Ocean Fast Facts

Which United States port is the the fifteenth busiest in the world today, but was number one as recently as 1985? Among the records it retains, it was considered the port with the largest volume of imports from Germany of all US ports, with over 2.6 million tons in 2006 - over 20% of the total volume of imports from Germany.

The Port of St. Louis, Missouri
The Port Newark - Elizabeth Marine Terminal, New Jersey
The Port of Mobile, Alabama
The Port of Portland, Oregon
The Port of Hampton Roads, Virginia

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Ocean Freight - The Ocean "Hot" Spots in 2009

2009 has officially arrived. After significant changes in United States import and export flows throughout 2008, the next year promises to bring even more changes.

Here's a quick snapshot of what can be expected in the first quarter of 2009:

Already, global ocean lines have drastically cut capacity in the remaining days of December. On December 29, the Journal of Commerce reported that 165 container vessels totaling 430,000 TEUs capacity were idle right before Christmas, which is a figure up from 300,000 TEUs two weeks before the holiday. The ocean lines are hopeful these actions to reduce capacity urgently will assist in minimizing rate fallout resulting from available space on vessels as well as surplus equipment.

While ocean rates may be slightly deteriorating in this market, especially for port/port freight, intermodal rates to and from inland locations are not expected to soften as much as ocean carriers still battle with operating and infrastructure costs on the terminals and railroads. This reduction in import capacity will have a direct impact on export capacity as well; less vessel capacity will be available and this could lead to limited US export bookings to all global destinations, especially Asia and Europe. Customers are advised to plan their export shipping patterns and bookings as early as possible.
Carriers will continue to consolidate sailing options with partner carriers or drop services altogether to mitigate financial losses.
Watch for continued "hot" spots. Emerging areas in the Middle East and Africa will remain steady for US exports, as well as exports from other regions of the world. Areas such as Dubai/Jebel Ali and Nigeria are expected to see continued volume growth and vessels to these regions will most likely remain at or near capacity, especially in the 1st quarter of 2009. These areas of the world have not been directly impacted by the recent global credit crunch and currency fluctuations experienced throughout 2008.
Several carriers have announced their January 1 BAF levels. BAF will soften in the first quarter but will most likely increase into the second quarter of 2009.
The "greening" of the supply chain will remain a factor in 2009. However, in the United States, green initiatives such as the "Clean Truck Fee" at the Ports of Los Angeles and Long Beach have been delayed again as this fee is being challenged by the United States Federal Maritime Commission. The "Clean Truck Fee" was initially scheduled to be implemented in the fall of 2008, but the $35 per TEU will not be charged until an official date has been announced. For more information online, please visit: http://www.cleanairactionplan.org and/or http://www.polb.com
It is likely ocean freight rates in the USA tradelanes will be in flux. Already in mid-December, the ocean lines that make up the 14 member consortia of the Transpacific Stabilization Agreement (TSA) warned that shippers should expect higher rates in contracts for 2009-10 in the Transpacific trade. This warning is the result of recent rate instability where certain ocean levels may have been brought to non-remunerative levels, meaning that the ocean carriers are taking significant losses for competitive purposes.

In a quote to the Journal of Commerce, TSA Executive Administrator Brian M. Conrad advised: "The rate actions seen in recent weeks are shortsighted and regrettable. They haven't produced new business, they haven't increased anyone's market share and they do not adequately reflect operating costs." Most of the carriers offering the short-term rates advise they will not be effective beyond January 31, 2009.

Conrad also advised that "No one should expect to see freight rates extended at current levels in upcoming 2009-10 contracts. To maintain current rates over an 18-month time frame would threaten the financial viability of any major carrier in the market today."

To summarize, rates on the Transpacific inbound markets from Asia to the USA will remain somewhat rigid, with anticipated increases during the springtime contract negotiation period. Carriers are contending that they are battling losses to maintain the rate levels.

Maersk Line considers leaving the Port of Charleston

Due to disputes between Maersk and the International Longshoremen's Association (ILA) in Charleston, Maersk Line is considering leaving the port of Charleston and routing freight via alternative ports over the next two years. Maersk, which is the port's biggest customer, is threatening to leave the port after the ILA in Charleston refused to waive certain contract provisions requiring the carrier to use ILA labor in lieu of non-union state ports employees at the terminal's gates.

The dispute resulted after Maersk began exploring ways to reduce costs in the port with Port of Charleston and the South Carolina State Ports Authority. While officials at the Port of Charleston hope to work on a mutually agreeable plan to retain Maersk at the port, no specific timeline for a proposed agreement has been announced.

Source: Journal of Commerce; December 24, 2008

A Reminder on 10+2

As earlier reported, the United States Customs and Border Protection published the Importer Security Filing rule in late November. The interim rule, known as 10+2, will take effect on January 25, 2009. Enforcement of the law will begin January 25, 2010. Should you have comments about the 10+2 required data elements, please contact your AIT representative.

For a copy of the Federal Register security filing rule, please refer to:
http://www.federalregister.gov/OFRUpload/OFRData/2008-27048_PI.pdf

It's Too Early for Baseball Season - The "Strike" Zone

The year 2008 brought a handful of strikes at or near ocean terminals that delayed shipments in certain port areas such as Greece and other Mediterranean ports. Just prior to January 1st, two port areas were either impacted by a strike or close to a strike situation. Whenever there is talk of a strike, possible delays or interruptions in the flow of goods is possible. Be guided accordingly that freight destined to or from these ports might be impacted, delayed or re-routed:

Chennai, India. An ongoing truckers strike was just resolved prior to January 1st; anticipate delays as container congestion is cleared from the ports in the first two weeks of January.

Vancouver, British Columbia Canada. Many customers may have been aware of a pending strike at Vancouver. At the last minute, a possible January 2, 2009 lockout was averted. Congestion is not anticipated at this point.

The anticipated volatile economic climate in early 2009 may result in additional widespread strikes in and around port cities. Should you have any questions about areas which may be impacted local strikes or how to route your freight accordingly around strike zones, contact your AIT representative.

January ... Just when you thought the Holiday Season was over ...

There are several international holidays in January to be aware of in order to ensure the smooth flow of your cargo. Most notably, Chinese New Year falls earlier in 2009, resulting in several closures late in the month which may require careful planning when sending shipments to and from the below locations.

January 2009 International Holidays:

Week of January 26 = Chinese New Year = The Year of the Ox. Lasting for one week. Expect closures or limited staff in China, Hong Kong, Taiwan and other Asian countries.
January 1 = New Year's Day (Global)
January 26 = Australia Day
January 26 = Republic Day (India)

Also, the major holidays don't stop in January. Carnival Season begins in late February, with the commencement of Mardi Gras on Tuesday, the 24 of February. Often times, countries in Latin America such as Brazil close for significant periods of time. Please be advised ahead of time and plan accordingly to avoid any and all potential delays with your cargo.

Carnet

A document that allows the temporary importation of merchandise into member countries while eliminating the value added taxes (VAT), duties, and the posting of security normally required at the time of importation.

Source: International Directory of Trade, 7th ed. Edward G. Hinkelman, 2006.

When is carnet relevant or useful in moving your ocean freight?

Carnets play a vital role for shippers or importers who often move commercial samples, professional equipment or items used in exhibitions and trade fairs. Generally, they are valid for a timeframe of up to one year and can be used in over 90 member countries and unlimited trips to member countries as required during the validity period.

Carnets are issued in the name of a company or individual with title to the goods, also known as the "holder." Any fees relating to the carnet are paid by the holder in their origin country prior to the first departure of the goods. It is imperative that the green cover of the multi-paged carnet is endorsed by the customs authority of the holder's country prior to exportation at the first point of departure. Carnets are then presented to customs at various points during the exportation/importation process, essentially being presented to customs authorities upon each country of exit/entry.

Carnets require security in the amount of 40% value of the goods, in the form of cash, surety bond or certified check. Upon cancellation of a carnet, cash deposits are returned and bonds are terminated. Should you have any questions about the use of carnets and whether or not they apply to your specific commodity, please contact your AIT representative.

More information on carnets can be found by visiting the following link: www.carnetsonline.com

The Parting "Wave"

Who can believe it is already January 2009? AIT Ocean Systems is looking forward to another active year with our ocean product. Once again, AIT Ocean staff will be participating in the Trans-Pacific Maritime Meeting this forthcoming March in Los Angeles to get our finger on the pulse of what is happening with inbound Asia Trade.

AIT Ocean staff also would like to take this opportunity to remind our customer base that AIT is not only an import NVOCC, but also an export NVOCC. We maintain an experienced and extensive network of ocean export staff in several locations to serve you locally, with a global touch. AIT Ocean Systems export staff has access to several ocean contract rates to ensure multiple cutoff, sailing and price point options.

Have a great January and thank you for your continued support!

Preview February 2009 AIT Ocean Newsletter:
What to Expect 2009 Contract Season? It may be too early to tell.

If you have any questions or comments regarding the Ocean eNewsletter,
please contact Kevin Krause from the AIT Ocean Department.

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