Ocean Fast Facts

Which port is the second largest container terminal in the Southern Hemisphere as of 2007 and handled 2.5 million TEUs of cargo during the same year?

Port of Capetown
Port of Johannesburg
Port of Walvis
Port of Durban

Click here to see the answer!

Kevin Krause attends 10th annual Trans-
Pacific Maritime Conference

- by Christine Nicholson, corporate public relations coordinator

On March 1-2, 2010, Kevin Krause, director of ocean services for AIT, attended the 10th annual Trans-Pacific Maritime Conference hosted by the Journal of Commerce at the Long Beach Convention Center.

Launched in 2001, the event is the most important annual gathering for senior executives from shippers, carriers, 3PLs, terminals, railroads, industrial real estate and other players in the trans-Pacific container market.

Held each year in early March as annual contract negotiations and peak season planning get under way, the event agenda is carefully planned to include the most knowledgeable and experienced speakers addressing the key challenges the industry will face in the coming year.

With more than 1,300 participants, attendance at this year's conference was more than double from last year's event. Krause attributes the spike in involvement to concerns over tightening capacity and significant rate increases imposed by the carriers since fall of 2009. Essentially, attendees were hoping to discover what's in store for the container industry after historic rate declines and financial losses in 2009.

Sessions at this year's conference addressed the market outlook for the trans-Pacific trade, how the recession and slower consumer demand has altered shippers' supply chains and suggested strategies for approaching a still very uncertain 2010.

With a panel of presenters led by opening keynote speaker Eivind Kolding, CEO of Maersk, the conference aimed to provide candid, well-honed observations to pressing industry questions in a setting promoting intensive dialogue, networking and business opportunities.

According to Krause, panelists addressed the market outlook for trans-Pacific trade much differently from last year's industry observations.

"Most felt in 2009 that the economy hadn't reached 'rock bottom- - there were a few optimists among the presenters in 2009," explained Krause. "In 2010, the outlook is still cautious, yet the discussions between the importer and shipper community were very heated. Importers and NVOCCs are pressing the carriers for answers as to why they fought back so quickly with very large increases and capacity and service reductions - not just in vessel service, but customer and operations services that are so vital to this industry."

Of the many topics and industry forecasts presented at the conference, Krause could relate most to the challenges posed by the importer/shipper community in terms of skyrocketing rates and poor service.

"I was intrigued that many carriers blame the shipper/importer community for pushing the low rates, while importers and shippers blame the lines for losses of buying market share," he said. "As an NVOCC, it is AIT's job to fight for the best balance for our customer; good service at a competitive price as well as service contract protection."

Krause reports that the ocean cargo community is now challenging the steamship lines through Congress and the Federal Maritime Commission in an effort to ensure there is no price gouging in order to protect the flow of U.S. goods and services along the various supply chain seaways.

Overall, Krause came away from this year's TPMC with a renewed industry outlook for 2010.

"I believe that carriers are on the trend to get their rates in check, but they should be held accountable for maintaining service that corresponds with the revenue recovery," he said. "I am optimistic that both capacity and service integrity will be back on track by late 2010 during peak season, and hopeful that we saw our 'rock bottom' late last year."

Spring has sprung and in this month's AIT Newsletter, we're blossoming with double your "buzz" word pleasure:

Standard form contract, or boilerplate

Standard form contract (sometimes referred to as an adhesion contract or boilerplate contract) is a contract between two parties that does not allow for negotiation, i.e., take it or leave it. It is often a contract that is entered into between unequal bargaining partners, such as when an individual is given a contract by the salesperson of a multinational corporation. The customer in no position to negotiate the standard terms of such contracts and the company's representative often does not have the autonomy to do so. While adhesion contracts, in and of themselves, are not illegal per se, there exists a very real possibility for unconscionability.

Source: http://en.wikipedia.org/wiki/Boilerplate_contract

It's Contract Season = Boilerplates and You!

It is appropriate to include some "legal jargon" in this month's AIT customer newsletter as the end of April concludes the start of the May 1, 2010 ocean contracting season. As clients such as direct importers, beneficial cargo owners BCOs and NVOCCs work with the steamship lines to establish base line ocean rates, it's "high" season for contract boilerplate review.

During this time, contract boilerplates are reviewed in addition to rates for minimum volume commitments, termination clauses and other factors such as liability limitations are reviewed. Boilerplates remain important for NVOCCs like AIT and our client base to help ensure proper MQC and equipment availability, space availability on vessels and a rate to ensure your cargo moves in line with the service level provided and committed to by the carrier.

Bonus Word: Jettison

To unload or throw overboard at sea a part of a ship's paraphernalia or cargo to lighten the ship in time of an emergency.

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

Jettisoning cargo: Believe it or not, it happens!

Since spring has "sprung," AIT thought it would be appropriate to provide a bonus "buzz" word for the month of April. Literally, jettisoning a container can be assimilated with "springing" or launching a cargo overboard to protect the safety of vessel crew, by-standing humans and overall safety of the vessel in an emergency.

While there is no "button to push" in order to jettison cargo or containers off vessels, this is manually done by ship crew. In high seas, Mother Nature has been known to take it upon herself to "jettison" containers. This can happen when ships pitch and roll in high seas and the momentum of the ship itself jettisons containers.

If you want a little dose of inspiration and you're a kid at heart, read the book "10 Little Rubber Ducks" by Eric Carle. This story demonstrates just what can happen to cargo when it is "jettisoned" at sea…whether by Mother Nature or deck hands.

General Market Conditions: Imports from Asia

As contract season in the Asia trade rapidly approaches May 1, there are several observations to report.

The lines have consistently been pushing for a May 1 GRI of $800 per 40' container, other sizes per formula for west coast and IPI routings. The level via the east coast is proposed at $1000 per 40' and other sizes per formula. Additional capacity is coming on board but will most likely match the forthcoming peak volumes so there is not a large anticipation that the additional capacity will not offset the proposed GRI.

It is hopeful that this additional capacity will help stabilize rate increases. Capacity will remain tight; especially out of North China with the approaching Shanghai World Expo and restricted, yet additional capacity. Carriers are careful to release "too much, too soon," so any reduction in rates in the near term from Asia is not probable.

The lines are proposing Peak Season to begin later this year on August 1st. The proposed level is $400 per 40', other sizes per formula. Carriers propose a quarterly GRI plan after May 1; however, it has yet to be seen if this will be effective based on additional capacity and when importer demand will fall off based on higher rates.

Finally, there seems to be growing interest by the U.S. Congress and the FMC regarding review of carrier operations and pricing. This development comes on the heels of importers and exporters in the U.S. wanting to ensure the proper flow of goods. This most likely will result in more news over the coming weeks and months and hopefully assist our customers from a rate and service standpoint depending on the findings.

Carriers Assess Document Amendment Fees - make sure your documents are accurate!

In an ongoing effort to cover administrative costs for document corrections after ocean carrier master bills have been issued to customers, AIT would like to remind customers that several ocean lines such as Maersk are charging Document Amendment Fees, or Transport Document Amendment Fees (AMF).

Essentially, the fee is assessed by the carrier for the transport document amendment at the request of the shipper, consignee or their designated agent after the first verify copy has been issued by the carrier. Multiple changes are allowed within a single amendment request per transport document. The fee generally does not apply if the carrier makes an error and runs in the area of $25 to $50 per bill of lading (depending on the carrier).

Finland Strikes Back = Finland Strike Surcharge

Certain carriers have begun charging a Finland Strike surcharge effective April 21, 2010, for cargo ex the USA to Finland. The charge is approximately 60 Euro per 20 and 130 Euro per 40, depending on the carrier.

Shanghai Expo Resulting in Hazardous Cargo Restrictions

The 2010 World Expo being held in China will force restrictions on the movement of hazardous cargo to and from Shanghai between April 15th and October 31, 2010. The restriction of hazardous material during this time applies to nearly ALL hazardous classes.

Speak with your AIT representative if you have questions above the movement of hazardous materials to and from Shanghai now through October.

REMINDER: AIT's Automated Ocean Rate Request Feature!

Last month, AIT announced the new offering that allows AIT Ocean customers the ability to submit rate requests in an automated format using the CargoSphere online rate quote system. AIT customers can now request rates and receive automated rate quotations complete with quote numbers and quotation validity dates, making the quote process more timely and efficient.

To get started on CargoSphere, click on the following link and start automating your rate quotation process today to register!

http://www.cargosphere.net/ait/ptrade/jsp/CustomerAgentRateRequest.jsp

April Congestion Alert!

At press time, the following port locations were reporting congestion:

China = Primarily Shanghai for the forthcoming World EXPO.
Jamaica (Kingston) = for both transshipment/relay and direct cargo.
Greece = National Strikes are in effect as of the end of February.
Colombia (Buenaventura)
North African Ports (Tripoli / Algiers)
Venezuela Ports (Puerto Cabello/Guanta)
West Africa (Luanda / Angola)
Nigeria (Tincan/Apapa)
Haiti (Port au Prince - Very limited port operations, relief goods remain a priority)

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.

The Parting "Wave"

March was an active month at AIT. Quoting remains strong, volumes were quite steady and U.S. exports really seem to be reaming up. The rest of April and May will focus on contract negotiation season. It promises to be an exciting year of contracting with capacity returning just in time to come on par with Peak Season volumes. Peak is just around the corner from Asia and carriers are talking of an August peak start date. More will follow in upcoming AIT eNewsletters.

ISF and 10+2 initiatives remain a priority at AIT. AIT has designated staff monitoring ISF filings and helping ensure importers are making timely and correct filings. This issue will remain a top priority for the AIT team as peak season approaches.

The AIT Ocean Systems team thanks you for your support during March and looks forward to a fantastic April.

Preview May 2010 AIT Ocean eNewsletter:
Shanghai!

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

eNewsletter Home Feedback Unsubscribe AIT Home