The State of Detention and Demurrage
Last week we had a trade call organized by the NASA President Max Moran (who is also Chair of the DISCUS Supply Chain Committee and VP of Operations at Remy Cointreau NY) and had the opportunity to hear from the Federal Maritime Commissioner Carl Bentzel.
It’s not encouraging when he stated plainly “We are facing the worst crisis in global shipping since World War II.”. On top of everyone’s mind is what is happening with the FMC’s investigation into the top shipping carriers over unfair practices, specifically addressed to detention and demurrage charges and the refusal of carriers to supply services to US exporters. Demurrage complaints from shippers date back to 2016, but with the port and rail congestion now, and the fact that 98% of cargo is handled by three ocean carrier operational alliances, the White House and regulators are taking action.
The FMC audit will take some time so there won’t be a short-term fix to the fees for demurrage (when you don’t pick up your container from the port before last free day) or detention (when you don’t return the container to the port on time). Commissioner Bentzel highlighted that “I do not see the market changing for the balance of the year, the busiest shipping seasons are back-to-school and holidays”. We’ll continue to update you on new developments.
US Port, Intermodal, Drayage and Trucking Outlook
Port congestion remains high on the US West Coast and Vancouver as well as hot spots in Norfolk and Savannah. Houston port terminals are back online after an unexpected closure from a network hardware failure, this is spilling over to the chassis supply in New Orleans. Jump to the report here. Europe to North America
Plan for more service disruptions to the US West Coast and for import freight moving inbound on rail networks. North Europe ports have become more congested, notably Antwerp this year which is a pivotal port for the wine trade. Carriers blanked (cancelled) sailings which reduced space to the US West Coast this past month, but there were no new omissions for after week 32. For any collections this week, plan for additional cargo protection (reefer equipment or Hillebrand VinLiner insulation) as southern Europe will have temperatures in the upper 90s and 100s in parts of Spain.
North America to Europe
Carriers have reshuffled their transatlantic capacity from the US East Coast. However any cargo moving to those ports via rail will run into delays to secure space and equipment. Space continues to be very tight for US West Coast loads.
Oceania / New Zealand
Industrial action against Patricks terminal in Melbourne have taken place, primarily in banning overtime or extended shifts along with daily stop work meetings three times per day. These actions are to continue for the first two weeks of August. Currently port delays are averaging 5-6 days in Sydney, and around 1-2 days for Melbourne, Brisbane and Fremantle.
The disruption to vessel schedules and port calls is impacting the supply chain in both Australia and New Zealand. Rail service between Adelaide and Melbourne for freight has been temporarily suspended for four weeks. Sydney delays continue to impact vessel port calls and the consequent movement of empty equipment. Recent bad weather in Napier, New Zealand has caused vessels omissions and delays. There is a backlog of cargo to move via Tauranga which is already overloaded with congestion due to the record volumes of freight trans-shipping there.
South America / Central America Transshipment hubs
There is little improvement in services from South America to the US West Coast that transship in Central America are delayed from the bottlenecks at these ports. These hubs are overloaded with cargo from Asia moving to the US West Coast and the situation is expected to worsen as we move into peak consumer demand periods for the US (back to school and holiday shipping season). As a reminder, expect winter weather delays and freezing temperatures for cargo moving across the Andes mountains from Mendoza Argentina to Chilean ports.
Impact of Heat Waves on products in transit
According to the National Weather Service in the US, excessive heat will continue to impact southern California, Arizona and Nevada into Thursday. A heat wave is also forecast for Southern Europe the next few days. Due to the extended delays in the supply chain, at ports, rail hubs and in delivery, cargo protection with Hillebrand VinLiner insulation (sea freight) and temperature protection (road / rail) is essential. Read more about impact of transportation on product quality here.
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.