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.

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.

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.

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.

The Ocean Shipping Reform Act of 2021 (H.R. 4996) includes, in part, common carriage provisions stating that ocean container carriers may not unreasonably reject export cargo if it can be loaded safely, arrive on time to be loaded and be shipped to a location that the carrier is already scheduled to ship to.

The export handling requirements in the bill are of much interest to inland ag exporters like many Specialty Soya and Grains Alliance members.

(Look for this topic to get attention at this week’s U.S. Soy Global Soy Trade Exchange & Specialty Grains Conferece in St. Louis when Federal Maritime Commission (FMC) Commissioner Carl Bentzel takes part in a panel discussion on container shipping. The SSGA breakouts session is set for 9:45 p.m. Wednesday, Aug. 25. More information on the GTE can be found here.)

Determining what is “reasonable,” particularly in this area where the steamship lines want to be able to control their business service without such hinderances, is not always a clear picture. The Journal of Commerce (JOC), in a recent analysis story, noted the legislation essentially delegated to the FMC the responsibility to determine what patterns of export rejections or avoidance by ocean carriers shall be considered “unreasonable.”

The bipartisan legislation, co-authored by Representatives John Garamendi (D-Calif.) and Dusty Johnson (R-S.D.) seeks to strengthen FMC enforcement of container ocean lines’ responsibilities in several areas.

“If you are going to be a common carrier, if you are going to U.S. ports to be part of the stream of commerce, you need to be willing to accept some very basic rules of the road, including not unduly discriminating against agricultural U.S. exports,” Johnson said at a recent media briefing.

Container exports drop at Port of LA

Port of Los Angeles (POLA) Executive Director Gene Seroka last week delivered his monthly port performance news briefing. While July saw the United States’ largest container port continue a run of 12 consecutive months of year-over-year growth, Seroka lamented the steep decline in exports and shined a critical spotlight on the steep rise in the shipping of empty containers back to Asia.

Other notables from the briefing:

• Imports continued to grow at POLA – up to 470,000 TEU (twenty-foot equivalents, the standard measure for container volumes) in July.
• Yet loaded exports fell to only 91,000 TEU – down a whopping 27.6% year-over-year for July. That made for the lowest number of loaded exports since 2005.
• Ocean carriers shipped a record number of empty containers back to Asia – 331,000 TEU’s – up 20.4% from the previous year.
• Empty container exports are now 3 to 1 over loaded container exports of all products out of POLA.

“The largest export commodity now going out of LA is air,” said Seroka, who has long been a strong advocate for increasing U.S. agricultural exports during his time at POLA and previously as the North American president of APL shipping line.

More coverage here.

China faces congestion disruptions, too

Although it hasn’t gotten as much public recognition as the container ship congestion off the California and other West Coast ports, there is another big, congested clog of ships causing supply chain gridlock.

It’s in bulker ships parked off of docks near the Yangtze River system in China.

Spot rates for bulk shipping are also on the climb, affecting costs and availability of ships to haul U.S. commodity soybeans, corn and wheat to and from the United States’ largest customer.

Go here for more detailed coverage.

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