Asian container ports struggle with the worst congestion in 20 years

Brett, Damian.  “Asian container ports struggle with the worst congestion in 20 years” Source: JOC | Wednesday, 10 September 2014 | Lloyd’s Loading List.com

Asian container ports struggle with the worst congestion in 20 years

“”Congestion at key Asian ports is the worst it has been over the last 20 years and the situation looks set to continue, according to two executives from one intra-Asia carrier.

Speaking to Containerization International, MCC Transport chief executive Tim Wickmann and chief commercial officer Naresh Potty said that schedule reliability was becoming increasingly difficult to maintain because of the congestion, which began around March.

Mr Potty named Manila as the worst-performing port but said that Hong Kong, Shanghai, Qingdao, Incheon and Cat Lai in Ho Chi Minh City were also badly affected.

Hong Kong congestion is causing particular issues for carriers, they said.

Mr Wickmann said the problem appeared to be partly caused by the complicated nature of vessel-sharing agreements, with cargo for several carriers being carried on a single ship that then needs to transfer to each of the carriers’ feeder, barge and intermodal service providers.

This has greatly increased the number of inter-terminal transfers.

“I have to say that I have been in this business for more than 24 years and I don’t think I have experienced anything as operationally challenging as I have over the last six months,” said Mr Wickmann.

Costs

He added that the congestion is increasing costs because vessels were having to wait for days outside terminals.

“The way we have been overcoming this is by omitting ports,” said Mr Wickmann. “You start by waiting, and after two or three days you wonder how you will get back on schedule.

“So you take fewer moves than you were planning in certain ports and this affects vessel utilization, or you simply omit calls.”

Mr Potty added it was difficult for short-haul carriers to speed up services to make up the lost time because the shorter transit times allowed for less flexibility than longer-haul services.

“It also creates a snowball effect where you still have the containers in the port waiting collection and by omitting ports you just worsen the situation in the transshipment ports,” Mr. Potty said.

“The cost for us is also not exactly cheap as the port charges us on a per daily basis for storage depending on how long the container sits there.”

Mr Wickmann said that MCC Transport, which offers both feeder and intra-Asia services, has also taken the step of adding ships to services in order to create extra buffer time at terminals, but this increased the cost of running a service.

Asked whether it is possible to implement a congestion surcharge, the two said it would be difficult because of the competitive nature of the intra-Asia trade and because the level of congestion between the terminals at a particular port varies, meaning not all carriers will apply a charge.

“Customers need to get used to the fact that fast transit times are a thing of the past because services with fast transit times don’t have a congestion buffer and that means that every time there is a delay we can’t meet our schedules,” said Mr Wickmann.

”Instead of looking for a fast transit time when everything goes well, which is happening less often, they should look for a schedule they can trust.”

Mr Potty said the problem could get worse, as the typhoon season has yet to get under way and intra-Asia volumes are growing by around 6%-7% per year. “”

 

 

ILWU/PMA Update on Contract Talks

Tentative Agreement Reached on Health Benefits

The International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) announced today that they have reached a tentative agreement on terms for health benefits, subject to agreement on the other issues in the negotiations.

Negotiations Continue on Others Issues

Jurisdiction: The ILWU will want to maintain what work they have now and expand if possible. Due to the focus on productivity with more output and less labor input, the ILWU will try to bring more work under their control.

Productivity: The high cost of the West Coast ports is due to productivity being below global industry standards. The terminals will be pushing for automation and using technology to streamline operations

 

WWL Trade News Update

Congestion, Truck and Rail delays have become the norm lately in many Ports world wide as well as in the USA. Worldwide Logistics has been working through the situation and the majority of our containers are moving relatively smooth through the crisis.

Origin local and transit ports are very congested. Carriers are as well over booked. The larger than expected container volume, along with other issues such as the Vancouver and Prince Rupert Canadian Embargo for US bound cargos have added to the normal high volumes of cargo. For these reasons, both East Coast and West Coast vessels remain over booked at this time. Although we all should be booking cargo at least 2 weeks in advance, vessels are fully allocated with bookings, in some cases, a month in advance. WWL is managing to to move your cargo as booked, but keeping a lid on the rates is a challenge right now with shippers willing to pay well over $1000 more in rates over a month ago, to get on ships. We are doing everything we can to keep a lid in these increases.

Carriers are taking advantage of the situation by enacting Peak Season, Revenue Recovery and/or General Rate Increases. We believe this situation will be relieved no later than by mid-October, if not earlier.

Truck shortages are evident in many inland ports right now. Many Ports are very congested, including LA and Long Beach, with truckers experiencing up to 8 or more hours on line to retrieve containers. They have begun to charge waiting time at the ports, which for many of them is a first. Warehouses are backlogged causing containers to sit for days or weeks in some cases without being de-vanned. This is causing additional Chassis, Per diem, and Bob-tail / dead-head charges (tractors leaving the yard without and empty return).

We have seen some terminals in LA/LB take up to a month to move containers off the port. This is the exception but many carriers are experience major back logs of freight which were initially caused by Teamster Wildcat work actions and have been struggling to recover. Savannah is backlogged 3-4 days, Norfolk as much as 10-12 days delay to access the rail. Rail almost everywhere is slow and congested, and is building especially with the extra volume added from the Vancouver embargo.

Negotiations between the ILWA and PMA on the west Coast is progressing. Some smaller issues have been agreed upon but the mjor issues remain unresolved for now.

We will continue to monitor all of the above issues closely and keep you apprised of any updates.

ASIA USA Trade Lane and ILWU West Coast Port Update

The situation in LA is extremely tough. The piers are running very slow. Another issue adding to the mix is the chassis situation.  Because the carriers halted the Chassis management, the chassis pools have now expanded outside carrier management. They are not getting maintained properly causing further chassis shortages and delays as truckers make sure chassis are in drivable condition.

The ILWU (Longshoreman in West Coast) and PMA (Pacific Maritime Association / Management) are in negotiations and ILWU working without a contract right now. They have vowed to work together without interruption but things are going slower than usual right now. Instead of three pulls a day, truckers are averaging one, “maybe a second” at night. On Thursday last, the Longshoreman quit at 3 pm and did not work the night shift because they had to hold meetings to discuss things.

The Teamster truckers are “not striking so far this week”. Although they have pulled wildcat work actions with the three largest trucking companies in LA basically on and off through last week. This adds to delays to the largest operations and put huge pressure on all truckers, port facilities and causing further rail operation delays. Although this does not affect WWL truckers directly, it overflows to affect every port and every container pulled from the port. ALL truckers are at least” 48 hours behind” right now. That means that we need 48 HOUR notice to pre-pull the containers. Basically, Very difficult to get containers the same or next day. PLEASE GIVE US 48 HOUR NOTICE TO PULL CONTAINERS.

The vessels are overbooked to both West Coast and East Coast right now. Many shippers are now circumventing the West Coast Ports because of the Local Port issues in LA and are now move to the East Coast. Transit ports have hundreds of containers stack up from late feeders due to bad weather, late feeders, and due to what is becoming a very busy peak period. Combine the situation in LA, and you have a “perfect storm” brewing right now. With a further PSS brewing Aug 1 subsequent to July 1 PSS and the vessels overbooked, WWL has been moving our shipments with very few incidents of roll-overs. Although we are facing cost increases WWL‘s effort to mitigate these increases is ongoing and we will advise you further of the rate situation in the near future.

 

Thanks for your understanding.

ILWU contract situation – update 04/30/2014

ILWU contract situation – update.

In an effort to keep you up-to-date regarding the ILWU contract situation, pleae note the current  events in the Transpacific Market.

 

  1. Booking & Capacity
  2. General Rate Increase
  3. Congestion Surchrges
  4. Labor Update

 

Booking and Capacity

Essential for everyone to book import shipments ,  least 2 weeks before ship date if this is possible!  The container ships are currently full and many are overbooked.

As you will read below in the west coast labor update, many importers are already diverting shipments from West Coast to other ports.  As a result of diverted shipments coupled with an increase in shipments,  ALL PORTS  are experiencing an increase in volume.  So it is important to:

A – Book shipments as early as possible.  Two weeks is  the minimum.

B – Provide forecasts of pending shipments volumes to your WWL representative if possible.  This helps our origin office plan booking with the ocean carriers.

 

GRI

The carriers have filed for a General Rate Increase for May 15th. This does not mean that the increase will be implemented in full and is dependent on how full the container ship are.

The Quantum GRI   $240/ 20    $300 / 40   $340 / HQ

Congestion Surcharge

The carriers have also forward filed for “Port Congestion Surcharges”.  In the event of a west coast strike , slow down or heavy volumes to contingency ports, the carriers have filed for a “Congestion Surcharge”.

The surcharges are in excess of $1000.  These surcharges can effect any of the ports servicing the United States. They have done this before but as yet have not instituted it to the trade. Just want you to know it’s out there.

West Coast Labor

As we informed you last month, negotiations for a new contract between the International Longshore and Warehouse Union, and the Pacific Maritime Association – representing employers – will begin on May 12.

Speculation throughout the trade community is that an agreement will not be reached before the current contract expires on July 1, however, many believe negotiations will continue without a strike or lockout although work slowdowns are possible. Truthfully it is impossible to know what will occur but helpful to plan for slow downs or stoppages.

The key issues for the new contract include:

ILWU jurisdiction,

The Affordable Care Act tax impact in ILWU “Cadillac” health plans

Automation.

Wage,

Safety provisions,

Productivity and efficiency.

Planning ahead may help minimize the effects of any future slowdowns on your supply chain.

Some of the options for contingency plans, beside shipping to West Coast into the deadline, are :

1.) ship as early as possible to stock up on inventory,

2.) reroute IPI  cargo over Canadian ports or IPI and West Coast cargo to U.S. East coast ports.

 

We look forward to discussing this with you and please feel free to contact us regarding these issues.

Worldwide Logistics Ltd.

www.wwllonline.com