Ocean Shipping

Possible West Coast Port Shutdown

It appears just as we were seeing signs of hope last week, the West Coast ports may be heading full steam towards the shutdown that we have all been fearing. CBFANC (Customs Brokers & Forwarders Association) has issued the following update from Pacific Coast Council’s Peter Friedman:

“I have refrained from spreading all the rumors, but this one has firm basis and warrants preparation:  it appears that there will be a gradual lockout this week, expanding over the weekend, and fully implemented next week. It is possible the ILWU will take some action to be the “first” to act, but the result will be the same – shut-down of the west coast.”

As of Tuesday afternoon, February 3rd, Great World has NOT yet seen any signs of a gradual lockout on the West Coast. In fact, we saw some small improvements at various terminals this past week. We are going to be vigilant and report any signs of a real lockout or shutdown.

Let’s keep our fingers crossed and hope that we are not staring at a shutdown.

-Jimmy Ting
GWL Corp.
tel: 650-873-9050 x1019
email: jimmyting@gwlcorp.com

Port Congestion Surcharge Update (November, 18, 2014)

The situation regarding the Port Congestion Surcharge (PCS) remains fluid and changing on a seemingly daily, if not hourly basis. We received confirmation overnight from carriers (Maersk and MSC) who had as of yesterday not made a decision yet regarding the the PCS that they would indeed begin charging the PCS. This left APL, Cosco, and K-Line as carriers who had not confirmed the PCS. However we also learned today that Evergreen and CMA-CGM would be postponing the PCS. We have also heard that other carriers may consider postponing the PCS as well. We expect to be hearing more updates throughout the next 24 hours and will keep you posted.

Please keep in mind that the congestion at the ports remains an EXTREMELY serious problem. We are seeing delays throughout the USWC ports. Therefore importers/exporters should be conscious of the fact that the PCS could be reinstated at any time.

I did review a letter from the FMC indicating that they are investigating the PCS very closely. It is possible that the FMC is the reason why carriers are announcing the postponement of the PCS. If that is indeed true, we may see carriers look for alternative ways to implement the PCS in the near future.
-Jimmy Ting
Great World
email: jimmyting@great-world.com
tel: 650-873-9050 x1019

USWC Terminals Open and Operating as of This Morning

The good news is that as of 11:20am this morning, USWC terminals are open and operating. Various terminals are still experiencing congestion. However, no longshoremen have walked off the job. That is the good news. The situation is still tenuous.

Tomorrow is Veteran’s Day. The terminals, for the most part, will NOT be operating as most carriers have not selected to pay to keep the terminals open on the holiday. There are a few select terminals that will be open for select carrier business.

I will keep everyone updated.

-Jimmy Ting
Great World
t: 650-873-9050 x.1019
email: jimmyting@gwlcorp.com

Crisis at West Coast Ports

BREAKING NEWS Update: 5pm, November 7, 2014

Los Angeles / Long Beach – 4 of 11 terminals shut down today due to ILWU walkout

Oakland – SSA Terminal shut down today at 2pm due to ILWU walkout

I would be surprised to see longshoremen working on Monday. Let’s keep our fingers crossed and hope for the best.

_____________________________________________

For months now, importers and exporters at U.S. West Coast ports have been dealing with massive congestion that has only gotten worse during the peak season. There are quite a few articles written recently detailing the numerous contributing factors that have led to the current logjam at the ports. Of these factors, the one that now threatens to tip the ports from massive congestion to complete standstill is the ILWU – PMA contract stand-off.

The ILWU has been working without a contract since July 2014. The ILWU and PMA have maintained press silence since that time. However the PMA broke the silence when they announced earlier this week that the ILWU was purposely slowing down productivity in the Pacific Northwest ports (Seattle / Tacoma). This slowdown purportedly began last weekend.

What is more dangerous, if what we are hearing is true, is that similar slowdown tactics have spread to Los Angeles / Long Beach terminals in recent days. Los Angeles / Long Beach terminals are already on the verge of collapsing under the weight of all the containers they are trying to process. We already have seen regular vessel delays in Los Angeles of at least a few days for each vessel.

The greatest fear right now is that if the slowdown does spread, the PMA and terminal operators may feel that they have no alternative but to lock out the ILWU. This would lead to a disastrous port shutdown, similar to the one experienced in 2002.

Importers and exporters are advised to ship with extreme caution and understanding of the fragility of the current situation at the U.S. West Coast ports. Those who have the option to ship via other ports would be wise to begin doing so until this current unrest settles.

The situation is one that may be changing daily. I will keep everyone updated. Let’s keep our fingers crossed and hope for the best.

-Jimmy Ting
Great World
t: 650-873-9050 x1019
email: jimmyting@gwlcorp.com

Possible Shipping Disruption Due to West Coast Longshoremen Contract Negotiations

The Problem

The ILWU (International Longshoremen Worker’s Union) six year contract with the West Coast terminal operators (represented by the PMA – Pacific Maritime Association) is set to expire on July 1, 2014. The 2008 contract negotiations were contentious, but ultimately settled without a long work stoppage. Many in the shipping community still remember the 2002 contract negotiation which resulted in a two week work stoppage that shut down West Coast ports for two weeks. During that time, vessels piled up at various ports, with many ultimately discharging their containers in Mexico, Panama, and some even returning back to their originating foreign ports. The carriers declared Force Majeure, thereby transferring the financial burden of relocating the containers onto the shipping community.

What can we expect for this year’s negotiations?

I thought this article posted by Bill Mongelluzo of the JOC published on the ILWU13 website was very telling.

Bill describes what he believes will be the headline issues of this year’s negotiations:

  • Health Care: The Affordable Care Act places a tax on “Cadillac” health care plans. It is no surprise that one of the most well compensated unions would have health care plans (no premiums, co-pay for medicine of $1) that fall within the ACA’s definition of a Cadillac plan.  The terminal operators are not going to want to pay this additional tax (estimated by Jim McKenna, president of the PMA, to be roughly  $150 million a year).
  • Jurisdictional Authority: With terminals consolidating the ILWU will continue to be concerned about work possibly moving to non-union labor. We saw this with the dispute last summer when a labor dispute broke out over whose job it was to maintain chassis at the Oakland terminal.
  • Pension reform: As we’ve seen across other industries the last six years, employers are pushing for unions to take on a greater share of pension contributions.
  • Productivity: As with 2008, the terminals will continue to push for more automation and use of technology to streamline productivity. However there has been talk that this may be less of an issue than in 2008.

Some have asked why the ILWU and PMA don’t begin their negotiations earlier to help those in the shipping community avoid the stress of planning for possible shipping disruptions. Jim McKenna’s addressed this particular issue recently indicating that from previous experience, early negotiations are not fruitful as neither side feels urgency to get a contract completed. Both sides have agreed to begin negotiations in mid-May. However there is a distinct possibility that negotiations may move past the July 1st contract expiration.

We can also expect that during the negotiations, especially during the month of June, the ILWU will try to show their strength by slowing down work at the terminals. We should expect terminal efficiency to drop during the month of June, whether it is via slowdown for a few hours or a complete work stoppage for a day or two.

The Agriculture Transportation Coalition published their “Crystal Ball for the 2014 ILWU-PMA Negotiations”. Peter Friedman, Executive Director, provides interesting insight as well as his take on the different variables involved in the negotiations.

What are carriers planning to do?

The carriers are readily aware of the situation and in fact are already planning for possible congestion in the coming months leading up to the July 1st contract expiration. We have already seen one carrier (APL) announce a Congestion Surcharge (CSU) for containers from Asia to ALL destinations in the USA effective May 1, 2104. The congestion surcharge will be in the amount of $800/20’, $1000/40’, $1125/40’HQ, and $1265/45’HQ container. This charge will be applied if labor unrest occurs. It is important to note that this surcharge applies regardless of the destination. This means even containers bypassing the West Coast would face these surcharges. We saw similar announcements from the carriers in the past when they encountered possible labor disruptions. We expect other carriers to follow suit in the coming weeks with similar announcements.

In the event of actual long term labor disruption, I am not quite clear whether the Congestion Surcharge would take the place of the carriers declaring Force Majeure. However I would not be surprised if the Carriers reserved the right to declare Force Majeure even with the Congestion Surcharge.

 

What should the shipping community begin doing in response?

Importers should immediately begin the following:

  • Bring forward their supply chain and try to get product in before the July 1st contract expiration.
  • Look for alternative routings. For those receiving cargo at inland locations, there are alternatives (bringing product in through the East Coast ports or through Vancouver / Prince Rupert).
  • Look for alternative sourcing for products.
  • Notify customers of potential delays during July.

Exporters should also begin to look for alternative shipping options via other ports. They should also notify their customers an encourage them to move forward their supply chain planning.

I will continue to provide updates on the negotiations in the coming months.

Jimmy Ting

Great World Logistics (GWL)

Great World Customs Service

Great World Express

218 Littlefield Ave. South San Francisco, CA 94080

Direct: 650-308-8838

Tel: 650-873-9050 x 1019

Fax: 650-873-7029 / 7024
Skype: jimmy_ting
email: jimmyting@gwlcorp.com

www.gwlcorp.com

Freight Insurance?

MOL Comfort

MOL Comfort

The recent accident involving the MOL Comfort is a reminder to the importing community about the risks involved in international shipping. The picture you are seeing above really is that of a vessel splitting in two. If you don’t believe it, take a look at the following pictures:

MOL Comfort: Front Half

MOL Comfort: Front Half

MOL Comfort: Rear Half

MOL Comfort: Rear Half

 

 

 

 

 

 

 

 

 

The vessel was sailing in the Indian Ocean when it encountered inclement weather. We still don’t have details explaining how the vessel split in two. At this moment, MOL has contracted with a salvage company to try to rescue as much of the cargo and hull as possible. MOL has already confirmed that some containers may have been lost or damaged, although they indicate that currently, a majority of the containers are still on the vessel.

While accidents like these are rare, they do happen. The question for those in the trade community is whether or not it is worthwhile to purchase freight insurance. While those in the trade community understand that freight insurance protects against potential damage, loss, or theft of cargo, many are unaware that freight insurance can also cover against General Average claims.

In cases like those involving the MOL Comfort, the carrier will almost certainly declare General Average. In such cases, those with cargo interest on board the vessel are required to help pay for losses and damages to the vessel. This can end up being a double whammy as not only does the owner of the cargo have potential losses related to damaged / lost / late delivery of cargo, but they have to pay the carrier to help make up for the damage / loss of the vessel.

If you don’t have freight insurance to cover your cargo, it is worth discussing with whomever helps arrange your transportation. Freight insurance may or may not make sense for different members of the trade community. Everyone has to make their own separate evaluation.

-Jimmy Ting

jimmyting@gwlcorp.com

tel: 650-873-9050 x1019

 

 

 

 

East & Gulf Coast Port Strike Averted!

The leaders for the ILA and the USMX have agreed to a six-year labor contract. Both sides still need to ratify the agreement. The agreement is also contingent on agreements regarding a number of local union negotiations. Details of the actual agreement are not available.

The labor dispute was quite an ordeal, lasting for months on end. For many importers, the dispute changed the way they routed shipments as well as the timing of their orders. Our only hope is that this type of labor dispute does not become the new normal. For those who may not be aware, the contract between West Coast ports and the West Coast longshoremen’s union (ILWU) is set to expire next year, in July 2014.

-Jimmy Ting

jimmyting@great-world.com

East Coast Ports Still Waiting for a Labor Deal

We’re on to round 3 of the labor negotiations between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) representing the East Coast and Gulf ports. The negotiations were first supposed to be completed by September 30, 2012. Both sides agreed to extend negotiations to December 29, 2012. When the two sides could not come to a full agreement towards the end of last year, they made an 11th hour agreement to further extend negotiations. We are now again running close to the 11th hour of the latest extension deadline (Feburary 6, 2013). We have less than a week.

I have not heard any positive or negative news, but this uncertainty is definitely unsettling.

Hoping we will have good news to share soon!

-Jimmy Ting

jimmyting@great-world.com

East and Gulf Coast Port Strike Postponed (and hopefully averted!)

Good news that is potentially great news! The ILA and USMX have come to a tentative agreement on container royalty payments (the main sticking point preventing a new contract from being agreed upon). With this agreement, both sides have agreed to an extension of 30 days (until January 28, 2013) to complete negotiations on the remaining issues in the contract.

Neither side has published details about the agreement on the royalty payments. I am also not sure if there will be any further sticking issues that will prevent the contract from completed within the next 30 days. However I am hopeful that a final contract can now be agreed upon.

Hoping our Federal Government can also come up with an 11th hour agreement on the Fiscal Cliff crisis!

Wishing everyone a joyful and peaceful New Year!

Jimmy Ting

jimmyting@great-world.com

http://www.ilaunion.org/news.html

http://www.usmxlaborupdates.com/

Port Congestion Surcharge Update

As I’ve mentioned over the past few months, the carriers will charge a Port Congestion Surcharge (PCS) in case there is a strike at the East and Gulf Coast ports. Here is the latest update on the PCS amounts from the various carriers. Please pay particular attention to the remarks on how the PCS will be charged.

PCS (Port Congestion Surcharge)

CARRIER

TRADE

20’GP

40’GP

40’HQ

45’HQ

EFFECTIVE DATE

REMARKS

ANL

USA

$800

$1,000

$1,100

$1,266

5-Oct-12

Basis on gate-in date

APL

USA

$800

$1,000

$1,125

$1,266

30-Dec-12

Basis on gate-in date

CMA

USA

$800

$1,000

$1,100

$1,266

30-Dec-12

Basis on arrival date

COSCO

USA

$800

$1,000

$1,125

$1,266

29-Dec-12

Basis on gate-in date

CSAV

USA

$800

$1,000

$1,125

n/a

6-Oct-12

Basis on gate-in date

CSCL

USA

$800

$1,000

$1,125

$1,266

29-Dec-12

Basis on gate-in date

EMC

USA

$800

$1,000

$1,125

$1,266

5-Dec-12

Basis on gate-in date

HAMBURG

USA

$800

$1,000

$1,000

n/a

10-Jan-13

Basis on on-board date

HAPAG

USA

$800

$1,000

$1,125

$1,266

1-Dec-12

Basis on arrival date

HANJIN

USA

$800

$1,000

$1,125

$1,266

1-Dec-12

Basis on gate-in date

HMM

USA

$800

$1,000

$1,125

$1,266

2-Oct-12

Basis on origin cargo receipt date

KLINE

USA

$800

$1,000

$1,125

$1,266

30-Dec-12

Basis on gate-in date

MAERSK

USA

$800

$1,000

$1,125

$1,266

29-Dec-12

Basis on gate-in date

MASTON

USA

$500

$500

$500

$500

10-Jan-13

Basis on gate-in date

MSC

USA

$800

$1,000

$1,125

n/a

1-Oct-12

Basis on gate-in date

NYK

USA

$1,000

$1,000

$1,000

$1,000

29-Dec-12

Basis on gate-in date

OOCL

USA

$800

$1,000

$1,125

$1,266

29-Dec-12

Basis on gate-in date

UASC

USA

$800

$1,000

$1,125

n/a

29-Dec-12

Basis on arrival date

 

We will continue to monitor the situation closely.

Jimmy Ting

jimmyting@great-world.com