Category Archives: Supply Chains

Glimmer of hope: Has the ship gridlock off ports finally peaked?

Posted on February 9, 2022 by | 1 comment

Flexport’s chief economist seems to think that’s possible.

He points to the fact that there won’t be any more stimulus checks to generate more demand for consumer goods. And the graphs show a rollover after a peak in January. The chart is telling:

Source: American Shipper, Chart: American Shipper based on data from Marine Exchange of Southern California

Flexport is a major broker and forwarder, based in San Francisco. They have a very thoughtful approach to understanding what they face in their markets. A pronouncement from them has some weight. Flexport just managed to raise $935 million to continue their advancement. That’s a bunch of capital.

https://www.freightwaves.com/news/flexport-winning-8b-valuation-with-tech-enabled-global-logistics
The backers are big names, too. Andreesen Horowitz is a major VC with many successes to its credit.

It’s too early to declare victory. over port congestion. More demand will come. There is a lot of replenishing of inventory going on. And the excess empty containers at LA and Long Beach, and elsewhere as well, are still a big source of onshore logistics problems. And the truck driver shortage, and the Great Resignation. And demand is still elevated; when people can’t travel or go to restaurants, they buy stuff.

But with recognition of a problem, and it’s certainly well recognized now, people have started to work on solving the many little bottlenecks that conspire to make a supply chain grind its gears. Perhaps we will see a slow unwinding of the problems.

Greg Miller, Senior Editor Tuesday, February 8, 2022

Glimmer of hope: Has the ship gridlock off ports finally peaked? – FreightWaves
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FMC to consider regulating ocean carrier billing practices

Posted on February 8, 2022 by | 1 comment

Demurrage and Detention are on everyone’s minds in ocean logistics today. The FMC proposes to regularize the information and timing of billing practices.

This could be very helpful in reducing the chaos of D&D billing today. It’s impossible to tell exactly which incidents happened when, and even who should pay. Those kinds of questions must have evidence to settle them, and it’s not being provided in bills. That results in long conversations and debates over the bills. It’s a huge time-waster, and fertile ground for complaints, refusals to pay, and legal action. These add cost while reducing consumer value.

In any principal-agent situation, when the cost of monitoring rises too much, the overall deal can’t be made. D&D charges are part of the cost of monitoring ocean trade. And in principal-agent models, monitoring costs often take the form of data collection and verification.

For years, ocean container traffic flowed fairly smoothly, and the events that triggered D&D charges did not happen very often. In those days, perhaps we could get away with settling claims by email and phone discussion. But with massive congestion worldwide, and only weak motivation to pick up empty containers, those days have changed.

We need accurate information for the parties to be able to resolve the D&D charges, and get the right bills paid by the right party. The FMC has it about right to take this first step, to regularize the bills.

Once that happens, if the D&D problem continues to be big, firms will recognize the value of investing in correct data gathering, and sharing it, and establishing standards for handling it.

John Gallagher, Washington Correspondent Monday, February 7, 2022

FMC to consider regulating ocean carrier billing practices – FreightWaves
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Today on the transpacific: continued congestion and more blanked sailings

Posted on February 7, 2022 by | Leave a comment

The headline makes you think that things are worse. However, in one way they’re better. Apparently ocean carriers are making a concerted effort to move empty containers out of LA and Long Beach Ports. And that will make a big difference in yard space at terminals.

Figures show that from late October and January 27, there have been 27 sweeper voyages from LA, carrying 68,000 empty containers to Asia, and 29 from Long Beach, carrying 76,000 empties. It sounds like a lot.

Ocean carriers certainly want to avoid the proposed fees at these two ports for letting empties sit in a yard. At times recently around 45% of the containers in the yards at LA and Long Beach have been empties.

However, when you consider that there are more than 600,000 containers per month coming into LA and Long Beach, the number removed does not seem that high— less than 23,000 per month on average from LA and 24,000 per month from Long Beach. It seems that more work is needed. And more jawboning.

And it’s important to also encourage exports using those containers. We don’t want empties being scarfed up when they could be used for exported products, say agricultural products, which are plentiful in California. The effort to create a port-based empty container filling station for ag products on the West Coast could help, but most ag products sail bulk to the Far East.

But I think more pressure on ocean carriers and others is still necessary.

By Ian Putzger, Americas correspondent 07/02/2022

Today on the transpacific: continued congestion and more blanked sailings – The Loadstar
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Posted in Logistics, Ports, Shipping, Supply Chains

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