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Ocean Fast Facts
In honor of the Summer Games commencing in Beijing on August 8, this month's ocean fast facts begins with an Olympic themed question:
Since 1896, which U.S. city / cities containing an ocean port have held either Summer or Winter Games?
Market Notes
Trans Pacific Peak Season Surcharges - PSS Delayed again ... and again!
As of August 1, several carriers have opted to delay the start of Peak Season yet again until August 15. A select few carriers will begin charging PSS for certain intermodal (IPI) and all water service to the U.S. east coast (AWS).
Ocean carriers had initially proposed the start of Peak Season Surcharges (PSS) for June 1 this year. Vessels remain near capacity leading up to the Olympic Games in Beijing, but the spike in inbound volumes remains manageable. A continual "spike" for shipments leading up to the implementation of PSS remains in effect. Therefore, planning ahead for shipments exiting Asia, especially for cargo that is involved with port "relay" or transshipment service at the origin, remains imperative. AIT customers who anticipate shipments during peak season are reminded to forecast as accurately possible and allow up to 10 days to pre-book at origin to ensure container equipment availability.
Speak with your local AIT representative to determine which local markets are most impacted as the height of peak season approaches. Based on the past several shipping seasons, at this stage of the year peak season surcharges would have been charged by the carriers for two months.
The proposed PSS levels are currently $320/20' $400/40' and $450/40hc, but may vary by carrier as some carriers are mitigating the charge already. More information will follow in upcoming newsletters or AIT customer alerts. As the PSS surcharges remain delayed in this never before seen market, please speak with your AIT representative to verify the current peak season surcharges.
China and the forthcoming Olympics:
Routing your Cargo around the Games
AIT would like to remind their customers that August 8, 2008 is the start of the Summer Games to be held in Beijing and surrounding areas through August 24. Booking cargo from China during this time may result in delays, as some factory closures are expected in Beijing and other cities hosting Olympic events. The cities that may be most impacted are Qingdao, Hong Kong, Tianjin, Shanghai, Shenyang and Qinhuangdao.
As of press time, the Chinese government has already restricted traffic and factory closures, but additional restrictions to prevent pollution have not been as successful as initially hoped. Please be reminded that ocean carriers and local government bodies alike will restrict the movement of cargo in ports and cities near Olympic venues into October. Additionally, shippers of hazardous cargo will be restricted altogether and cargo will either need to be re-routed or held for shipping until after restrictions are lifted. For ideas on routing alternatives during this time, please contact your AIT representative.
What's up? BAF
Believe it or not, the term "BAF," or Bunker Adjustment Factor, has found a home on the Internet encyclopedia known as "Wikipedia." Considering the rising costs of fuel and its impact on the ocean transportation chain, the topic of BAF fluctuations and increases has become a hot one!
Unfortunately, the Wikipedia definition of BAF only discusses BAF at a very high level, explaining that this charge is determined or "fixed" by carrier conferences or groups of carriers that come together to set the BAF level. In its definition, Wikipedia fails to mention that each carrier charging a BAF often has drastically different operating cost structures in place. They may also utilize various fuel indexes (such as Platt's) to determine their individual thresholds for calculating and charging BAF. BAF will remain floating in the near future and the days of included BAF or quarterly fluctuating BAF are an item of the past.
Update! Ocean Export Container and Vessel Space Availability
Ocean container availability and vessel space remains limited, especially in inland locations such as Chicago, Houston, Minneapolis, St. Louis, Denver and Dallas. Additionally, export vessels are full. In order to help ensure container availability and vessel space for your export bookings, it is recommended you allow 7 to 10 days in order to secure space for your export bookings, especially for multiple container shipments. Last-minute bookings are very difficult to secure with the ocean lines, but if you plan accordingly your chances of loading on earlier vessels improves significantly. Lastly, booking ocean shipments using LCL services rather than FCL might allow for earlier shipment options. As always, check with your local AIT office to discuss alternatives.
BOX FEE Coming to California
As reported on July 16 by the Journal of Commerce, California legislators passed a bill that will introduce a $30 per TEU charge for all containers moving through Los Angeles, Long Beach and Oakland to support transportation infrastructure and green initiatives including air quality improvement. The start date of this fee has yet to be determined and is separate from the $50 per TEU fee that will go into effect in San Pedro Bay ports in the LAX basin effective October 1.
ILWU and PMA Contract – Tentative Agreement
According to the Journal of Commerce on July 28th, The International Longshore and Warehouse Union and the Pacific Maritime Association announced a preliminary agreement on terms for a new six-year contract. The contract covers more than 25,000 dockworkers at 29 West Coast ports. The previous agreement had expired July 1 and workers had been working without a contract since that time. The agreement is subject to ratification by both the ILWU and PMA members.
Recently, the PMA had accused ILWU members of slowing productivity at the Port of Los Angeles / Long Beach. Workers had taken simultaneous coffee breaks contributing to the concern raised by the PMA. As of press time, operations at the port are reported as normal.
Liner Terms
Definition: Conditions under which a shipping company will transport goods, including the amount payable for carriage of the goods (freight) and the cost for both loading and discharge on the vessel.
Source: International Directory of Trade, 7th ed. Edward G. Hinkelman, 2006.
A note about this month's "buzz word." Occasionally, when receiving ocean rate quotations from a service provider, the customer may see rate notes or rate note disclaimers. Given current shifting economic conditions, service providers may often times include a rate notation or disclaimer that says, "Rates subject to liner terms."
This disclaimer covers the costs associated and billed by the ocean carrier to the customer. Since costs that are passed through in the course of moving ocean freight from point A to point B are ever-changing, carriers use "liner terms" in order to cover themselves in the event of alterations in ocean rate quotations.
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The Parting "Wave"
The entire AIT Ocean Systems team thanks you for a successful July 2008! We wish you a happy summer and hope your favorites "take the gold" in Beijing.
Preview September 2008 AIT Ocean Newsletter:
To Peak or Not to Peak? That is the question.
If you have any questions or comments regarding the Ocean eNewsletter,
please contact Kevin Krause from the AIT Ocean Department. |
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