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Northeast ports prepare for Baltimore-bound freight as shippers scramble

Ocean carriers are diverting ships to other ports in the Northeast US while CSX Transportation plans on rare north-south intermodal trips between those ports to handle containers that would otherwise go through the Port of Baltimore. The moves come as shippers scramble to figure out their next best options in the immediate wake of the Baltimore port’s closure.

Vessel traffic in and out of the port remained suspended Wednesday as recovery efforts resumed for six missing construction workers, now presumed dead, who fell into the Patapsco River after the Maersk-chartered Dali crashed into the Francis Scott Key Bridge early Tuesday.

With salvage efforts for the downed bridge still to be undertaken, the Maryland Port Administration has not provided a timeline on when the port will reopen.

The length of the recovery efforts, as well as the potential impact on vessel traffic once the bridge gets rebuilt, are what’s at stake for many shippers that relied on Baltimore to move their goods and are now having to figure out their next steps.

“A shorter duration closure involves a temporary reroute to manage the disruption from a supply chain perspective,” a maritime logistics executive told the Journal of Commerce. “A longer duration disruption may involve rebuilding existing supply chains.”

For the time being, the temporary reroute is the option. Seagirt Terminal, the Port of Baltimore’s main container terminal, had planned for the arrival of 18 container ships through April 6, according to Seagirt’s vessel schedule as of Tuesday.

As of Wednesday, three Mediterranean Shipping Co. vessels that were previously bound for Baltimore – MSC Alina, MSC Altamira and MSC Paris – are expected to arrive at the Port of Philadelphia’s Packer Avenue Terminal this week, according to Packer’s vessel schedule.

PhilaPort said in a statement following Baltimore’s closure that “the maritime and supply chain community will naturally work to assist the Port of Baltimore at this time.”

New Jersey’s Port Newark Container Terminal plans to receive seven ships that were previously Baltimore-bound through the first week of April. Those include the MSC Kumsal, Maersk Makutu, Maersk Gironde, MSC Mattina and Nele Maersk, along with second calls by the Alina and Paris.

The Port Authority of New York and New Jersey said in a statement Tuesday that “it is proactively working with our industry partners to respond as needed and ensure supply chain continuity along the East Coast.”

The Gironde, Makutu and Maersk’s CCNI Andes are also now scheduled to call the Port of Virginia’s Norfolk International Terminal in the coming weeks after previously planning to arrive at Baltimore.

The Port of Virginia said in a statement that “it is already working with ocean carriers whose vessels were due to call Baltimore and offering our port’s capability to discharge cargoes as requested.”

Other carriers that call Baltimore, including CMA CGM and Evergreen Marine, are declaring force majeure on freight, leaving it indeterminate where they plan to discharge their goods. Evergreen’s 14,000-TEU Talos remains at anchorage at Savannah and its sister ship Triton is anchored at Norfolk.

Baltimore’s Seagirt, which handled 1.1 million TEUs last year, is planning to help move some of that freight. Ports America, Seagirt’s operator, said in a statement to the Journal of Commerce that it is working with CSX Transportation, its on-dock rail provider, to move import containers from other ports to Seagirt. It said it is also working with Norfolk Southern on a similar plan at its off-dock rail yard, which handles domestic containers.

“CSX and Ports America are collaborating on the fast launch of intermodal service for cargo diverted to other ports to come through the intermodal container transfer facility at Seagirt as a solution for cargo owners wanting Baltimore access,” the statement said. “Norfolk Southern has also reached out to discuss similar solutions for importers.”

Trucking, ocean freight costs expected to increase

Jeff Leppert, vice president of Redwood Logistics, told the Journal of Commerce that shippers are asking about their trucking options as they face port diversions. He said it’s unclear how long those diversions will last, but noted they will cause delays and higher expenses as more drayage providers and transload facilities for truckload freight are tapped.

“Shippers are asking what do we do about securing capacity,” Leppert said. “We don’t have a lot of excess truck capacity laying around.”

Robert Burdette, vice president of Baltimore-based third-party logistics provider Shapiro, told the Journal of Commerce that roughly two-thirds of the ocean freight coming into Baltimore goes to warehouse and distribution centers areas around Hagerstown, Maryland, and southeastern Pennsylvania.

He said New York-New Jersey will make more sense for some of the Pennsylvania-bound freight due to the shorter length of haul. But freight coming through Norfolk will likely require transloading to dry-van because drayage is not economic at the longer distance.

“Norfolk sounds appealing from the perspective of port capacity, but it doesn’t work that well for Baltimore,” Burdette said.

Challenges for exporters

Rachel Shames, vice president at Norfolk-based forwarder CV International, told the Journal of Commerce that transloading from container to truckload at the Port of Virginia is going to be the main option for shippers looking to get to the Baltimore region.

Shames said that more truckers are reaching out about work and there’s transload capacity available, but whether it’s going to be enough to handle the diversions is unclear.

“I get the sense that we can absorb some of the extra volume down here, but it’s really hard to say what the actual volumes are going to be,” she said.

Exporters, too, are facing a similar issue of repositioning their containers or waiting out the port’s reopening. CMA CGM sent a notice to shippers Tuesday indicating it will allow laden exports to remain at the port until Baltimore harbor reopens. The carrier said that exporters can use Norfolk or New York-New Jersey as an alternative, but that repositioning the containers will be at the shipper’s expense.

Burdette said it’s much more difficult for an exporter to absorb repositioning costs because of the low value of their freight. Ports America said export containers will also be addressed through the CSX and Norfolk Southern service once plans for import containers are finalized.

Details please refer to JOC news.

Source:

Angell, M. (2024b, March 27). Northeast ports prepare for Baltimore-bound freight as Shippers Scramble. Journal of Commerce. https://www.joc.com/article/northeast-ports-prepare-baltimore-bound-freight-shippers-scramble_20240327.html

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Trucking squeezed, but not crushed, by Baltimore port closure

The closure of the Port of Baltimore will be felt far from Chesapeake Bay but tempered by excess capacity at other ports and on US highways, analysts and industry sources say.

Problems could range from shortages of drayage and flatbed capacity on the East Coast to delays and higher costs for the delivery of goods rerouted to other ports. While it’s unknown how long Baltimore’s port will be closed, most knock-on impacts are expected to be short-lived and specific to certain markets and industrial verticals.

“It’s peak season for flatbed work out of Baltimore, and the supply of agricultural and construction equipment to the Midwest could be disrupted,” Dean Croke, principal analyst at DAT Freight & Analytics, told the Journal of Commerce.

That’s one of many potential challenges shippers and trucking companies might see in the wake of the port closure after a container ship struck and collapsed the Francis Scott Key Bridge early Tuesday, Croke and other industry sources said.

The immediate issue for shippers, warehouse operators and carriers in the Baltimore area was how to keep freight moving. “The loss of the bridge has been impactful, as that’s a big hazmat route,” said John Luciani, COO of LTL Solutions for regional less-than-truckload (LTL) carrier A. Duie Pyle.

Trucks carrying hazardous materials are banned from the Baltimore harbor tunnels on I-95 and I-895 and use the I-695 beltway around Baltimore. The collapsed bridge is on the eastern half of that route, which means trucks must detour to the west.

Luciani said traffic congestion has increased since the bridge collapse but called that an “inconvenience” rather than a significant problem. “The impact is probably an additional 30 minutes” as trucks take alternate routes around Baltimore, he said.

Details please refer to JOC news.

Source:

Cassidy, W. B. (2024, March 27). Trucking squeezed, but not crushed, by Baltimore Port Closure. Journal of Commerce. https://www.joc.com/article/trucking-squeezed-not-crushed-baltimore-port-closure_20240327.html

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No timeline for Baltimore port reopening following bridge collapse

The Port of Baltimore will remain closed for the foreseeable future after a Maersk-chartered container ship lost power and crashed into the Francis Scott Key Bridge early Tuesday, collapsing the span and sending construction workers on the bridge into the Patapsco River. At least six workers remained missing, authorities said; two were rescued from the water.

With the fifth-largest container port on the US East Coast now effectively isolated from waterborne traffic, the deadly accident will, at least temporarily, reconfigure the region’s supply chain. Mediterranean Shipping Co., the world’s largest container carrier, said it expects it will be “several months” before it can resume calls to Baltimore.

Baltimore is the largest port along the East Coast port for handling roll-on, roll-off cargo such as cars, light trucks and farm equipment, processing 389,096 auto units last year.

The port’s closure could put pressure on container lines as they divert vessel calls, challenging ocean service reliability at other US East Coast ports and even generate congestion if there’s vessel bunching at those gateways.

“This is a major disaster and will create significant problems on the US East Coast for US importers and exporters,” Lars Jensen, CEO of Vespucci Maritime and a Journal of Commerce analyst, said in a LinkedIn Post. “The bridge collapse will mean that for the time being it will not be possible to get to the container terminals – or a range of the other port terminals – in Baltimore.”

President Joe Biden, speaking from the White House, promised to put the full weight of the federal government behind recovery efforts in Baltimore, including funding the entire cost of reconstructing the bridge. “I directed my team to move heaven and Earth to reopen the port and rebuild the bridge as soon as humanly possible,” Biden said.

Alternative routings for vessels looking to drop off or remove cargo from the region include Wilmington, Delaware; Philadelphia and Norfolk, said S&P Global analysts, noting that the three ports ranged from 120 miles to 260 miles from Baltimore via truck.

No timeline for port reopening

The US Coast Guard said it received a report at 1:27 am Tuesday that the 948-foot container ship Dali struck the Francis Scott Key Bridge. Maryland Gov. Wes Moore said in a statement that the Dali reported losing power prior to the collision.

Jennifer Homendy, chair of the National Transportation Safety Board (NTSB), said a press conference that search-and-rescue efforts were still underway late Tuesday for at least six construction workers who were on the bridge at the time of its collapse. She did not offer a timeline on when the port would reopen.

“Right now, it’s about people and addressing the needs of those that were impacted, that’s the focus,” Homendy said. “I don’t think anybody at the NTSB command post is thinking about the next steps for getting things cleaned up. They are working to find out who was impacted and how do we address that, because that is and should be the priority always.”

The Maryland Port Administration said in a statement that due to bridge strike, “vessel traffic into and out of the Port of Baltimore is suspended until further notice.” It said that trucks are still being processed at the port’s main container terminal, Seagirt.

The port said in its last update that “at this time we do not know how long vessel traffic will be suspended.”

No Maersk personnel onboard vessel

The Maritime and Port Authority of Singapore, which flagged the 9,962-TEU ship, said the Dali had 22 seafarers on board. None were injured.

The ship is owned by Singapore-based Grace Ocean Pte. Ltd., which has a fleet 54 ships of various types, including six container ships, five of which are chartered to Maersk, according to Sea-web, a sister product of the Journal of Commerce within S&P Global.

The Dali is operated by Singapore-based Synergy Maritime, Sea-web data shows. It is deployed in the 2M Alliance’s TP12/Empire service between North Asia and the US East Coast. Baltimore was the last US call before heading to the Port of Colombo in Sri Lanka, according to its last AIS track.

Maersk said in a statement to the Journal of Commerce that the Dali “is time chartered by Maersk and is carrying Maersk customers’ cargo. No Maersk crew and personnel were on board the vessel.”

The carrier added it was “horrified by what has happened in Baltimore, and our thoughts are with all of those affected.”

Synergy Maritime said in a statement that the vessel was outbound from Baltimore under control of two local pilots at the time of the accident. It said all crew members and the two pilots have been accounted for and there has been no pollution from the accident.

“The US Coast Guard and local officials have been notified, and the owners and managers are fully cooperating with federal and state government agencies under an approved plan,” Synergy said.

Trucks still working Seagirt terminal

Seagirt, which handled approximately 1.12 million TEUs last year, is also home to three other Asia services along with the TP12/Empire. Those include the Ocean Alliance’s Taiwan Strait/AWE3 service, Mediterranean Shipping Co.’s Santana service and Zim Shipping’s ZXB service.

The 2M Alliance also operates two trans-Atlantic services that call Baltimore, with other container lines operating various services from India and South America that also call the port. It is not known yet how those services may be rerouted.

Maersk said in a customer advisory that cargo on the TP12 service, its two European services, and a service from South Africa would omit Baltimore “for the foreseeable future, until it is deemed safe for passage through this area.”

According to Ports America’s vessel arrival schedule, some 18 container ships were expected to arrive at Seagirt between March 26 and April 6. Those include Evergreen Marine’s 14,000-TEU Triton and Talos, which are deployed in the Ocean Alliance’s Asia service and expected to call over the next two weeks. Another ship in 2M’s TP12 service, the 10,000-TEU Maersk Yukon, was expected to call in the next week.

MSC, Maersk’s partner in the 2M Alliance, said in a statement the Dali was carrying cargo for MSC customers. The carrier also said it expects it will take “several months” to resume calls at Baltimore.

“We are expecting substantial delays to cargo aboard the (Dali) and currently standing on the quay in Baltimore,” MSC said. “Further to the port authority’s closure of the port, we also have no choice but to omit Baltimore from all our services for the foreseeable future, until the passage to port is reopened and declared safe. We expect this to take several months and all MSC customer cargo will be rerouted and discharged at alternative ports in the meantime.”

Details please refer to JOC news.

Source:

Angell, M. (2024, March 26). No timeline for Baltimore port reopening following bridge collapse. Journal of Commerce. https://www.joc.com/article/no-timeline-baltimore-port-reopening-following-bridge-collapse_20240326.html

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BNSF, UP working through rail container backlogs in Southern California

Terminal operators at the ports of Los Angeles and Long Beach are working to reduce a backlog of rail containers that have accumulated during two consecutive months of strong imports and are urging the railroads to send more cars to the ports to help them finish the job.

The rail container inventory at Yusen Terminals in Los Angeles is double the normal volume, but the terminal has managed the load thus far. “We’ve been backed up for four to five weeks, but there’s no real congestion yet,” said Yusen CEO Alan McCorkle.

Still, McCorkle said he anticipates strong volumes for summer and fall as much of the discretionary cargo that left West Coast ports last year during the prolonged longshore contract negotiations returns.

US imports from Asia in January and February handled in Los Angeles-Long Beach totaled 1,395,837 TEUs, an increase of 39.6% from the first two months of 2023, according to PIERS, a Journal of Commerce sister company within S&P Global.

The two railroads that serve Los Angeles-Long Beach, BNSF and Union Pacific, say they are responding to the backlog in Southern California. BNSF and Union Pacific told the Journal of Commerce they are deploying more intermodal railcars to Los Angeles-Long Beach and are adjusting their operations so the terminals can clear out the rail containers and reduce dwell times.

BNSF in February set a record for on-dock intermodal container moves in Los Angeles-Long Beach, beating its previous February volume record set in 2021, said Jon Gabriel, the railroad’s vice president for innovation, service design and network strategy.

BNSF is steadily reducing the rail container backlog, he said. “We will whittle away at it and should be completely current by the start of April,” said Gabriel.

BNSF has positioned “ready fleets” of railcars at “multiple locations” throughout the western US so it can deploy more equipment when needed at the ports and along its network, Gabriel said. “We have dedicated equipment that focuses only on the ports,” he added.

In addition to the import surge in Los Angeles-Long Beach, operating conditions in the western part of the country were hampered by wildfires in Texas and flooding that occurred during multiple rainstorms on the West Coast, Gabriel noted.

When some terminals in Los Angeles-Long Beach began to experience a surge of imports, Union Pacific “temporarily restricted westbound empty billing to help marine terminals manage higher import volumes,” a UP spokesperson said. The temporary restriction was later lifted and UP isn’t experiencing a railcar shortage this week, the spokesperson said.

Backlogs vary from terminal to terminal

The rail container backlogs vary from terminal to terminal in Los Angeles-Long Beach. SSA Marine, which operates three terminals in Long Beach, has not experienced issues with rail containers so far this year. Due to its mix of ocean carriers, SSA does not handle as many intermodal containers as some terminals, said Ed DeNike, president of SSA Containers.

Details please refer to JOC news.

Source:

Mongelluzzo, B. (2024b, March 19). BNSF, up working through rail container backlogs in Southern California. Journal of Commerce. https://www.joc.com/article/bnsf-working-through-rail-container-backlogs-southern-california_20240319.html

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THE Alliance restores two trans-Pacific services as Asia imports jump

Two trans-Pacific container services operated by THE Alliance that were suspended last year due to plummeting ocean freight rates will restart in the second quarter. The new capacity arrives as US imports from Asia show strong growth at the start of 2024 and trans-Pacific rates recover from 2023 lows.

Hapag-Lloyd said THE Alliance’s East Coast 4 (EC4) service will resume with the voyage of the 14,080-TEU YM Warmth, which is scheduled to arrive at Port of Norfolk on May 25. The EC4 service spans ports in Taiwan, southern China, Vietnam and Singapore, with US calls at Norfolk, Savannah, Charleston and New Jersey.

The EC4 will use a rotation of 13 ships operated by THE Alliance members Ocean Network Express (ONE) and Yang Ming, according to Sea-Intelligence Maritime Analysis’ latest weekly report. It’s unclear whether Hapag-Lloyd and HMM will also deploy ships or take slot charters, Sea-Intelligence added.

With some THE Alliance services from Asia to the US East Coast being rerouted via the Cape of Good Hope, the EC4 transit time from Singapore to Norfolk will now be 29 days, according to Hapag-Lloyd’s online vessel schedules. The EC4’s Suez transit would take 25 days, according to the service’s proforma schedule.

In addition, THE Alliance’s Pacific Northwest 3 (PN3) service will restart with the first voyage of the 13,600-TEU HMM Aquamarine, which is expected to arrive in Vancouver on May 14. The PN3 port rotation includes southern China, South Korea, Vancouver and Tacoma.

THE Alliance, which said in December that the two services would be restored as part of their 2024 network, suspended the EC4 and the PN3 in the fourth quarter of 2023 due to the rout in freight rates.

Details please refer to JOC news.

Source:

Angell, M. (2024b, March 19). The alliance restores two trans-Pacific Services as Asia imports jump. Journal of Commerce. https://www.joc.com/article/alliance-restores-two-trans-pacific-services-asia-imports-jump_20240319.html

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Chinese niche carrier to launch Shanghai-Los Angeles expedited service next week

Hede (Hong Kong) International Shipping Ltd. next week will launch a premium weekly service from Shanghai to Los Angeles, entering the competitive trans-Pacific market at a time when it is beginning to turn around from a weak 2023.

The Chinese-owned carrier’s first vessel will depart Shanghai on March 21, with arrival at the West Basin Container Terminal (WBCT) in Los Angeles scheduled for April 3, according to Roger Zhang, COO of Duke Shipping, the exclusive agent for the service.

The transit time will be 13 days, and with access to a leased chassis fleet at WBCT, containers requiring expedited treatment will be discharged from the vessels directly to chassis so customers will be guaranteed next-day pickup at the terminal, Zhang told the Journal of Commerce.

“Hede is demonstrating its long-term commitment to the trans-Pacific trade by entering it now, before the trade really takes off,” he said.

Hede is a China-based carrier that operates in the domestic and intra-Asia trades, Zhang said.

According to Infor Nexus, the average transit time from Shanghai to Los Angeles in January, the latest data available, was 15 days, a level that has been unchanged since September.

Hede’s new service would appear to be a direct challenge to Matson, which operates two express services from China to the US West Coast. Matson last month said those two services carried 34,900 FEUs during the 2023 fourth quarter, a 23% year-over-year gain.

UWL, the forwarding arm of third-party logistics provider World Group, in May 2022 launched a partnership with multipurpose shipping line Swire Shipping to offer a biweekly express container service from the Port of Ho Chi Minh City in southern Vietnam to the Port of Seattle’s T-30 terminal.

The expedited service will fill a niche for e-commerce and similar shipments that require faster handling, Zhang said. Standard trans-Pacific services have transit times of 14 days or longer, and containers can often sit on the terminals in Los Angeles-Long Beach for several days or longer before being picked up by truckers.

The Hede service will operate from Shanghai to Los Angeles and back to Shanghai, with vessels ranging in size from 3,700 to 4,250 TEUs capacity, Zhang said.

Source:

Mongelluzzo, B. (2024, March 15). Chinese niche carrier to launch Shanghai-Los Angeles Expedited Service Next Week. Journal of Commerce. https://www.joc.com/article/chinese-niche-carrier-launch-shanghai-los-angeles-expedited-service-next-week_20240315.html

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Montreal port employers lose bid to make dockwork an ‘essential service’

Canada’s labor tribunal on Thursday rejected a request from maritime employers at the Port of Montreal to designate container services at the port as an essential service, leaving the option open for longshore workers to strike.

The “essential” designation request, which if granted would have barred workers from striking, comes as talks on a new contract have dragged on for seven months with no resolution.

“Although the decision does not correspond to our expectations, we remain convinced that the continuity and stability of the supply chain is of the utmost importance,” the Maritime Employers Association (MEA) said in a statement after the ministry’s ruling. “Our priority remains the conclusion of a negotiated collective agreement.”

The MEA filed its request in October that longshore work at Montreal’s six container terminals be designated as an “essential” service. The rejection came from the Canadian Industrial Relations Board.

The MEA’s request last fall, which had the support of Canadian forwarder and shipper groups, came as it said talks for a new collective bargaining agreement with the Canadian Union of Public Employees (CUPE) Local 375 hit an impasse just ahead of the expiration of the current four-year contract.

The MEA entered talks with the union representing Montreal’s 1,200 dockworkers back in September. But the union quickly shut down direct talks with employers by asking Canada’s Federal Mediation and Conciliation Service (FMCS) to intervene, signaling to many that CUPE was going to take a contentious stance in the talks.

But the FMCS’ oversight of talks ended in December with no deal. After a cooling-off period following those talks — and now the lack of an essential services designation — CUPE is allowed to strike within 72 hours of notifying the employers. The MEA said in its statement that it hopes the FMCS can again intervene in the talks.

Montreal has been hit by strikes during other contract negotiations. Longshore workers staged multiple strikes against the port in 2020 as they tried to bargain for a new four-year contract with the MEA following the previous contract’s expiration in 2018. CUPE Local 375 also struck the port for four days in April 2021 over new rules that required a seven-hour shift instead of five-hour shift.

CUPE did not respond to requests for comment.

Source:

Angell, M. (2024, March 14). Montreal port employers lose bid to make dockwork an “essential service.” Journal of Commerce. https://www.joc.com/article/montreal-port-employers-lose-bid-make-dockwork-essential-service_20240314.html

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Asia import projections rise on surprising US economic strengthening

The improving US economic outlook is driving the return of Asia import growth, with macro and micro signs pointing to a stronger year for Asia-US trade than anticipated just months ago.

US imports from Asia have been rising on a year-over-year basis since October, with February volumes up more than 30% from a year ago, according to early readings of data from PIERS, a sister product of the Journal of Commerce within S&P Global, when retailers and wholesalers were still destocking after an unprecedented import surge in 2021 and 2022. Separately, US retailers last week increased their forecasts for first-half import volumes for the second month in a row.

“I think…we could see physically on the terminals that since November, the imports have been picking up into the US and into the Canada gateways…,” Jeremy Nixon, CEO of Ocean Network Express (ONE), told TPM24 last week. “I was actually out on the terminals (in Southern California) yesterday, and you could see that the terminals are already working at quite high utilizations.”

Strong US employment, record-high wages and a rising housing market are driving strong imports. Importers, according to Nixon, are getting over their overstocked “big hangover” and have “punched (their way) through” what he likened to 18 months of indigestion. He told TPM24 that the automotive sector looked strong for this year and next, and so do cargoes tied to decarbonization, ranging from solar panels to electric vehicle components.

Rising economic tide lifts most goods

Fiscal loosening, as inflation eases yet still hangs over the economy, is pushing the US toward a so-called softer economic landing, brightening the prospects of stronger import volume growth. S&P Global recently lifted its forecast for US real gross domestic product (GDP) because the economy has exceeded expectations in early 2024, said Chris Williamson, chief business economist for S&P Global, parent company of the Journal of Commerce. US GDP this year will expand at a 2.4% clip rather than the original forecast of a 1.7% uptick, according to S&P Global.

“There are very few signs of recessions becoming imminent in the US or elsewhere,” Williamson said at TPM24.

Globally, factories are finally revving back to pre-pandemic production levels. An index measuring the upstream supply chain from manufacturing lines shows that demand for raw materials, commodities and components is recovering. The February reading of the GEP Global Supply Chain Volatility Index showed an essentially flat reading of 50, resulting in a 10-month high for the barometer created by procurement software provider GEP with S&P Global’s help.

While the growth of financial services is leading the muted global economic recovery, manufacturing is starting to show strength, Williamson said. In February, S&P’s global manufacturing purchasing managers’ index (PMI) hit an 18-month high and notched its first measure of growth since August 2022.

“Global manufacturing output and global goods exports are turning up quite nicely,” Williamson said. “Trade and exports are showing signs of stabilizing.”

As was the case during the pandemic-driven import boom, US consumers are the hungriest for goods coming off the assembly line. The National Retail Federation’s Global Port Tracker last week upgraded its expectations for US imports through the first half of 2024. US imports for the first six months of the year are now expected to be up 7.8% compared with the first half of 2023. That’s a significant revision and the second within two months; retailers just last month were expecting more modest growth of 5.3%.

Here comes the capacity

The volume projections from US retailers appear to be resonating with container lines. Asia outbound vessel capacity is rising to make more room for spring clothing, furniture for new homes and whatever outdoor furniture was not snagged during the pandemic. Ocean capacity between Asia and the US in March and April will rise approximately 22% to well over 1.3 million TEUs each month compared with deployments in January and February, according Drewry Container Capacity Insight, which bases forecasts on announced carrier sailings.

US consumers may be more sensitive to prices as inflation continues to drag, with even wealthy big spenders picking a more modest Rolex and the rest of us tilting toward generic goods, but, ultimately, we’re still spending. Adjusting to price inflation, US consumers spent nearly 30% more on durable goods in the fourth quarter of last year than in pre-pandemic Q4 2019, according to the Organization for Economic Cooperation and Development. Betting against upward import growth this year — and against the resilience of the US consumer — looks unwise.

Source:

Szakonyi, M. (2024, March 14). Asia import projections rise on surprising US economic strengthening. Journal of Commerce. https://www.joc.com/article/asia-import-projections-rise-surprising-us-economic-strengthening_20240314.html

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Asia gateways scramble as Gemini alliance plans big shift to feeder port network

Gemini Cooperation, the Maersk/Hapag-Lloyd alliance due to launch next February, is set to downgrade some of the carriers’ current key cargo gateways in Asia to feeder ports under its proposed “hub-and-spoke” network linking Asia with Europe, the Mediterranean and North America.

The new partnership will consolidate calls at just five main hubs in Asia — Shanghai, Ningbo, Yantian, Singapore and Tanjung Pelepas in southern Malaysia.

The move has already prompted Busan, one of the ports most affected by the downgrade, to urge Maersk and Hapag-Lloyd to rethink their Gemini vessel schedules and restore some calls at the South Korean gateway. Sources hope that other carriers or alliances can fill some of the gaps in direct calls left by the Maersk/Hapag-Lloyd alliance.

Under the preliminary Gemini network, Busan will lose all its main line calls by Maersk and Hapag-Lloyd on Asia-Europe, Asia-Mediterranean and trans-Pacific services. Direct calls on two Asia-US East Coast and one Asia-Middle East services will be retained, preliminary schedules show.

Hong Kong will also cease to be a gateway, with cargo trucked or feedered to Yantian, one of the four Shenzhen terminals.

Highlighting the shift, Hutchison Port Holdings Trust (HPH Trust), the Singapore-listed subsidiary of the global operator, said as a major export hub for the US and European export markets, Yantian has been selected by the Gemini Cooperation as a main port of call in South China.

“For [Hong Kong’s] Kwai Tsing Terminals, it is anticipated that some of Maersk’s and Hapag-Lloyd’s throughput currently handled in Hong Kong may shift to Yantian when the operation starts,” Hutchison said in its annual results commentary on Feb. 7. “HPH Trust will work closely with Gemini Cooperation to identify any new opportunities which the new cooperation may bring.”

HPH Trust controls Hongkong International Terminals and Yantian International Container Terminals.

Xiamen, Kaohsiung also losing direct connectivity

Other ports that will lose direct connectivity include Xiamen in eastern China, which has calls by eight existing Maersk Asia-Europe and trans-Pacific services; Dalian in northeast China; Kaohsiung in Taiwan, which has calls by five Hapag-Lloyd trans-Pacific services; and Ho Chi Minh/Vung Tau in Vietnam. Vung Tau is a significant port for both Maersk and Hapag-Lloyd, with a total of 10 services, including eight on the trans-Pacific, calling there.

Several ports in Japan, notably Tokyo and Kobe, will also become feeder ports.

“We’re hoping shippers, forwarders and the ports themselves can persuade Maersk and Hapag-Lloyd to retain some direct calls on the main trades as the network plan is confirmed,” a senior executive at an Asia-based freight forwarder told the Journal of Commerce.

Lee Eung-hyuk, director of international logistics at the Busan Port Authority, said the port handles about 1 million TEUs of export and import cargo on the European trade lane alone with between 14 and 16 weekly services, depending on the time of year. Four are operated by the Maersk-Mediterranean Shipping Co. 2M Alliance and five by THE Alliance, of which Hapag-Lloyd is part.

“Maersk and Hapag-Lloyd’s announcement that they will not call at Busan Port on their Europe services will be a significant disadvantage for their existing customers, [such as] Korean import and export shippers,” Lee told the Journal of Commerce.

“For this reason, we think the decision may still be reversed in the future,” he added.

In Hong Kong, Hapag-Lloyd is currently the second-largest carrier behind Cosco Shipping in terms of scheduled capacity on Asia-Europe and North American services, deploying approximately 615,000 TEUs a quarter, according to figures from British maritime consultancy MDS Transmodal.

Maersk, meanwhile, deploys about 261,000 TEUs of capacity per quarter on North American-related services calling at Hong Kong, MDS Transmodal senior consultant Antonella Teodoro, told the Journal of Commerce.

All that volume would potentially shift to nearby Yantian in eastern Shenzhen under the Gemini service revamp.

Further deep-sea decline for Hong Kong

Maersk’s Asia-Europe and Mediterranean services are handled by the carrier’s hub at Nansha, about 60 miles northwest of Hong Kong and the main international gateway for Guangzhou.

Roberto Giannetta, chairman of the Hong Kong Liner Shipping Association, said the move by the Gemini Cooperation to drop Hong Kong mainline calls continues the decline in deep-sea services that has been seen for some time. This is reflected in total container volumes, which fell to 14.3 million TEUs last year, the lowest since 1998.

Giannetta said the slide was exacerbated by COVID-19 pandemic restrictions which largely prohibited truck traffic from moving between Hong Kong and adjacent Shenzhen, with carriers encouraging shippers to use Shenzhen port rather than Hong Kong.

“The lack of strategy on the part of Hong Kong port to intentionally promote and attract services compared to significant and meaningful planning on the part of all other regional ports has also contributed to the decline,” Giannetta told the Journal of Commerce.

Commenting on the sidelining of Hong Kong by the Gemini alliance, a spokesperson for the Hong Kong Transport and Logistics Bureau said the government will actively work with the industry to explore new external markets.

“Specifically, we need to expand the international connections of the port and increase the volume of origin and destination cargo handled by the port, so as to solidify our status as the transshipment hub in Asia,” the spokesperson told the Journal of Commerce.

Customers ‘skeptical’ at this point

Maersk said Gemini’s 26 mainline services across seven trades including Asia-Europe, the US East and West coasts, Asia-Middle East and trans-Atlantic will be complemented by 32 feeder shuttle services, including 13 in Asia.

Hapag-Lloyd said 95% of the Asia-Europe volume would get faster or stay the same using the hub and shuttle network, although that would drop to 85% on the trans-Pacific based on forecast transit times. Schedule reliability would be 90% across four of the main trades, Hapag-Lloyd said in a Gemini presentation.

“The potential saving in time and cost made on their core loops will be translated into more third-party feedering,” a senior executive at an Asia carrier told the Journal of Commerce. “From what we hear at this stage, customers, overall, are rather skeptical it will work.”

The Gemini combination will comprise a pool of about 290 vessels with a combined capacity of 3.4 million TEUs, of which Maersk will deploy 60% and Hapag-Lloyd 40%.

Both Hapag-Lloyd and Maersk said the service details provided when the Gemini alliance was announced last month were “preliminary.” The carriers said they were also studying the possibility of operating their own services outside the alliance on Gemini’s seven main trades.

“The Gemini Cooperation will cover most of our services on these trades, however, we may choose to continue to operate or participate in a few parallel services outside Gemini, just like we do today,” a Maersk spokesperson told the Journal of Commerce.

Added a Hapag-Lloyd spokesperson: “We are currently reviewing our network outside Gemini Cooperation but have not finalized our plans yet.”

Source:

Wallis, K. (2024, February 23). Asia Gateways Scramble as Gemini Alliance plans big shift to Feeder Port Network. Journal of Commerce. https://www.joc.com/article/asia-gateways-scramble-gemini-alliance-plans-big-shift-feeder-port-network_20240223.html

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Canada’s two major railways could see strike in May: Teamsters

Tensions between the Teamsters Canada Rail Conference (TCRC) union and railways Canadian National and Canadian Pacific Kansas City (CPKC) are ramping up after the Dec. 31, 2023 expiration of three major collective agreements.

About 9,300 workers at the railways are covered by the agreements.

“CN and CPKC aim to eliminate all safety-critical rest provisions from our collective agreements. These provisions are necessary to combat crew fatigue and ensure public safety. We want to reach a negotiated settlement, but their demands are non-starters for the Teamsters. Safety is non-negotiable,” national president of Teamsters Canada, François Laporte, said in a release.

“Canadian railroads don’t care about supply chains, farmers, or small businesses. They care about their bottom line, and squeezing everything they can out of their employees. If they need to manufacture a work stoppage to get there, they won’t think twice,” added the president of the TCRC, Paul Boucher.

Negotiations have come to a standstill and CN and CPKC have filed notice of disputes with the federal government, requesting government mediators be appointed. Teamsters points out the notice of dispute starts the legal countdown to a possible strike or lockout, which could come as soon as 81 days after government mediators are appointed. This could lead to a labor disruption as early as May.

Source:

Menzies, J. (2024, February 20). Canada’s two major railways could see strike in May: Teamsters. Truck News. https://www.trucknews.com/human-resources/canadas-two-major-railways-could-see-strike-in-may-teamsters/1003182139/