Ocean Fast Facts

Which one of the below is not considered one of the Port of Shanghai's 5 major working harbor zones?

Yangshan Deepwater Port
Yangtze River Estuary
Man Yan Lee Deepwater Harbor
Waigaoqiao

Click here to see the answer!

Knot

A unit of measurement of speed of a vessel in water, or an airplane in equal to one nautical mile per hour (or 6,082.66 feet per hour).

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

Ocean freight: getting tied up in knots...?

The term "knot" has often been associated with nautical verbiage - sailors are generally experts in tying bowline loop-knots, and then there's the traditional sailor's knot, or "anglers" knot. Steamship lines have also recently become experts in another kind of "knot," which has been widely used in a majority of the shipping news circulated in the past year.

This month's ocean "buzz" word has been appearing in many headlines as vessel operators and steamship lines are making several cost cutting measures to hedge record losses posted during 2009. While speedy transit times have been sacrificed, the environment has benefited from reduced CO2 emissions. Carriers have been getting increased attention over the past year as they have implemented "slow steaming" programs which increase vessel transit times.

With knots comes "loops." For example, during the early part of 2010, the ocean carrier Hanjin announced they would start slow steaming on an all-water "loop," or port rotation service, between Asia and the U.S. east coast. In an effort to both save money and cut carbon (CO2) emissions, Hanjin slowed their vessels to 20 knots from 25 knots. While this doesn't seem to be a large difference in terms of speed, a vessel transit time significantly increases over the large distance when only a small sacrifice in speed is used.

A perception exists with some shippers that slow steaming is only a ploy for carriers to cut costs; however, carriers like Hanjin have formed "green teams" in an effort to reduce CO2 emissions by 15% until 2015. Shippers who also require quicker transit times on the ocean have been critical of the plan, since transit times have increased an average of 2 days between Asia ports and the United States east and west coast ports.

Source: http://www.joc.com/maritime/hanjin-slow-steam-all-water-loop

Piracy risk remains high

Customers should be reminded that cargo transiting the Gulf of Aden and the areas from Oman to the Suez Canal remain at high risk for piracy.

Maritime Executive Magazine reported on Thursday, April 22, that four vessels had been hijacked in a one week period. While no container ships were reported as part of the latest round of hijackings, international merchant vessels remain at high risk throughout the region. Please also be mindful that in addition to the risk of piracy, many major ocean lines are charging Piracy Risk Surcharges for shipments on board vessels that transit the region. As an example, one type of charge the lines are charging is called the "Gulf of Aden" surcharge.

http://www.maritime-executive.com/article/2010-4-22-somali-pirates-
hijacked-fourth-vessel-week/

The Shanghai World EXPO 2010

A global event of phenomenal proportions is due to start May 1st in Shanghai. The long anticipated Shanghai EXPO begins on Saturday, May 1, 2010 and goes through October. The Shanghai region has spent billions of dollars (CNY) in preparation for this global exposition, which includes events, venues and pavilions highlighting Chinese cultural, environmental, scientific, technical and business advancements.

The EXPO also has dozens of pavilions which include venues for countries from all around the world. In anticipation of the event, six pavilions have already opened in April to allow a sneak peak for exposition visitors. Shanghai will be a "buzz" over the five months as the exposition is hoping to reel in millions of visitors from around the world.

For more information, visit http://en.expo2010.cn/ or http://en.expo2010.cn/pavilions/hqzg.htm

A sign of the times: the global containership fleet is growing?

Whether they like it or not, it seems shippers are becoming more and more accustomed to hearing "no vessel space" or "no equipment for the next sailing."

Well, signs are pointing to new capacity being made available not only in the U.S. import and export markets, but on a global scale. In an April 16, 2010 IFW-Net article, it is reported that the active global containership fleet is expected to grow by 12% by the end of the year and 25% by the end of 2011. This data is derived from research conducted by container leasing firm SeaAxis.

At the recent Global Liner Shipping Conference sponsored by Containerisation International, Philippe Hoelinger, Vice President at SeaAxis, said the current global fleet stood at 13 million TEU with 1.6 million TEU idle. By the end of 2010, Hoelinger said the fleet would be 13.6 million TEU active, but less than one million TEU laid-up.

According to Hoelinger, by the end of 2011, almost all the total fleet of 14.4 million TEU would be active, which translates into fleet growth of 25% by the end of 2011. Hoelinger also believes containership owners and operators would not start ordering vessels again until 2011.

The article continues on to say that ship orders hinge on global GDP growth factors (of 4%), a decrease in ships on order to 20% of the total fleet as well as the idle fleet reaching 200,000 TEU; western GDP growth reaching 2%; and the gap between supply and demand closing . Hoelinger believes these factors could be realized by the third quarter of 2011, when global GDP growth would reach 4%, supply and demand should balance and the order-book would reach 20%.

These statements point to optimism that supply and demand are in balance, providing further evidence that the global economy is stabilizing. With this stabilization, the rates and cargo flows in global trade should steady as well. It is one sign of the times that the economy is on a path of recovery - and hopefully the recovery for shippers who have taken the brunt of the recent rate and service instability.

Source: http://www.ifw-net.com/freightpubs/ifw/index/global-boxfleet-growing/20017768376.htm

ARGENTINA: New Customs regulations effective May 3, 2010

Customers should be advised that Argentina is implementing new Customs regulations for cargo arriving on or after May 3, 2010. On that date, all bills of lading must now contain the consignee's CUIT number (unique tax identification code), as well as the first six (6) digits of the NCM number (otherwise known as harmonized code) for each commodity shown on the bill of lading. Without this information, cargo will not be permitted to be registered with Customs and will be blocked instead. This will cause delays and potential fines to the account of the cargo.

Additionally, for non-commercial shipments, household goods, or personal effects that may be consigned to an individual who is a resident of Argentina, one of the following forms of ID must be presented:

Clave de Identificacion (CDI)
Codigo Unico de Identificacion Liboral (CUIL)

For cargo consigned to non-resident individuals of Argentina, Argentina Customs requires the manifest to be completed with personal information of the person (i.e., passport number, country of issue).

General Market Conditions: Imports from Asia

Contract season is in full swing in the Asia to USA trade. Observations at this time report that while the lines are pushing for a May 1 GRI of $800 per 40' container, other sizes per formula for west coast and IPI routings and the proposed GRI level via the east coast is $1000 per 40'.

The ERC that was announced and charged by the lines in January will be canceled by most of the lines by May 1. As reported in last month's edition of the AIT eNewsletter, additional capacity is coming into May, but most of this capacity is likely to correspond with the historical peak volumes, so there is no significant reason to believe this additional capacity will offset the proposed GRI entirely. There are signs, however, that the additional capacity will help to stabilize recent rate increases imposed by the lines.

Throughout the month of April, vessel capacity and equipment availability was at maximum utilization, especially out of North China. The lines are still planning on implementing Peak Season Surcharges by August 1st. The proposed level is $400 per 40', other sizes per formula.

Throughout April, vessel space throughout Asia remained tight and this will most likely continue into May; even after the start of the GRI and "cancellation" by most lines of the ERC. AIT continues to recommend forecasting as early as possible until further notice, allowing 3 to 4 weeks while capacity remains tight from Asia. Existing and new customers can minimize "rolled" freight if shipment (container size and type) forecasting is used and can speak with their AIT representative to best assess their needs to ensure cargo gets loaded on the scheduled ship in order to make a required ETA. Finally, conditions on rates and services are also subject to change so speak with your AIT representative to evaluate current market situations that may impact your freight movement.

Ship trivia - China!

Here's a little bit of trivia that reflects the role of China as a maritime "powerhouse," aside from being a powerhouse in the area of exporting consumable goods. Did you know that China's shipbuilding activity accounts for over 40% of the world total? According to the April issue of Maritime Executive Magazine, China's shipbuilding orders have increased in the first quarter of 2010.

The Ministry of Industry and Information Technology in China stated during the period from January to March, China's output of completed ships surged 128% during the same period from 09' to 10' and now accounts for 41% of the world's total shipbuilding activity. While the country's overall orders for ships amounted to 184.1 million DWT at the end of March 2010, this represented a decrease of 2.2% less than at the end of 2009.

Of the total orders for ships, 88% are export orders and represent 37.3% of the world's total. In terms of dollars, it is reported that during January and February of 2010, China exported US$6.72 billion worth of ships, boats and floating structures, an increase of 65.8% over the same period in 2009.

http://www.maritime-executive.com/article/chinas-2010-shipbuilding-activity-accounts-48-world-total/

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 commencing in mid April through 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 about the movement of hazardous materials to and from Shanghai now through October.

The following list includes the key hazmat restrictions that apply during the Shanghai Expo. This list is subject to change, so contact your AIT representative should you have any questions:

All Class 1
Class 2.3
Class 3 - Anything with ACETONE
Class 5.1 - UN1511, UN2014, UN2015, UN2984, UN3149 and any of the above as components in other UN#'s
All Class 5.2
All Class 6.1
All Class 7
Class 8 - UN1786, UN1789, UN1798, UN1796, UN1830, UN1826, UN1831, UN1832, UN2031
UN2032, UN2976 and any of the above as components in other UN#'s

May Congestion Alert!

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

China = World EXPO begins May 1
Jamaica (Kingston) = for transshipment / relay and direct cargo
Colombia (Buenaventura)
North African Ports (Tripoli / Algiers)
Venezuela Ports (Puerto Cabello/Guanta) - Venezuela shipments require prior approval
West Africa (Luanda / Angola)
Nigeria (Tincan/Apapa)
Haiti (Port au Prince) - Limited port operations are handling goods in addition to relief goods at this time.

Be advised that ocean carriers may temporarily enact "Port Congestion Surcharges" in times of peak volumes, so please speak with your AIT representative in the event of any questions.

Have you signed up for AIT's automated ocean rate request feature?

Have you registered yet? Earlier this year, AIT announced a new technology solution 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 process more timely and efficient.

If you haven't yet signed up for access to CargoSphere, click on the following link and start automating your rate quotation process today!

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

The Parting "Wave"

Whether hunting for rates, equipment, vessel space and all combinations thereof, the month of April certainly kept the AIT ocean team busy. It certainly has been a challenging time with full vessels and limited space availability. The flurry of business activity that AIT has been experiencing appears to be a sign that 2010 will end stronger than 2009. Hopefully, rates and service levels will start to stabilize as demand and capacity are equalized in the global sea freight trade lanes.

AIT Ocean had a successful April despite the global challenges that keep our operations and pricing teams hard at work getting freight on board vessels or delivered to customers. The entire team would like to thank you for keeping us "busy" during April and we hope to be of assistance as Peak Season approaches.

Preview June 2010 AIT Ocean eNewsletter:
A Middle Eastern 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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