PierPass shelves permanent TMF plan as Long Beach calls for 24/7 supply chains

Posted on February 14, 2022 by | 1 comment

The problem with 24/7 operation at ports is that no one wants to pay for it. And that is despite the fact that the costs will probably wind up being added to the import cost and passed on to the shipper and customer.

It seems port executives and supply chain players differ in their view of what’s needed. Terminals and warehouse operators and perhaps even drayage firms don’t think 24-hour service is needed to relieve the current congestion. And the staffing costs of staying open 24/7 would rise, with a lot of potential dead time. It is also hard to find additional trained staff today.

Unions are resisting because they claim the port terminals and other unionized players are not willing to hire more union workers.

And the PierPass is being taken unfair advantage of; apparently some are charging higher fees for using the time slots in the hours outside normal working times. See the second article below, which claims PierPass is only incentivizing adjustments that make them more money, rather than enhancing the flow of goods.

Is it possible for port management to get control of this? It’s doubtful under the current port governance rules.

Perhaps we need even more involvement from the federal government or the FMC to get action.

By Ian Putzger in Toronto 14/02/2022

PierPass shelves permanent TMF plan as Long Beach calls for 24/7 supply chains – The Loadstar

Kim Biggar February 14, 2022

https://splash247.com/fmc-says-non-profit-pierpass-at-los-angeles-and-long-beach-is-making-millions-in-profits/

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Softening spot rates could mean ‘days are numbered’ for ad-hoc carriers

Posted on February 12, 2022 by | Leave a comment

Spot rates for container shipments might be coming down from the stratosphere. There are a few indications, such as Xeneta’s XSI short-term index from Asia to North Europe.

If short-term rates really are coming down, what is going to happen to many new ocean shipping entrants in the trade from Asia? These new firms offer regular shipments with no blanking, faster transits, calling at less congested ports for faster unloads, status monitoring, and good communication.

Most of these firms have a limited number of smaller ships. The conjecture here is that they cannot survive if rates drop back to reasonable levels.

I think this position underestimates the value of on-time and reliable service. Many shippers will pay to get out of the bottleneck system the alliances are running, with large ships calling at large congested ports, and frequent delays of service, including simply canceling voyages if they aren’t full enough. You can’t have a viable business if you’re only on-time 30%-40% of the time. Lots of customers will choose another way.

We have already seen large container shippers such as Amazon, IKEA, and Costco choose dedicated service with captive vessels for some of their cargo. If it works well, that could expand, leaving the major alliances with less cargo to carry.

Interestingly, the large ocean carriers have a new name for what they are doing. Canceling a voyage is not to be called ‘blanking’, but rather ‘sliding’. Whatever you call it, it’s a disruption in service supposedly guaranteed.

By Mike Wackett 11/02/2022

Softening spot rates could mean ‘days are numbered’ for ad-hoc carriers – The Loadstar
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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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