farms 
The continued harmful impact of the supply chain and port service crisis on key sectors of the U.S. economy, particularly on U.S. agriculture exports, is not lost on industry leaders. The New York Times carried a major feature story by on Nov. 14 about how the “Crunch at the Ports May Mean Crisis for American Farms.” You can read the full story here.

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

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By Bruce Abbe, SSGA Strategic Adviser for Trade & Transportation

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

Here are a few highlights of the package: 

  • A five-year reauthorization of the recurring Federal Highway Bill, funded at $273 billion for roads and bridges, the highest allocation in decades. 
  • $550 billion in new spending, including $110 billion for roads, bridges and other major infrastructure projects. 
  • $17.4 billion in new spending for inland and coastal waterways and ports infrastructure. 
  • $66 billion for freight and passenger rail. 
  • $25 billion for airports to improve runways, gates and multi-modal connections. 
  • $73 billion for upgraded electrical power. 
  • $65 billion for broadband access expansion. 
  • $55 billion for clean water 
  • $5.7 billion for electrical vehicle charging stations 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Not revenue. Not profit. But rise in profit. 

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

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

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

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

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

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

Despite continued congestion, ports actually handling more cargo

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Loaded exports continue to drag at key West Coast ports

Hopes are on the rise that new efforts by the container ports and the supply chain partners that serve them, under pressure from the Biden Administration to adopt 24/7 or some level of increased hours of operation, will begin whittling back the backlog of containers stuck on the docks and ships parked offshore waiting to unload. However, the prognosis is not positive for a quick turn-around.

There was an estimated $22 billion worth of cargo stuck on container ships off the Southern California ports of Los Angeles and Long Beach less than a week ago, with 71 container ships waiting to unload on Oct. 20 with an average wait time to berth of 13 days, according to a Freightwaves report.

Meanwhile, up north at the Northwest Seaports Alliance-operated ports of Seattle and Tacoma, a backlog of ships parked offshore in Puget Sound reached 20 vessels. The Pacific Northwest ports, though, like the Southern California ports, report that they are handling more and more cargo, despite the congestion.

NWSA reports it handled 330,517 TEU of containers in September, up 7% from a year ago. Total volume from January through September was more than 2.8 million TEU, up 16%.

There are some wrinkles in the stats though.

NWSA, according to Container News, reported full import containers up 22.5% to 1,101,725 TEU. Yet, loaded exports declined by 11.4% to 522,767 TEU. The biggest shift was in shipment of empty containers back to Asia. Those hit 611,954, the largest increase by almost 50% at what traditionally have been strong U.S. export ports in past years with near balance in imports and exports.

More Tools Needed?

The Biden Administration successfully pushed labor and the Southern California ports to begin 24/7 hours of operation, while at the same time pressing major retail business leaders to keep warehouses open extended hours. Port of Los Angeles Executive Director Gene Seroka reported that there have been some improves in through-put already.

Other industry observers question if 24/7 operations can work with the shortage of truckers and the need for more rail capacity to move containers quickly inland and back. An American Journal of Transportation analysis notes Biden is tackling “the supply-chain crisis with few tools” while the “clock is ticking.”

The power of the U.S. government has some limitations to fix what is predominantly a private-sector program. Those limitations, particularly in the powers of the Federal Maritime Commission (FMC) are exactly what is on the minds of agriculture, manufacturing and retailing shipper interests – including SSGA.

The Ocean Shipping Reform Act, introduced in Congress, seeks to beef up FMC’s authority and oversight resources and capabilities.

‘Empties’ keep volume up

Despite chronic shortages of trucking availability nationwide and a growing imbalance in import, export and empty containers shipped from the West Coast, some industry analysts contend the U.S. global supply chain is not broken and, in fact, is handling more containers than ever before.

Freightwaves reported last week that the Port of LA had it’s busiest September ever, handling 903,865 TEU, up 2.3% from a year earlier, and 8,176,917 TEU for the year, up 26%. Its sister, the Port of Long Beach had its second-busiest September, handling 748,472 TEU for the month and 7,094,849 for the year, up 24.2%.

While loaded imports in September were flat at 468,059 TEU at LA, exports dropped a whopping 42% to just 75,714 TEU, Seroka and the port reported. Seroka, long a strong advocate for increasing U.S. ag exports, said that was the lowest number of exports handled in a month since 2002. Empties shipped out make for the largest gains, up 28% to 360,092 TEU. Long Beach saw imports decrease 8.7% in September compared to a year earlier at 370,230 TEU, and exports shrank 1.6% to 110,787 TEU.  Empties were 267,456 TEU.

Jason Miller, a supply chain logistics associate professor at Michigan State University, however, contends that America’s supply chain is actually performing well – given the extreme circumstances that exist now.

He points out in a separate analysis piece in Freightwaves that America’s warehouses, where all the containers handling imports move to, are concentrated in just a small number of select markets that are currently preferred by importers – places like Southern California, inland cities such as Chicago, Kansas City and Dallas, as well as near East Coast port population centers.

The lack of trucking, related lack of chassis and shortage of workers in those particular markets, he contends, coupled with a whipsaw change in consumer demand, are largely to blame for the congestion dilemma the country is experiencing. He also cites data that show retail sales and movement of goods is up. The supply chain – at least the import supply chain – is not broken, Miller contends.

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

Expanded maritime container capability now available at Duluth terminal

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The Duluth Seaway Port Authority, an SSGA member, announced last week that Duluth’s Clure Public Marine Terminal now has the ability to handle significantly larger volumes of international shipping containers transported by vessel, in an expansion that will augment existing road- and rail-based intermodal container service under the Duluth Cargo Connect banner.

Through recent investments in infrastructure and capabilities to ensure homeland security compliance, Duluth now becomes only the second United States port on the Great Lakes-St. Lawrence Seaway System capable of handling containers by direct water connection and the only such port west of Cleveland, Ohio.

“Considering the significant congestion and delays occurring at some coastal ports, we provide a fluid alternative for containers to move inland and bypass those coastal bottlenecks,” Duluth Seaway Port Authority Executive Director Deb DeLuca said.

As North America’s furthest-inland seaport, Duluth is an attractive, uncongested choice for shippers looking to move containerized cargo to and from America’s heartland.

Approximately 800 vessels and 35 million short tons of cargo move through the Port of Duluth-Superior each year, making it the Great Lakes’ largest tonnage port and one of the nation’s top 20.

Read more here.

Competitive Shipping Roundup: Extended hours are worthy goal, but congestion is no easy fix

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By Bruce Abbe, SSGA Strategic Adviser for Trade and Transportation

The search for answers to the compounded, system-wide, congested global container shipping system continues, and last week’s news and developments point to some concerted efforts but no quick, easy fixes. Here’s a look:

White House pushes expansion of hours
In response to complaints and pleas from shippers and their organizations, including SSGA, the Biden Administration in August created a Supply Chain Disruptions Task Force in that includes senior executive staff at the departments of transportation, agriculture and others to work with industry on solutions.    John Porcari, a former head of the Port of Baltimore and industry veteran, was tapped as a port envoy for the task force.

Porcari reportedly told a group of exporters last week that he will be working to expand operating hours at more ports, a strategy that started at the ports of Long Beach and Los Angeles last month and looks to be getting a bit of traction at the PNW ports and others. He’s urging large volume retail importers, ports and terminals to expand their operational times.

Expanding operating hours at the ports and dock terminals – ideally to 24-7 like other ports around the world – won’t provide a quick solution some, industry experts advised the Journal of Commerce (JOC) and the Agriculture Transportation Coalition’s annual virtual meeting last week. Terminal operators at LA/LB claim they have been offering truckers and import retailers incentives to use the after-hours gates opened last month, but few of them are as of yet doing so. Experts speculate that the warehouses are simply full and not operating after hours, so the truckers don’t have enough places to move the containers.

The space availability and congestion issues are more systemwide, particularly so on the land side and inland U.S. Rail service to inland warehouses and distribution centers in the Midwest from the West Coast is also being restricted, or staged, by the Class I intermodal railroads. There are space limitations at their inland container yards where, again, the containers too often are sitting on chassis and not moving off to warehouses.

Ed DeNike, president of SSA Containers, the largest port terminal operating company in the U.S., told the AgTC meeting that it’s not a terminal issue now.  They have been operating longer hours with little support from truckers so far. West Coast terminals are full of import containers that aren’t moving.

“Just pick up your containers,” he said.

Higher container dwell times at rail and port terminals, backed-up vessels bunched at the main gateway ports, trucking and chassis shortages and labor shortages at various points including warehouses are all contributing to the compounded congestion problem. It will take extended operational hours at critical bottleneck points throughout the system to make it flow faster.

‘Double-Flex Solution’
One incremental solution at the ports some experts have been advocating would be to move to “double-flex hours,” which would open the gates two or three hours earlier for the truckers during day shifts, instead of pushing night and weekend shifts when other parts of the system aren’t yet running.

The International Longshore and Warehouse Union (ILWU) says it is ready and supports 24-7 and extended hours. Yet the current contract between the ILWU and the Pacific Maritime Association employers group reportedly does not allow for double-flex at container terminals.

ONE announces new Port of Oakland service
Speaking at the AgTC annual meeting, Jeremy Nixon, president of Ocean Network Express (ONE), the large consolidated Japanese-owned container carrier line, announced that ONE will be reinstating a regular, direct service between Asia and the Port of Oakland, a key U.S export port.

The regular service will start November 15, and until then, ONE will be having other ships stop at Oakland. Oakland has suffered recently from a decline in ocean carrier service, while LA/LB has been seeing increases.

Meanwhile, John Wolfe, president of the Northwest Seaport Alliance joint operation for the ports of Seattle and Tacoma, said NWSA will also be extending gate hours and is adding needed container storage space at nearby terminals and is looking for additional space. NWSA is a key gateway for many SSGA export shippers.

Ocean carrier profits – wow!
In the midst of all this system congestion, ocean container carriers say is the result of an unprecedented surge in trade from Asian manufacturing companies North America and Europe (translation: not their fault) they are rolling in the revenue like never before.

London-based global shipping consultancy Drewry provided its latest industry revenue estimates last week, and according to JOC, Drewry says container shipping’s pre-tax profits for 2021 and 2022 could be as high as $300 billion.

“This extreme profitability is built on an incredible full run of pricing … tight space, strong demand … and port congestion in Asia and at destination ports in the U.S. and Europe has driven spot rates to new highs almost every week,” the report said. “Contract rates have followed spot rates and are far above pre-pandemic levels.

Drewry noted in its Container Insight Weekly, that the $300 billion in earnings makes for “an extraordinary war chest to play with.”

Competitive Shipping Roundup: Container port congestion hitting both sides of Pacific

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By Bruce Abbe 

It’s not just a West Coast or even just a U.S. problem.    

The port congestion clogging in the global container shipping pipeline looks every bit as severe off the ports of China as it does off the largest U.S. container ports. 

A little more than a week ago, Freightwaves reported that 61 container ships were at anchor or drifting in San Pedro Bay off the ports of Los Angeles and Long Beach, the largest container ports in the U.S. which handle 50% of all imports coming into the U.S. That shattered the previous record. Later last week, that total climbed briefly to more than 70 waiting vessels. The Northwest Seaport Alliance has also reported recently that 15 container vessels were anchored in Puget Sound waiting to berth at the ports of Seattle or Tacoma. 

The same thing is happening on the other side of the Pacific Ocean. As of Friday, 154 container ships were waiting to load cargo destined for the U.S. and elsewhere off China’s big container ports of Shanghai and Ningbo, Freightwaves reported. There were 242 container ships waiting for berths across all the ports of China. It’s further indication that trans-Pacific container shipping demand has overwhelmed port capacity, Freightwaves senior editor Greg Miller wrote. 

“While the number of ships in the world is finite, operators can shift ships to wherever they make the most money. And the trans-Pacific is now a particularly lucrative trade:  Spot rates (for imports to the U.S.), including premiums, can top $20,000 per forty-foot equivalent unit (FEU),” the publication noted. Landside capacity for rail, trucking, terminals, warehousing and storage, however, is limited on both sides of the Pacific. 

Meanwhile, U.S. exporters continue to struggle to find container bookings, deal with delayed bookings or rolled cargo, and longer transit times to serve customers overseas.   

Return to blank sailings
The backlog of ships on the trans-Pacific has gotten to the point that the three big ocean carrier alliances, made up of the top 11 steamship lines, are reportedly now bringing back canceled or “blank” sailings – simply because the ports can’t handle the added cargo they’d bring. 

Container News reported Monday that The Alliance (made up of carriers Hapag-Lloyd, ONE, Hyundai Merchant Marine, and Wang Ming) announced 20 cancellations; the 2M alliance (Maersk and MSC) are planning 14 cancellations; and the Ocean Alliance (CMA-CGM, Evergreen and Cosco-OOCL) announced six cancellations. About 80% of the cancellations will happen in the Asia-North America and Asia-Europe trade lanes. 

Extended hours at ports
Cargo shippers and the U.S. Department of Transportation have been engaging the industry, calling for the U.S. ports to adopt longer hours of operation, eventually moving to 24/7 operations like exists elsewhere globally. 

The ports of Long Beach and Los Angeles announced September 17 they are about to make such a move. Mario Cordero, executive director of the Port of Long Beach said Long Beach will take its first steps toward 24/7 operations by maximizing its nighttime operations. Port of Los Angeles Executive Director Gene Seroka announced POLA will expand weekend operating gate hours. Both called on marine terminal operators at their ports to incentivize the use of all available gate hours, especially night gates, to reduce congestion and maximize cargo throughput capacity.  

‘Pleading with importers’
The Journal of Commerce recently published an analytical piece that shed light on how the problems are becoming more acute because importers are not moving their freight fast enough from inland and port terminals to their warehouses. A shortage of labor and, at times, space at the warehouses are backing up congestion through the supply chain to the ports. Importers are leaving containers on chassis longer, to the extent there is a major chassis shortage inland at Chicago, Kansas City and Minneapolis and at the coasts.   

“The bottlenecks in the inland supply chain have made it extremely difficult for terminal operators to plan their operations each day”with ship schedule uncertainty adding to the problems. Vessel on-time performance to the West Coast was only 15.7% and only a little better – 20.9% – on the East Coast in July, JOC reported. 

‘Why are supply chains so messed up?’
If you want it all in a nutshell – or to be able to tell everyone else what is going on when they ask you, ”Why are Supply Chains So Messed Up?” – you might want to check out an opinion piece just out by Craig Fuller, CEO of Freighwaves.     

Go here for his insightful comments. 

Vancouver hits volume record
While supply chains seem to face ever more disruptions and delays, the fact is there is still a lot of freight moving through the system to meet high demand. 

The Port of Vancouver, British Columbia, a key gateway container port serving many SSGA exporter members, announced it set a record for the first half of the year clocking 1.9 million TEU in containers handled, up 24% from the pandemic-reduced first half of 2020 and still 155% higher than 2019. While imports through Vancouver were up 20% over 2020, exports were up 29%. Go here for the full story. 

Bruce Abbe is SSGA’s strategic adviser for trade and transportation.