Category Archives: Shipping

US importers using box ships to store cargo

Posted on January 13, 2022 by | 1 comment

US importers are not so worried about cargo waiting offshore to be unloaded. As long as they have enough for their sales or manufacturing, the cargo can sit on a container ship and the principal cost to the shipper is the interest cost. With interest rates at historic lows, that isn’t much.

The graph below from project44, a Chicago, I- based visibility platform, shows the number of TEUs at anchor by month from January through November 2020, on the left. The rise starting in August is significant. Using data from HSBC, which show a 3.2% annual interest rate, using an average container value of $40,000, they calculate almost $50M per month in new delay costs, and cumulative inventory interest costs over $850 million.

The point is that these costs are a lot lower than inventory costs at warehouses. While the cargo is held at sea under riskier conditions, in the warehouse other costs kick in, not the least of which is space required. Insurance charges on the financed inventory also accumulate. And there’s the work, both labor and mechanical, of shuffling the inventory around; it’s very variable given the specific warehouse layout, but can be significant also.

So shippers are using the offshore jam-up rather than wishing it away. Only when the demand for products ratchets up so that the offshore inventory is needed will the stakes change. While we have significant COVID likelihood today, that isn’t likely to change much.

It’s always interesting to look at the overall question of inventory cost in the supply chain. Advantages to shippers can come from unlikely places.

By Nick Savvides 12/01/2022

US importers using box ships to store cargo – cheaper than warehouses – The Loadstar
Like our remarks? We don’t take ads, and don’t just publish press releases. We try to curate articles of significance to maritime trade and logistics both domestic and international. Please donate to our blog!

1 Comment

Posted in Logistics, Managerial Econ, Shipping, Supply Chains

Tagged , , , , , , , ,

FMC probe into D&D claim against Hapag-Lloyd could set industry precedent – The Loadstar

Posted on January 12, 2022 by | 1 comment

This Detention and Demurrage claim filed by a carrier against Hapag-Lloyd could be interesting to watch. All this activity takes place at the Port of Long Beach and nearby.

For one thing, the claim involves reefer containers, usually overweight, which require special triple-axle chassis to handle. It also involves breaking down the containers and restuffing them into domestic-style reefers for inland transit. The drayage firm, OAE, finds that they are often charged detention even if they can return the empties within 2 days.

From a supply chain perspective, OAE is clearly providing an important service; they are moving containers from the yard, and are quickly returning them to the carrier for reuse. Both of these are aids to reduce congestion. They also are aids to the shippers, getting cargo further along its route. And there is a recognized need for reefer containers, perhaps even more than for general merchandise containers.

So it would seem that Hapag-Lloyd might be prepared to look the other way regarding D&D charges, except when something goes wrong, such as a lost container or something. Other issues that can occur include a lack of gate appointments for return. With the congestion at Long Beach we see now, gate appointments could be in short supply. To what extent is that the fault of Hapag-Lloyd? Do they have an obligation to use a terminal that can accept the containers they are sending through it?

By Nick Savvides 10/01/2022

FMC probe into D&D claim against Hapag-Lloyd could set industry precedent – The Loadstar

1 Comment

Posted in Logistics, Ports, Shipping, Supply Chains, Trucking

Tagged , , , , , , , ,

How to sue a carrier for delays, blanked sailings and D&D overcharges

Posted on December 7, 2021 by | 1 comment

It’s not going to be easy to sue a carrier for delays and blanked sailings. But whatever your taste, you have to document everything. The author, a lawyer, points to many types of documentation required to substantiate your claim.

I believe that the threat of many suits may well be useful to annoy carriers. They’re less likely to engage in reprehensible behavior like blanking if they know a bunch of shippers are going to be suing them. Those little lawsuits are annoying because each has to be dealt with somehow, and if the plaintiffs (shippers) are persistent, the annoyance may be enough to get the carrier’s attention.

Now there are two ways that attention can go. One way is that the carrier offers to settle and doesn’t complain too much. This may be a sign they care about your future business– at least a bit– or that they are taking a generous attitude toward customer service. The other way is hardball. They may deny everything and threaten you back. That is a sign they don’t want your future business, and just want to dispose of this claim to be able to tell authorities they have dealt with it. In this case, you probably won’t get anything, unless you have deep pockets for the law, and can pursue a case for which you are unlikely to recover your expenses.

And whatever action you take, don’t expect prompt resolution. One thing companies do is try to string out a case hoping the plaintiff loses interest or has a need to move on and not spend the time. That manages to get a lot of complaints off their back.

However, company lawyers are expensive too, and a stream of annoying lawsuits is not how the company wants its lawyers spending their time. So harassing the company with a lawsuit might get you some attention.

By Tiffany Comprés 07/12/2021

How to sue a carrier for delays, blanked sailings and D&D overcharges – The Loadstar

1 Comment

Posted in Logistics, Shipping, Supply Chains

Tagged , , , , , ,