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Ocean Fast Facts
This month's Ocean Fast Facts comes in the form of a multiple choice challenge.
North American container ports are represented within three countries: Canada, Mexico and the United States. Which of the ports below represent the top port in each of these three countries in terms of container volume (TEU) during 2007?
- Montreal, Veracruz and Los Angeles
- Halifax, Altamira and Long Beach
- Vancouver, Manzanillo and Los Angeles
- Vancouver, Puerto Vallarta and New York
Where is the Peak?
By now, the rush to get holiday goods to the shelves of stores across North America in time for "Black Friday," or the Friday after Thanksgiving, would have been in full swing....or even passed, depending on the destination in the US. However, the continued volatility in the global markets has retailers and consumers alike planning on conservative spending this holiday season.
So, what does this mean for Peak Season 2008? Well, there hasn't been any true "peak," as witnessed during the past several shipping seasons. Additionally, consumer goods that often move more steadily throughout the year, such as electronics and furniture, have seen a decline as consumers have significantly cut down on spending. Additionally, the credit crunch relating to the housing market has put a steep decline in the volume of home improvement and housing related commodities.
Last month, US retailers saw their weakest September in years. Several carriers have suspended Peak Season surcharges altogether and some are only charging a very minimal charge, especially for vessels into the US east coast.
Several large ocean carriers are still reporting vessels from Asia to the US to be at or near capacity as larger carriers are cutting capacities in the US Trans Pacific eastbound trade lanes. This is due to carriers pulling capacity in the Asia to US trade already for the winter slack season, which typically follows on the heels of the holidays. Some carriers are not planning to add that capacity back in 2009, as the 2008 ocean shipping season has experienced a 7% drop in containerized volumes.
The New World Alliance carriers consisting of APL MOL and Hyundai are reducing capacity by 16% while the CKYH partner carriers consisting of Hanjin, K-Line and Yang Ming are nearly matching their capacity reductions by 15%. Other carriers such as Hapag-Lloyd, NYK and OOCL, which are part of the Grand Alliance partner consortia, have not yet announced capacity cuts but will most likely plan them as slack season approaches.
While tumbling rates are being reported on the Asia to Europe trade lanes, the carriers have made capacity reduction attempts in order to match the current demand in that trade lane. It appears ocean carriers are trying to proactively pull capacity in the Asia to US lanes to minimize losses and consequently major rate cuts on a trade lane which remains less profitable than between Asia to Europe.
Source: http://www.trafficworld.com/newssection/ocean.asp?id=48079
USA Ocean Exports - Are the tides changing?
WOW! What a ride the past year has been for ocean exports. Equipment and vessel space availability since late summer of 2007 has been quite limited. Much of this was driven by the stronger foreign currencies in Europe and Asia versus the US dollar. In the past few weeks, it seems equipment and space availability is becoming more readily available as ocean carriers are experiencing declining volumes for exports to Asia and Europe. Even during this time, some carriers remain at or near full capacity.
Keeping these factors in mind, customers should still allow ample booking time (between 7 to 10 days) to ensure space and equipment are available. Please be mindful when requesting
rates for special equipment such as open-tops, flat racks and refrigerated containers that they remain in limited supply. 20' refrigerated equipment remains especially challenging to find, as the demand for refrigerated containers remains strong. Please be sure to contact your local AIT representative with any export questions. AIT offers a plethora of weekly direct carrier and co-loader sailing options to global destinations!
Clean Truck Fees delayed at the Port of Los Angeles / Long Beach
Effective October 1, the ports of Los Angeles and Long Beach were to begin collecting a new local-based fee for imports and exports delivered by truck into the ports terminals. The fee will be assessed to ensure the development of environmental infrastructure projects such as subsidizing costs to purchase trucks that meet the emissions requirement of the clean trucks initiative in the Los Angeles Basin. The official start up date has not yet been finalized due to computer programming issues. Once it goes into implementation, the fee is going to apply as follows:
| LCL Export |
$3 W/M |
| LCL Import |
$2 W/M |
| FCL Import and Export |
$35 per TEU |
For more information online, visit: http://www.cleanairactionplan.org and http://www.polb.com
Credit Crunch Hits the Ocean Supply Chain
On October 14, the Journal of Commerce Online reported that more stringent credit terms would be likely for maritime operations. This information is based on commentary provided by Ocean Intelligence, a maritime credit risk assessment group. This does have a direct impact for importers and exporters who may be securing new customers during this volatile global economic time.
Even traditionally strong importers and exporters with solid credit may be at risk when managing the proper flow of goods from Point A to Point B. Importers and exporters alike will most likely be expected to provide open book financial background when negotiating updated or extended credit terms. This is critically important for the importer and exporter to understand and in order to avoid credit shortfalls which may interrupt the supply chain, especially when significant "spikes" in shipments occur around the holidays where freight charges may exceed pre-determined credit limits. Being cognizant of how the credit crunch may impact your business will assist in ensuring a continual flow of freight during these undoubtedly challenging times.
Leaves are falling, but are Fuel Surcharges falling as fast?
Fuel or bunker (BAF) levels being assessed by most major ocean carriers had been steadily rising in early 2008, then leveled out in August. After the recent spike in the price of crude oil as well as the price of processed automotive gas at the pump, prices have started to plummet.
Ocean carriers often set their fuel adjustment factors, or bunker adjustment factors, with formulas based off fuel indexes such as Platt's (www.platts.com). Because of this, there is often a lag time for ocean carriers to pass along the adjustments to fuel costs, whether fuel is increasing or decreasing. Consequently, several carriers review their fuel surcharges on a monthly or quarterly basis.
It is expected that into November and December, fuel and BAF surcharges will remain constant or decrease slightly just behind the decreases in the price per barrel of crude oil. Additionally, certain carriers may charge different levels for fuel based on their unique operating structures and ability to purchase or hedge purchases on fuel. When you have questions about the fuel surcharges relating to your ocean freight business, please speak with your AIT representative.
Are your containers sealed?
As a reminder, the United States Customs and Borders Protection announced that beginning on October 15, 2008, all U.S. bound maritime containers must contain seals meeting the ISO/PAS 17712 standards for unique numbering, strength, durability and resistance to tampering.
In a notice posted in the Federal Register, U.S. Customs also stated that carriers must use the Vessel Automated Manifest System to supply Customs with all seal numbers at least 24 hours before U.S. bound cargo is loaded at overseas ports. Should you require information as to where to purchase ISO Seals, please contact your AIT representative.
Haulage
The local transport of goods. Also, the charge(s) made for hauling freight on carts, drays or trucks. Also called cartage or drayage.
Source: International Directory of Trade, 7th ed. Edward G. Hinkelman, 2006.
Haulage is a widespread term in the transportation industry, whether it refers to domestic transportation or local transportation for international freight. More commonly in ocean freight, the term "drayage" may be used, especially in the United States when referring to local pick up or deliveries to or from container yards (CY), rail ramps, ocean ports or container freight stations (CFS).
Haulage, cartage and drayage may be used interchangeably when speaking of local pick up or deliveries in the context of ocean freight. While they may seem like different services, they are all one in the same.
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The Parting "Wave"
The first 10 months of 2008 have seen significant fluctuations between imports
and exports. With 2009 rapidly approaching, there will most assuredly be
more fluctuations in the flow of goods in and out of the United States.
November is also a time to give thanks to all our customers. The AIT Ocean
Systems team would especially like to thank those new customers who have
joined us during these challenging yet exciting times and we look forward
to assisting you as we enter the "slack" season and beyond.
Preview December 2008 AIT Ocean Newsletter:
What's on the horizon for ocean freight in 2009?
If you have any questions or comments regarding the Ocean eNewsletter,
please contact Kevin Krause from the AIT Ocean Department. |
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