North America Operations Update
Trade Tariffs on beverage alcohol trade
NASA continues to work with 88 associations as part of the Toasts not Tariffs Coalition to urge for the immediate removal of tariffs on beverage alcohol products. Recent progress was made between EU and US over steel and aluminum tariffs that averted the planned doubling of tariffs on American Whiskeys that was scheduled for June 1st. There is an US-EU Summit taking place June 14-15 in Brussels Belgium which is another important opportunity NASA and industry associations are taking to reiterate the joint call to end tariffs on all of the unrelated sectors caught up in trade disputes.
If you missed last week’s update, below is the latest insight on congestion, capacity and the upcoming summer shipping outlook. Contact us to be added to the North American Operations Report via email.
The connection between congestion and capacity
As we move into the summer months, the shipping industry is still grappling with delays from congestion, equipment shortages, and restricted capacity. Where does that leave us as we move into the traditional peak shipping season?
We can look to the US West Coast ports for a clear example of the domino effect of port congestion. This region takes the largest brunt of import volume from the transpacific trade and can handle the mega containerships. Vessels have been queued up outside the port to berth and each vessel stays longer in port as labor is restricted to 4 gangs for large vessels at LA/Long Beach, and 2 gangs per vessel at Oakland for most shifts. Without any break in vessel arrivals, all terminal activity gets backed up – container movements (inbound/outbound), chassis supply, gate operations, rail connections and more.
This port congestion in turn continues to impact ocean carrier operations and schedules. When all the vessels in a scheduled rotation are delayed on their multiple stops, this prevents them from returning to the origin (Asia for a lot of West Coast calls) to meet the next rotational departure. To realign schedules, carriers remove or “slide” one more more planned sailings. This adds to the volume of rolled (overbooked) containers that do not make the intended vessel. So each consecutive vessel has less capacity because they need to take on the rolled cargo. This also takes more container equipment out of circulation with the delay. Typically each “slide” sailing will take the next four weeks to resolve the backlog of cargo.
Carriers are trying to mitigate the capacity limits through the vessel charter market (purchasing extra loaders to move forced slide sailings). The charter market is tight as well due to the demand and the extra costs associated to secure this capacity, if even deployed on a given sailing loop, is passed to the market at a premium.
Shipping rush before August
The next two months we can expect to see retailers ramp up for a strong back to school and holiday season, even before the typical shipping peak in August. Given the current situation, carriers and industry experts are predicting the shipping disruption and delays to continue throughout this year. We encourage you to reach out to your suppliers and customers to adjust your lead times and discuss revised delivery expectations given the constraints of the shipping industry today.
For more information on pending or planned shipments, please reach out to your Hillebrand representative to discuss the best possible arrangements for transport, warehousing, insurance, and customs compliance needs