Ocean Fast Facts

Which Northeastern U.S. seaport handled 44,146 TEUs of EMPTY containers between December 2007 through November 2008 contributing to 21% percent of total container movements during that time?

Port of Stamford, CT
Boston, MA
Port of New York and New Jersey
Portland, ME

Click here to see the answer!

General Rate Increase (GRI)

Definition: General Rate Increase (GRI) occurs when a carrier announces an increase in base ocean freight rates within a given trade lane. For cargo destined to or from the United States, GRIs are generally announced and filed in the ocean carrier's public ocean freight tariff 30 days prior to the increase due to the requirements of the Federal Maritime Commission (FMC).

General Rate Increases - A common occurrence in today's ocean trades

In the past few months, most global ocean trades throughout the world have been affected by GRI's. Ocean carriers have implemented them in efforts to sustain profitability or even survival as cargo levels had deteriorated to record lows at the end of 2008 and into 2009.

When a GRI occurs, especially in the trades to and from the United States, ocean carriers first announce their market proposed "GRI" rate level, generally 30 days before the effective date. Once the "GRI" date arrives, it is rolled into a new market ocean freight rate that includes the GRI in addition to the previous market rate level.

For example, a basic GRI can be explained below for a 40' container between New York and Brazil. These figures are for sample purposes only - as illustrated with a simple A + B = C equation:

August 1: 40' standard container rate for non-hazardous cargo between New York and Santos:

$ 500 per 40' standard container

September 1: Carriers propose a General Rate Increase (GRI) of $400 per 40' standard to be effective on October 1 for non-hazardous cargo between New York and Santos.

October 1: The GRI becomes effective by adding the above A + B to equal C; the "NEW" market level for a 40' standard container between New York and Santos becomes $900 per 40' standard container.

A + B = C

$500 + $400 =$900

Finally, the new market rate of $900 after October 1 is now the rate "inclusive" of the October 1 GRI. This is otherwise known as the GRI being "rolled" into the base rate after October 1 and the term GRI disappears into the new market level rate - that is, until another "GRI" is announced.

GRI's sometimes might be mitigated or cancelled depending on market conditions, but recently carriers have been successful in passing GRI's in nearly every global trade lane. The term is also synonymous with the terms "revenue recovery" or "cost recovery." The global shipping industry is in a revenue recovery period and is expected to remain so in the near term.

Eye on the United States East Coast

Kevin Krause, Director of Ocean Services for AIT, recently participated in the East Coast Maritime Conference held October 5-6 in Jersey City, NJ. Attendees of the two day conference worked in an interactive environment, as the format of the conference included automated audience involvement through online "internet" chats. For example, participants would respond to surveys on topics such as industry outlook or west coast versus east coast routing strategies during the presentations and discussion panels.

"The electronic and interactive format allowed for an open forum for importers/exporters, economists, industry experts, port authorities and carriers alike to voice their opinions and debate current events in shipping," said Krause. "Participants could share their opinions on industry hot topics anonymously or with full disclosure through an Internet format that brought depth to current issues facing the shipping industry."

Krause contends that there are several matters facing shippers or importers, but the topics with the most relevance to AIT customers were those relating to east coast versus west coast routing strategies.

"Because so many AIT customers are situated in the center of the USA and the fact that east coast routings are becoming more transit time competitive when compared to west coast routings, more options will be available to AIT customers," he said.

For example, ocean carriers are offering more competitive all water services from Asia to the United States east coast and Canada from Asia which potentially will allow better transit times from locations like Singapore into places such as Cleveland, Detroit and Chicago.

"The gap between transit and cost from east coast vs. west coast intermodal routings is narrowing and other factors such as the expansion of the Panama Canal will help contribute to narrowing this gap," said Krause.

Encore, Encore! Another GRI proposed for USA to Brazil … Colombia also set for GRI

Ocean carriers serving the USA to Brazil trade successfully passed along a general rate increase (GRI) in the area of $250 to $350 per TEU that was effective early September. Now, under the guise of "full ships," carriers such as Hamburg Sud have proposed yet another GRI from the United States east coast to Brazil effective November 9, 2009 at $250 per TEU.

Other areas such as Buenaventura, Colombia are also set to see a GRI during the month of November. As always, AIT will continue to keep customers informed of the latest adjustments to rates; however, as the markets are ever-changing based on supply and demand fluctuations, please contact your local AIT representative if you have any questions.

Houston to West Africa Peak Season Surcharge

Safmarine has advised their intentions to charge a $50 per TEU Peak Season Surcharge (PSS) to West Africa, effective November 15th, to be charged until further notice.

USA to Australia - Proposed General Rate Increase

Carriers in the United States to Australia trade are proposing a general rate increase (GRI) effective December 1, 2009. The proposed GRI is as follows for dry and and refrigerated cargo moving from United States & Canada to Australia and New Zealand:

$150/20'ft standard containers

$300/40'ft standard containers

November Congestion Alert!

At press time, certain port locations were reporting congestion. Port areas to be aware of during late October and early November are as follows:

Venezuela Ports (Puerto Cabello)
Colombia (Buenaventura)
India (Kolkata)
North African Ports (Tripoli / Algiers)

Please be advised that ocean carriers may temporarily enact "Port Congestion Surcharges" in times of peak volumes so speak with your AIT Representative in the event you have questions.

November Export Update = Carriers report FULL Export Sailings

Throughout October, several of AIT's primary ocean carriers reported export sailings to Europe and Asia at near or full capacity. Additionally, sailings to Latin America, especially Brazil, remained overbooked in some cases. There were reported incidents of carriers having to "roll" cargo destined for Brazil base ports such as Santos. Not only are ships filled to capacity, the demand remains strong for containers at both port and inland container depots. Export trades remain "tight" on equipment availability and vessel space, especially for U.S. exports to Brazil and North Europe.

AIT continues to recommend that exporters to plan early for booking export shipments, allowing a minimum of 48 to 72 hours for standard equipment and additional time for special equipment such as open tops or flat racks. Planning early will ensure equipment availability and vessel space for the container size and type required to satisfy your booking needs.

Less than container load (LCL) booking availability remains wide open. AIT would like to remind our customers moving special equipment to also allow for ample planning and booking time for special equipment such as refrigerated and flat rack/open top equipment. Speak with your AIT representative to address your specific shipment needs, whether FCL, LCL or break-bulk.

A Reminder on 10+2 = Ocean Imports

As earlier reported, the United States Customs and Border Protection 10+2 or ISF program will be enforced effective January 26, 2010. Submission of timely and correct ISF data is the ultimate responsibility of the importer of record. AIT has been participating in official U.S. Customs and Border Patrol ISF seminars and has been educating customers and agents alike to ensure ISF data is managed properly.

Should you have questions or concerns about the 10+2 required data elements, please contact your AIT representative. For a copy of current documentation relating to the ISF program, please refer to the following link:

http://www.cbp.gov/xp/cgov/trade/cargo_security/carriers/security_filing/

2009-2010 Trans Pacific Imports = Peak Season Winds Down ...

At press time, most carriers operating in the Trans Pacific Eastbound trade report expiration or a removal of the Peak Season Surcharge (PSS). Many carriers had already mitigated or cancelled their PSS charges by October 1. Capacity in the Trans Pacific import trade remains relatively tight; however, demand has not caused carriers to charge a PSS, which normally occurs under extreme peak shipping conditions. The 2009 peak season only witnessed a spike in shipping during mid to late September leading into the mid-Autumn holiday in China the first week of October. The Trans Pacific Eastbound trade is primarily serviced by TSA member carriers.

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

Source: http://www.tsacarriers.org/pr_070709.html

The Parting "Wave"

October was a busy month for AIT Ocean Systems. The team remained quite active in preparing rate quotations. It seems like AIT and non-AIT customers alike are sharpening their pencils and exhausting all options when looking for the best possible rates to move their freight during these tight economic times. AIT's ocean operations and pricing staff have witnessed this trend now since mid-2008, and it will continue in the near term while carriers attempt cost or revenue recovery.

In order to get the best "bang" for your ocean "buck," AIT would like to remind our customers to be as specific as possible when requesting rates. Provide the proper incoterms, commodity, origin, destination, and volume to help ensure the best possible rate. Finally, AIT would like to give thanks this November to all our customers who have helped us remain busy during these challenging times. It appears the markets are stabilizing and it seems this trend may continue into 2010. Have a great November!

Preview December 2009 AIT Ocean eNewsletter:
A cold northern hemisphere port

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

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