Are We On The Verge of a Complete West Coast Port Shutdown?

Update on Port Conditions

I don’t want to be the boy who cried wolf, and I certainly have been ringing the alarm often these last few months. However recent actions at the West Coast port terminals have undeniably put us right on the brink of a complete port shutdown. With all three major ports areas (Seattle/Tacoma, Oakland, Los Angeles/Long Beach) discontinuing longshoremen labor at night to unload containers off vessels, the port conditions will only continue to get worse.

In the past few weeks we have seen the following:

  • SSA and BENT terminal in Oakland shut down last Thursday due to disagreement between the ILWU and PMA..
  • Five strings calling the port of Oakland have been eliminated. This will significantly decrease the capacity coming to Oakland. Those with containers on vessels that eliminated the Oakland port calling will have containers railed to the port of Oakland from the port of discharge.
  • Vessels continue to sit at the port of Los Angeles/Long Beach for multiple weeks before departing.
  • Containers that are unloaded from vessels have an increased likelihood of being put into a closed area.
  • Steamship lines and terminals are in some cases barely extending any free time when containers are put into closed areas.
  • Some terminals are refusing to accept empty container returns for extended periods of time.
  • For export shipments, some terminals are refusing to accept loaded containers that are ready to be delivered to the terminal. This only acerbates the chassis shortage problem as many of these loaded containers are sitting on chassis that are much needed on the import side. One of our trucking partners indicated to us that they have over 300 loaded export containers sitting in their yard or at their customer’s dock waiting for the terminals to accept them.

I mentioned that the PMA and ILWU agreed to Federal Mediation at the beginning of the year. Mediation was supposed to be accompanied with a news blackout. However both the PMA and ILWU have been trading public attacks leading us to believe that mediation is not working.

My feeling is that the next step will be a complete port shutdown. There’s no where left for the situation to progress to. One local carrier representative mentioned to me that we should pull out from the ports as many containers as we can right now as a shutdown could happen any moment. I found this comment amusing as no one is holding back on pulling out containers. We’ve been desperately trying to get containers out as quickly as possible these last few months. The trucker who has 300 export containers waiting to be returned to the terminal also believes that this situation cannot go on for long.

Monday, January 19th, is MLK holiday. Some terminals are open. Others will be closed. A few will be open in limited capacity only. One less day to pull out containers will not help.

I hope I am wrong about a shutdown, but all signs indicate that we are sitting on the precipice and staring straight at a shutdown.

What alternatives do shippers have?

Many shippers have come to me asking me what alternatives they have.

  • If they have the ability to ship to the East Coast or perhaps to Houston, this is an alternative. Note that transit time is long (but perhaps not as long as having to wait it out at the West Coast ports). Furthermore, capacity on vessels to the East Coast is also very tight.
  • What about Canada? If you ship to the Midwest, you should undoubtedly be looking at rail through Vancouver or Prince Rupert as an alternative. However for those on the West Coast, is Vancouver really a viable option? The product would have to be removed from the container and transloaded onto a trailer before being trucked to the most locations in the United States. I recently priced this service out with a few various truckers. The current rough estimated cost to get a container of product from Vancouver to the San Francisco Bay Area would be somewhere between $4500 and $5000. There would be some variation depending on the size of the shipment and whether or not the product floor-loaded or palletized. This is a very rough estimate that could certainly change in the coming months/
  • What about air freight? This would have to be a last resort as air freight rates will assuredly surge during this time.

We will be watching this situation closely and providing updates as we receive them.

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

Truck Protest at the Port of Oakland Today (Monday, December 8, 2014)

Conditions at the West Coast port terminals have seriously deteriorated in past weeks. I have been writing about how horrible conditions have become awful in the past month. Apparently, drivers at the port of Oakland have had enough. We received a message last Friday from one local trucking company that drivers at the Oakland port were intending to protest at the port terminals today, Monday, December 8th. We have confirmed this morning that many trucking companies are indeed facing a protest. Here is a message from one our local drayers:

Today , drivers have not shown up for work  in support of the truckers work stoppage  against the unreasonable delays at the terminals and to highlight their complaints against Union workers. We have learned that numerous drivers, including our own independent contractors, have agreed not to work , either to join their support to the protest, or out of fear for their safety.. Moreover, several transportation companies will not be sending their drivers to the terminals on the day of the protest.

This protest at the port of Oakland is unfortunate in timing, but should not come as a surprise. We have seen the West Coast terminal situation become absolutely unbearable as truckers are not able to consistently get into the terminals to pick up and return containers.

I would like to also share a snapshot of messages we have received this past week from what we consider to be some of our long standing most trusted trucking partners along the U.S. West Coast.

  • “There most likely will be demurrage charges for this container. We will only accept if you guys guarantee demurrage for however many days we need to pull container. Also, once your container becomes available, we won’t be able to schedule until the LFD. We have too many demurraged containers at the moment. Please confirm. Thanks”
  • ​”Well received and even we got the order days ahead before the arrival, there’s no sufficient time to pull out containers from terminals. Due to terminals congestion, we don’t guarantee pickup of containers on or before the LFD​​. Please provide allowance for additional chassis usage because we’re havi​​ng problems on the return too.  Thank you.”
  • “Notes:  Due to the current situation at Oakland Port, we will not be ​responsible for DEMURRAGE CHARGES if container​ ​is not p/u before the last free date​. In order to process the order and assured that we received the document we​ ​will acknowledge receipt of your order by providing a REFERENCE#. If we do​ ​not reply, please contact us immediately”​

The reality is that there is no guarantee these days that a driver going into a terminal will be able to get out of a terminal in any reliable time frame, if at all. In the past, trucking companies were able to schedule drivers to arrange pickups and deliveries ahead of time with a basic amount of certainty. However under current conditions, trucking companies are having to turn away pick up and delivery requests because they just cannot be sure their drivers will be available to successfully get into a terminal. If the trucker does accept the delivery order, they are requesting that we provide a flexible time frame for actually retrieving the container. This means that there WILL be a possibility that a container may not be picked up until AFTER the last free day. This means there may be BOTH demurrage charges to be paid to the terminal AND waiting time charges to be paid to the trucker. In the case of the port of Seattle and Tacoma, we ask that importers be aware that trucking companies are having extreme difficulty even returning empty containers. This can lead to storage and detention charges on empty containers.

Many of our long time trucking partners have turned away a large amount of business in recent months. This turning away of business has only accelerated in recent weeks with various truckers already stating they are booked through much of the month of December.

I have been pleading with our customers to be patient and flexible in this time. If we are assisting you with your trucking moves, this means that we ask that you be understanding if we indicate that we are looking for drivers that can assist with a delivery. You may find that we are using alternative trucking companies outside of normal ones you are used to working with. We ask that you be understanding if we indicate that there may be demurrage and/or special waiting time/congestion charges associated with a pickup.

Great World is first and foremost a service company that has the best interests of our customers at heart. We value our long term partnership with our customers and believe strongly in building mutually beneficial relationships. This is an extremely trying time. We ask that you work with us as well as the trucking community to get through it.

If you have any questions, feel free to contact me.

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

Port Congestion Surcharge Returns! (November 21, 2014)

As expected, carriers are starting to announce the return of the Port Congestion Surcharge. Carriers postponed the PCS earlier this week due to concern from the FMC. However the carriers are indeed struggling with the congestion at the ports. As long as congestion continues, it is of no surprise that the carriers would try to find a way to implement the PCS.

Here is the latest breakdown from the various carriers and where they currently stand. I have indicated in bold below the carriers that have confirmed the PCS again. Please be careful to distinguish the effective dates and whether they are based on the Gate-In date at the port of origin or whether it is base don the discharge date at the destination port.

I do believe other carriers will soon be jumping back in and assessing the PCS. I will keep everyone updated.

US PORT CONGESTION SURCHARGE 2014 Last update Nov 21 2014
Carrier Applicable on shipment Discharge or Via $20 40′ HQ 45′ Effective Date on/after Remark
APL All US Ports 800 1000 1125 1265 TBA Gate in Date at origin (based on last container gate in date in B/L)
CMA LGB/LAX Ports 800 1000 1000 1266 Suspend the implementation until further notice Discharge Date at USWC Ports
COSCO All US Ports + Canada Ports 800 1000 1125 1266 TBA Discharge Date at Ports
CSCL USWC Ports 800 1000 1125 1266 Postpone until further notice Discharge Date at Ports
EMC USWC Ports 800 1000 1125 1266 21-Dec-14 Discharge Date at USWC Ports
Hamburg USWC Ports 800 1000 1125 N/A Suspend the implementation until further notice Discharge Date at Ports
Hanjin USWC Ports + Canada Ports 800 1000 1125 1266 26-Nov-14 Gate in Date at origin
Hapag Lloyd USWC Ports 800 1000 1125 1266 Postpone until further notice Discharge Date at Ports
Hyundai USWC Ports 800 1000 1125 1266 Postpone until further notice Discharge Date at Ports
K-line All US Ports 800 1000 1125 1270 TBA Gate in Date at origin
Maersk USWC Ports + Canada Ports 800 1000 1125 1266 Postpone until further notice Discharge Date at Ports
Matson USWC Ports 500 500 500 500 3-Dec-14 ETD of the Vessel at Origin
MSC USWC Ports 800 1000 1125 N/A 26-Nov-14 Gate in Date at origin
NYK USWC Ports 800 1000 1000 1000 26-Nov-14 Gate in Date at origin
OOCL USWC Ports + Canada Ports 800 1000 1125 1265 Postpone until further notice Gate in Date at origin
PIL USWC Ports 800 1000 1125 Postpone until further notice Gate in Date at origin
UASC USWC Ports 800 1000 1125 Delay the implementation until further notice Discharge Date at Ports
WANHAI USWC Ports 800 1000 1125 1266 24-Dec-14 Discharge Date at Ports

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

Port Congestion Surcharge Postponed (Update – November 19, 2014)

As reported late yesterday, carriers began announcing that they were postponing the Port Congestion Surcharge. We received confirmation today from all remaining carriers that had announced a PCS that they would be postponing the fee. The reason for the postponement is apparently due to intensive scrutiny from the FMC. The FMC sent out a notice on November 17th that they would be closely reviewing the application of the PCS.

The fact that the carriers have postponed the PCS gives a brief breather to importers who are now seeing their containers finish arriving at the peak of the shipping season. However importers and exporters should not assume that the PCS has gone away. From reports, carriers seem intent on finding a way to charge the PCS. Carriers are still sustaining losses due to the extreme congestion they are facing at U.S. West Coast ports. Whether it is through a formal PCS or a General Rate Increase, carriers are looking for ways to pass along the added operation cost that has resulted from the port congestion. In fact, two carriers (Matson and Wan Hai) have given specific dates (Dec.3 and Dec.18th respectively) for charging the PCS again. Those dates will apply based on discharge dates at the destination port. I would not be surprised if other carriers follow this lead and announce a PCS to be implemented sometime in mid-December.

In the meantime, terminals continue to operate slowly. One week away from the Thanksgiving holiday, there is no real timeline for improvement.

-Jimmy Ting
Great World
t: 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

Carriers Begin Collecting Port Congestion Surcharge (PCS) as USWC Ports Continue to Teeter Along, November 14, 2014

Carriers Begin Charging Port Congestion Surcharge
As expected, steamship lines have begun announcing that they will begin charging the Port Congestion Surcharge. We received announcements from the following carriers that they will begin charging the PCS for all containers arriving at U.S. West Coast Ports on or after November 17, 2014.

  • Evergreen
  • Hyundai –
  • CMA-CGM
  • Hanjin
  • NYK

The amount of PCS that we are seeing applied to IMPORT containers is currently as follows:

  • $800/20′
  • $1000/40′
  • $1125/40’HQ
  • $1266/45’HQ

The original PCS that most carriers announced gave them the latitude to levy the charge on containers at all U.S. ports. However currently, the announcements we have seen are only applying to West Coast IMPORT containers. We are expecting most of the other carriers to join in and begin collecting the PCS.

For EXPORT containers, thus far we have only seen Evergreen announce a PCS ($240/20′, $300/40′, and $375/45′). I would imagine other carriers might be joining in to announce a PCS on export containers as well.

Current Status of the USWC Ports
The USWC port terminals are open and operating today. Reports have come out that the Teamsters have been striking at six Los Angeles / Long Beach terminals. However thus far, the ILWU has not honored the picket line and have kept the terminals in Southern California open.

In Oakland, all four major terminals are open today. SSA remains a terminal of concern as we have seen the terminal close twice in the past week. Heavy congestion and backlog remain.

The PMA sent out the following message yesterday, critical again of the ILWU’s behavior in recent weeks. With this message, we are seeing a continued escalation of tensions at the USWC ports.

We are still monitoring this situation closely and will provide updates as soon as we receive them.

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

USWC Terminal Update on the Day After Veterans Day

We expected to see more congestion than normal on the day after Veterans Day. As of 10:55am, we already have our first terminal closure. SSA Terminal in Oakland has shut down for the day due to ILWU labor issues. This is the second time in the past week that the terminal was shut down. As many of you are aware, SSA Terminal in Oakland also shut down last Friday afternoon due to ILWU labor issues.

We have not heard of any closures yet in Los Angeles/Long Beach or Seattle/Tacoma. However we do know that carriers are already limiting or not accepting exports through various terminals due to extreme congestion. Furthermore there was news yesterday of potential trucker demonstrations in Los Angeles/Long Beach ports.

As I mentioned last week, the situation at the ports is extremely tenuous. We know the many reasons for congestion at the ports. However the labor contract negotiation between ILWU and PMA should be taking center stage right now as it threatens to completely shut down USWC ports.

I also wanted to remind importers that the carriers have within their contracts port congestion surcharges that they can assess if there is a shutdown at the ports. The port congestion surcharge for most carriers is listed at $800/20′, $1000/40′, and $1125/40’HQ. We have heard that there carriers are in serious discussion about whether or not to start assessing the surcharge.

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

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

Time to Re-register Your Food Facilities With FDA

For those who import food products, it is time to re-register your food facilities with FDA. Starting in 2012, companies were required to re-register their food facilities with FDA on a biennial basis. The re-registration period is from October 1 through December 31 of each even-numbered year.

Re-registration can be down via the FDA Food Facility Registration website. Please note that “renewing” your registration is different from “updating” your registration. If you recently “updated” your registration, you still need to go into the FDA Food Facility Registration website to “renew” your registration.

Remember that the FDA Food Facility re-registration requirement applies to both food importers as well as their overseas manufacturers. Please remind your food manufacturers to renew their FDA Food Facility registration before the end of the year. As your food manufacturers go through the renewal process, please also be aware of the U.S. Agent appointment process. Domestic food facilities are not required to appoint a U.S. Agent. However foreign food facilities are required to appoint a U.S. agent. It is extremely important for U.S. Agents to remember that under the FDA Food Safety Modernization Act (FSMA), the U.S. agent is responsible for paying for any FDA re-inspections of foreign food facilities. FDA’s fees are not cheap. FDA will be billing for foreign travel at a rate of $305 per hour. Therefore I would HIGHLY recommend that U.S. food facilities think twice before accepting responsibility to be the U.S. Agent for foreign food manufacturers.

Food facilities have until the end of this year to get re-registered. Please do not waste time and get your re-registration completed early to avoid being denied import privileges by FDA.

Let me know if you have any questions.

-Jimmy Ting

GWL Corp

Great World Customs Service

jimmyting@gwlcorp.com

tel# 650-873-9050 x1019