Los Angeles

State of US West Coast Shipping Heading into the Chinese New Year

As we close out the month of January, I think it is extremely important for those who ship into and out of the U.S. West Coast ports to have a clear outlook of what to expect in the following months. Chinese New Year is on the horizon (February 18th) and is already impacting the shipping industry.

West Coast Terminal Congestion
Los Angeles and Long Beach ports continue to be a bottle neck. Vessels anchor outside the port waiting to be worked on and when they are worked on, it is taking over a week for the work to complete. Vessels are overall averaging two weeks or longer in Los Angeles/Long Beach. Many steamship lines have taken to “drifting” their vessels as they sail towards Los Angeles/Long Beach, as there is no point in rushing the vessels to the port if the vessels are expected to anchor and wait to be worked on.

I have heard rumors of customers paying massive amounts of demurrage / storage charges in Los Angeles / Long Beach, with one customer telling me they had a bill from their freight company for over $40,000 in demurrage fees and another customer mentioning a bill of over $30,000. I’m not sure how accurate these stories are, but they are an example of what many importers are facing as they fight to get their containers at the port. Importers are not just fighting to get containers out, but also fighting the terminals/carriers over demurrage charges.

While Oakland continues to face similar congestion, the port at least was able to go one week without a terminal closure incident. Various truckers are still refusing to go into the problem terminals, in particular SSA Terminal. However we did notice that containers arriving at Evergreen’s BENT terminal this week were able to become available for pick up within a day or two after coming off the vessel. This was a great improvement over previous weeks when we would routinely see containers be placed in closed areas for roughly a week after coming off the vessel.

Are any vessels still planning to come to Oakland?
Due to the delays in LA/LB, carrier sailing schedules are no longer able to follow predictable weekly sailing patterns. In order to try to get vessels back on schedule, many carriers have eliminated calling second ports along the West Coast. For example, Oakland has seen a drastic reduction (at least five strings have been eliminated). I have heard other carriers also are discussing whether or not to remove Oakland as a port calling. One carrier representative explained to me that the cost of sending a container from Los Angeles/Long Beach to Oakland via rail was cheaper than sailing a vessel to Oakland and having it wait at the port to be worked on. It is no coincidence then that more carriers are also discussing dropping Oakland as a port calling.

Are there any vessels to pick up containers in Asia before the CNY?
One carrier representative advised me yesterday that space on vessels departing from Asia is completely booked up through the month of February. This is due to a combination of reasons:

  • The usual surge of product departing from China before the CNY.
  • The fact that most vessels are stuck on the West Coast waiting to go back to Asia.
  • Despite the lack of vessels and abundance of cargo, carriers are still planning on skipping a week and having a “blank” sailing after the CNY.

PMA-ILWU Contract Situation
I do view the fact that Oakland went a week without a labor stoppage as a sign that the contract negotiation is finally moving forward. Assuming the two sides don’t have any massive arguments in the coming week, there is room for optimism that a contract may finally be agreed upon.

Nevertheless, even when the PMA and ILWU agree on a contract, it is going to take months to unwind ourselves from this mess at the ports.

If you have space confirmed with a carrier, I highly recommend that you don’t mess around with it. I have had various importers and exporter come to me complaining about the listed transit times on containers that we have booked. In light of the vessel availability situation, the top priority for every importer should be just getting product out during the month of February.

Let me know if you have any questions.

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

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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

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

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

LA/Long Beach Port Strike Over

The strike at the ports of Los Angeles and Long Beach are officially over. Both sides came to an agreement late last night. Details of the agreement are not immediately known. One publication I have read indicates that the new contract will extend six years. The longshoremen are back at work this morning.

Here is a review of what importers can look forward to in the aftermath of the week long strike.

  1. Vessels that have arrived and stayed in Los Angeles and Long Beach will begin to be worked on this morning. I assume it will be on a first-in, first-out basis. I think it would be reasonable to expect that there will be some congestion at the terminals that may take a few weeks to get over.
  2. Truckers in Los Angeles and Long Beach will be busy working through the back log of containers that have arrived. Importers should work closely with truckers to prioritize deliveries.
  3. Importers with new bookings from overseas must double-check the vessel schedules as there is a strong possibility that carriers may no longer be on track with their prior posted schedules. The vessels that have stayed for a week at the Los Angeles / Long Beach ports may be at least a week behind their sailing schedule. As we saw from the 2002 port strike, carriers needed a few weeks to re-align their vessel schedules.
  4. For shipments diverted to other ports such as Oakland, Seattle, and Tacoma, Customs has provided the following instructions:

Vessel Diverted to Foreign Port and Discharged: When a vessel does not arrive in Long Beach and diverts to a foreign port of entry to discharge freight, all bills of lading and entries filed against those bills need to be deleted. New entries will be filed at the appropriate port of entry for merchandise entering the U.S. A new prior notice will be transmitted to the Food and Drug Administration (FDA) for shipments requiring prior notice. The Trade can submit a deletion list to the Long Beach Trade Interface Unit (TIU) and does not need to provide any additional documentation. Entries should be removed from the statement.

Vessels Diverted to Foreign Port Not Discharged: When the vessel is diverted to a foreign port of entry but not discharged, no change is needed to the bill of lading or entries. The arrival date for the vessel will reflect the date the ship returns to Long Beach to be offloaded

Everyone is breathing a sigh of relief now that the LA/Long Beach labor dispute is over. However we are not out of the woods yet. Everyone now must shift their eyes to the East Coast port contract negotiations. The deadline of December 29th is less than a month away. As reminded previously, all importers, even those with shipments only coming to the West Coast, should be concerned with these negotiations. The carriers have announced a Port Congestion Surcharge that would be implemented in case of a East Coast port strike.

-Jimmy Ting

jimmyting@great-world.com

LA/Long Beach Port Labor Dispute Enters Second Week Without Resolution

Seven days after members of the OCU clerical works began striking, the same terminals in Los Angeles and Long Beach remain closed. Carriers are starting to divert vessels to other ports along the West Coast. Please check with your freight forwarder to see if vessels currently on the water are still bound for Los Angeles/Long Beach or whether they are being diverted.

As mentioned in my previous post, if you have containers heading to a Midwest location, you should consider booking with a carrier that discharges in Canada (Vancouver or Prince Rupert).

-Jimmy Ting

jimmyting@great-world.com

LA-Long Beach Port Strike Now Entering 4th Day

We are now entering the 4th day since the clerical workers began striking at the ports of Los Angeles and Long Beach. The longshoremen continue to honor the strike, keeping most of the terminals shut down. There are three terminals (PIER A, PCT and B-136) in Long Beach that are open. These terminals are open because they do not employ OCU clerical workers.

We have yet to see many vessels begin to divert from Los Angeles/Long Beach. However with a number of vessels set to arrive this weekend and already arrived vessels continuing to remain unworked on, we may see carriers forced to divert vessels in the coming week. Carriers are giving us daily status reports. Most are taking a wait and see approach. This may change at a moments notice. Importers who are expecting their cargo to arrive in the coming weeks should continue to brace for long delays.

Importers with new bookings for containers moving via rail to inland locations may want to consider carrier services that transit via Canada (via Vancouver or Prince Rupert). Some inland destinations that have carrier service through Canada include Chicago, Cleveland, Memphis, Minneapolis, Detroit. Please contact us if you want to inquire into specific inland rail destinations not listed here.

-Jimmy Ting

jimmyting@great-world.com

Labor Dispute at Los Angeles & Long Beach Ports Threatens to Disrupt Ocean Shipments Throughout the United States

The West Coast port clerical workers have been working without a contract since their previous contract expired over two years ago (June 30, 2010).  Negotiations broke down earlier this month. Clerical workers went on strike at APM Terminals in Los Angeles on Tuesday, November 27th. The strike spread to the other terminals in Los Angeles & Long Beach on Wednesday, November 28th. Longshoremen working at these terminals have honored the picket lines, effectively shutting down the ports of Los Angeles & Long Beach.

Clerical workers went on strike for one day at the port of Oakland last Tuesday (November 20, 2012), shutting down the port for a single day. They returned back to work the following day. However the strike in Los Angeles & Long Beach seems to be more than just a one day demonstration. Through today, the ports of Los Angeles & Long Beach are still shut down.

*** Special Alert (as of 11:50am, Nov.29, 2012): It does seem that a few terminals are open (PIER A, PCT and B-136). All other terminals are closed. How long this continues remains to be seen. ***

The issue that seems to be at the crux of the labor dispute is not wages and benefits (which the OCU agrees is generous). At issue are 51 jobs that the OCU feels have been outsourced to other countries. The Los Angeles / Long Beach Harbor Employers Association represents the terminal companies in their negotiations. They dispute the allegations of outsourcing of jobs, saying that the 51 jobs referred to by the union belong to workers who have retired, quit, or died in the the past three years. The fact that new hires were not made to fill these positions was a simply a matter of lack of business need for replacements. None of the work performed in the 51 jobs has been outsourced.

If you are interested in following the labor dispute in detail you can try to read both sides of the story at the following websites:

Los Angeles/Long Beach Harbor Employers Association: This website represents the viewpoint from the terminal operators who employee toe clerical workers.

Longshore & Shipping News: This is a website that seems to provide news from the perspective of the longshoremen. I couldn’t find news updates on the actual ILUW 63 OCU website.

Importers and exporters need to brace themselves for an extended work stoppage. How long the actual work stoppage continues is difficult to predict. What is apparent is that the work stoppage will impact ocean shipments throughout the United States. Containers at the port of Los Angeles/Long Beach waiting to move onto rail are effectively stuck. Vessels waiting to get worked on at the port of Los Angeles/Long Beach are sitting idle. Importers waiting for vessels to continue sailing to other ports along the West Coast (Oakland, Portland, Seattle, Tacoma), will likely see delays as most vessels call Los Angeles/Long Beach first. Cargo currently being loaded onto vessels coming to the West Coast may also find their schedule disrupted. If work stoppage continues for an extended period of time, we may even see carriers begin to divert cargo (as seen during the previous work stoppage on the West Coast ten years ago). The diversion of cargo led to significant additional charges that importers had to pay.

We should also keep in mind that the contract negotiations between the longshoremen’s union (ILA) and the East Coast & Gulf ports have not been settled yet and the pushed out deadline (December 29, 2012) is right around the corner. Importers may be faced with a situation where there is a labor dispute at both the West and East Coast ports.

-Jimmy Ting

jimmyting@great-world.com