Ocean Fast Facts

Between 2002 and 2008, which Brazilian ocean port increased their ocean volumes 100% and remains the largest ocean port in Brazil in terms of TEU?

Pecem
Belem
Manaus
Santos

Click here to see the answer!

LCL Express - It's here!

AIT has recently launched a new LCL program from Shenzhen/Yantian/Hong Kong and Shanghai to the United States west coast, with more destinations soon to follow. The program, called LCL Express, offers industry leading LCL transit time on dedicated weekly COSCO vessels via Los Angeles through our vendor partner, COSCOEx. Transit times of 21 to 23 days ex CFS Shanghai to Door Chicago are available.

Combining direct dedicated weekly boxes with expedited delivery services to door locations throughout the Continental United States, the service offers an economic alternative to air freight, or expedited LCL solutions at a small price premium.

AIT's LCL Express service was introduced to supplement AIT's successful FCL Ocean Express program. Ask your AIT representative for more details and service specifics!

Global Holidays Abound in June!

As those in the northern hemisphere gear up for summer, there are a few key holidays to be aware of during June. Office closures may be in effect in certain countries. Several bank holidays also exist in June, so check with your AIT representative to ensure accurate information regarding closures.

June 1 - June Holiday (Ireland)
June 10 - Portugal Day (Portugal)
June 12 - Russia National Day (Russia)
June 14 - Flag Day (United States)

U.S. Exports Volumes Remain Steady - Plan Ahead!

Please be reminded that exports remain steady. Over the past 30 days, the market has experienced a slight increase in the import volumes from overseas, which will assist the available U.S. export supply, especially within key intermodal markets in the interior US including Chicago, Minneapolis, Kansas City and St. Louis.

While the equipment situation is improving, AIT advises exporters to plan early for booking their shipments to ensure equipment and container availability in origin cities. This remains especially critical when planning within your supply chain for multiple full container load (FCL) shipments.

Less than container load (LCL) booking availability remains wide open. As always, AIT would like to remind our customers who are transporting special commodities, such as refrigerated and flat rack/open top equipment, to also allow for ample planning and booking time. Speak with your AIT representative to address your specific container needs.

Gulf of Aden Surcharges = Customer Advisory

Please be advised that certain ocean carriers offering service through the Suez Canal or via the Gulf of Aden region have begun to charge a Gulf of Aden surcharge. This surcharge is related to piracy activity in the Gulf of Aden / Somalia region. Charges vary by carrier and origin/ destination pair, so please contact your AIT representative should you have any questions or concerns.

The Fight against Piracy Continues

In last month's AIT customer eNewsletter, it was reported that carriers like Maersk were stepping up their efforts on piracy, especially in the regions off Somalia and the Gulf of Aden. The May 22 edition of the Journal of Commerce Online contained a story about navies from Canada and Italy foiling recent attacks against two vessels in the Gulf of Aden.

A U.S. cargo ship, the Maersk Virginia -- from the same fleet as the Maersk Alabama, whose captain was held captive for four days in April, and a Lebanese-flag cargo ship, the Maria K, were both rescued in the same region. CBS News reported directly from the Canadian warship HMCS Winnipeg after it responded to a distress call by the Maria K. The crew of the Canadian warship reported fire exchange in the form of rocket propelled grenade fire from the pirates. Within minutes, three naval helicopters were dispatched from the HMCS Winnipeg toward the Maria K, located about 60 miles away, The pirates broke off their pursuit of the Maria K and headed instead for the nearby American ship. Immediately thereafter, an Italian Navy helicopter joined the Canadian aircraft. With the helicopters hovering overhead, the pirates gave up their attempted hijacking and threw their weapons overboard before their boat was boarded by Italian seamen.

Piracy in the Gulf of Aden region off the coast of Somalia remains a threat to the shipping community. Several countries are counteracting the threat by positioning international warships into the region to protect merchant ships and the overall ocean supply chain that relies on this important sea lane between Asia, Africa and Europe. Additionally, several merchant ships are now navigating this region in convoys and naval forces are supposed to be available within 30 minutes via helicopter in the event of an attack.

Moisture Sensitive Cargo - Protect It!

In a past issue of this eNewsletter, AIT reported on a product that can assist in controlling the moisture of cargo moving within seafreight containers. AIT has received several inquiries from customers since that original article was published, and thought it would be a good idea to take this opportunity and remind both our existing customers and new customers of AIT's specialized services in moving moisture-sensitive commodities.

Outside of AIT's Perishable division, which specializes in transporting fresh, frozen and refrigerated commodities, the other divisions of AIT often handle an array of cargo requiring special handling, such as moisture-sensitive cargo.

Frequently on the high seas, cargoes moving within sea-going corrugated containers are subject to extreme temperature and humidity extremes while in transit. Ocean freight containers are sometimes offered in refrigerated (temperature controlled) or insulated containers, which help control and maintain temperature and humidity factors throughout the transit of freight.

Refrigerated and insulated containers come at a premium price of standard dry containers, which are not humidity or temperature controlled but can subject sensitive cargo to moisture and damage. These containers are considered "special equipment" and generally are not as readily available in the container fleets of ocean carriers.

For those commodities susceptible to moisture but because of low cargo value cannot justify the premium price or expense of "special" equipment, there are products in the marketplace that are less expensive than paying for special equipment when booking with an ocean carrier. Companies such as Multisorb Technologies of Buffalo, New York (www.multisorb.com), offer moisture reduction packs to stow in containers while in transit. These packs have the potential to reduce moisture damage while in transit and come at a fraction of the cost of booking special insulated equipment.

Importers of footwear or fashion accessories or other moisture-sensitive commodities might benefit from this product. Contact your AIT representative for questions to see how these types of products may save on your bottom line when transporting moisture-sensitive commodities.

Where are the Ships? Singapore ... or elsewhere?

According to Joseph Bonney of the Journal of Commerce in late May, the New York Times reported a total of 735 ships at anchorages in Singapore and the surrounding areas. At initial glance, one might assume the recent economic crisis that appears to be weakening is contributing to ongoing dwell time at the port; however, The Maritime and Port Authority of Singapore apparently took exception to the New York Times article.

The Marine and Port Authority of Singapore indicates that even during more stable economic times, 400 to 500 ships are in port anchorages daily, but that more than 95 percent are there for less than 10 days. As a major port, Singapore attracts ships awaiting employment, undergoing repairs or taking on fuel at the world's largest bunkering port, thus inflating the perceived "poor" market and excess available capacity in maritime.

The Journal of Commerce pointed to clear evidence that the number of ships laid up just outside the harbor has increased, and this number includes ships that are maintained for quick reactivation or "hot" layup, and an increasing number of vessels in "cold," or long-term, layup. It appears that excess capacity at "anchorage" at places like Singapore or Hong Kong will remain a hot topic entering the historical peak season that approaches in June.

Contract Season is approaching in the Transpacific Market ...
Peak or No Peak in 2009?

As earlier reported in the May AIT customer eNewsletter, the Transpacific Stabilization Agreement (TSA) member carriers servicing the Asia to USA trade are recommending an unprecedented schedule of minimum base freight rates for their upcoming service contracts. The recommendations arrive as the TSA is making efforts to stabilize revenues and services based on the recent activity in rate reductions. Members of the TSA are proposing the establishment of floor rates to help ensure rate stability and make certain that member carriers are keeping freight rate levels profitable for the member carriers.

As of now, ocean freight levels on the Transpacific eastbound service remain at historically low levels. Additionally, these levels both to the port and for intermodal cargo within the United States are non-compensatory, meaning the carriers are losing money or claiming to lose on some of the lanes as of the writing of this article.

Additionally, carriers are reporting that no decision has been made on whether or not the historical Peak Season that typically starts on June 15 and goes through October or November of each year will apply during 2009. Carriers are also reporting that contract negotiations are underway in the market, but most post June 30 rate levels will not be known until mid-June, as the first large beneficial cargo owner and NVOCC ocean contracts are finalized.

As published last month in the AIT customer eNewsletter, the TSA carriers proposed new minimum rates (per 40'container) which should be applied in all contracts not yet concluded, as soon as possible but no later than July 1, as follows:

US $1,350 to the west coast
US $2,500 via east coast all-water service

Guideline minimums have also been adopted for selected minilandbridge (MLB) and inland point destinations.
Guideline minimum rates per high-cube 40-foot container have been recommended at levels $100 above those for standard 40-foot units.
All 2009-10 contracts should expire by no later than April 30, 2010, the traditional cycle in the Transpacific.
All contract offers should be subject to full, floating bunker charges per TSA's revised formula, with quarterly adjustment and separate charges for west coast and east coast sailing.

The TSA member list of carriers includes the following carriers: APL, Ltd., China Shipping Container Lines, CMA-CGM, COSCO Container Lines, Ltd., Evergreen Line, Hanjin Shipping Co., Ltd., Hapag Lloyd AG, Hyundai Merchant Marine Co., Ltd., Kawasaki Kisen Kaisha, Ltd. (K Line), Mediterranean Shipping Co., Nippon Yusen Kaisha (N.Y.K. Line), Orient Overseas Container Line, Inc., Yangming Marine Transport Corp. and Zim Integrated Shipping Services.

It is clear that as part of their contract negotiations plan, TSA carriers will continue to aggressively seek cost recovery. AIT is in direct contact with the TSA lines and monitoring the market very closely. Post June 30th rate levels will be in place for the 2009-2010 shipping season during the first three weeks of June.

Will 2009 be a Peak Season? At this date, it appears 2009 will not be a Peak Season year. Will the carriers try to increase rates? Yes, as rates are historically low and the carriers are struggling with making any profits currently in the Transpacific eastbound trade. The amount of any potential increase is not known. There is a chance that the TSA carriers will sustain current rate levels to maintain capacity. Much of that will depend on economic developments in the US and China.

It appears there are signs of life and some moderate recovery and perhaps carriers may push for a late year "Peak Season" and "GRI" or general rate increase. Updates on the market will be passed along to AIT customers. For those customers seeking new rates for the 2009-2010 shipping season, please bear in mind the shifting market conditions on the Transpacific trade lane and contact your AIT representative to clarify rate validity as needed.

War risk insurance

Insurance coverage against war risk as outlined in detail in some dozen rather specific paragraphs of an insurance policy. The policy conditions must be read in full for comprehensive understanding. In general, they cover risks of capture and seizure, destruction or damage by warlike operations in prosecution of hostilities, civil wars and insurrections or in the application of sanctions under international agreements.

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

War Risk vs. Piracy? Are you covered?

War risk insurance is an important consideration when moving freight to regions within the world that may be susceptible to outbreaks of war and violence. Recently, global coverage in the news of piracy in the Gulf of Aden have some customers asking questions on whether or not standard war risk insurance is enough to cover the value and transportation of cargo that is either delayed, stolen or lost as a result of acts of piracy.

Because war risk insurance policies are often written for specific shipments, (i.e. unique origin/destination and commodity pairs), as well as other shipment or geographic characteristics related to the shipment, the answer to this question is generally "no." Customers should carefully review their existing war risk policies or standard marine transportation policies to determine the specific coverage limitations. As piracy is generally not considered an act of war, cargo violated by pirates most likely would not be covered by a standard marine or war risk insurance policy.

In order to investigate insurance requirements and determine cargo coverage in high risk regions under acts of piracy, speak with your AIT representative to ensure coverage for your freight is adequate.

The Parting "Wave"

The AIT Ocean Systems team would like to thank you for your support during the month of June. As summer approaches later this month, AIT is already planning and in discussions for contract negotiation season on the Transpacific trades as well as expanding carrier alternatives around the world. AIT has signed new ocean carrier contracts to offer additional sailing and service alternatives for our customer base shipping to and from Europe and between the Americas.

Preview July 2009 AIT Ocean eNewsletter:
Another ocean "fast fact" from south of the equator.

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

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