Tag Archives: shipping delays

US regulator probing China’s role in container shortage

The FMC is looking into Chinese control of containers and equipment to move them. Most containers and chassis are produced in China. So says Carl Bentzel, an FMC commissioner.

China certainly has a large stake in production of both containers and chassis. There are three state-owned firms in China that dominate container production. Even with elevated prices recently, it is still about the same cost to buy a new container in China for the voyage to the US, or to recycle one from the West Coast of the US. Even if you would rather recycle an empty container, the ocean shipping firms can affect that balance by refusing to pick empties up at say Long Beach or Los Angeles, or delay their transit by long enough to cause headaches for those who need them by a certain date.

If empty containers build up in the US, tying up chassis as well, that’s a form of industrial pollution. Having to spend large sums for storage yards rather than getting them back to China is an environmental cost that should not have to be borne by US local governments and citizens.

It’s certainly worth an investigation and perhaps some action by the US government.

John Gallagher, Washington Correspondent Thursday, May 6, 2021

US regulator probing China’s role in container shortage – FreightWaves

FMC to consider regulating ocean carrier billing practices

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

Today on the transpacific: continued congestion and more blanked sailings

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