California law AB 45 prevents ports and terminals from charging detention and demurrage fees for containers not picked up or empties not delivered when the facilities prevent drivers from picking up or delivering.
Sometimes, the authorities or facilities institute sudden rules changes that prevent delivery of empty containers or prevent pickup of specific cargo because of hours or appointments. These rules are troublesome and cost time for drivers. And often the drivers or their firms are the ones paying the fees.
The contention is that the ports are by their own actions forcing expenses on the trucking firms and drivers.
The law, if enforced, would keep ports and terminals from charging these fees. But how to enforce the law is not altogether clear.
This article shows that it isn’t so easy to divert containers from LA/LongBeach to other ports. The smaller ports don’t have the infrastructure to handle the added containers efficiently. They may not even be able to get drivers to move the incoming containers. And how will they handle empties? Ship them to LA/Long Beach? It’s a complete mess for shippers and forwarders.
The article details some of the techniques people are trying. Each has its own set of problems to wrestle with.
DP World has not waited to announce their complete booking and shipping system to compete with Maersk’s announcement.
Maersk has Tradelens, a booking systme using blockchain concepts, which is a partnership with IBM, and purports to allow a shipper to book end-to-end delivery of cargo.
The DP World version is called CARGOES. According to the article, DP World claims that while blockchain is not part of their system now, they are looking at including it.
And why would they want to, if the standard database technology works well? It surely would not perform as well, and once they have the permissions set up, registered users can query whatever they set up to allow.
But more important, both of these announcements tend to render ocean freight brokers less relevant for smaller shippers. While there are other services brokers could perform, the one-stop booking and tracing they offered can be obtained elsewhere.
Brokers can still provide customized help with freight services. And they may have a customer relationship that cannot be obtained through an app. And remember, brokers still buy 40% of ocean shipping space, so that competing with brokers may cut off your nose if they shift where they buy their space for resale.
It’s most useful now, with rates at an all-time high for containers, from say Asia to EU or US. The platforms may help the firms keep some of the margin they are able to command right now. They won’t have to discount so much for brokers who book larger volumes Bu tthe ocean shipping firms can’t expect to maintain their blanked sailings and late deliveries as a means of holding prices up. That’s anathema for shippers, who can’t see their cargo tied up in shipping delays of various sorts.
The high prices are going to create big incentives to figure out how to cut them out. We already see large shippers such as Amazon and Walmart and IKEA turning to chartering their own ships. There will be more of that.
These chartered ships are going to create dedicated fleets. And there is no reason they cannot offer some of their unused capacity for sale to some partners. Ocean liner companies may well be creating a secondary carrier set and find themselves serving far more small shippers and fewer of the megashippers, which were their primary source of revenue for years.
That would put them in a long-term starvation system, with megaships to fill and not enough large shippers to fill them. There would be massive retrenchment and only a few carriers would survive. That could be the future 10 years from now, after the supply chain disruption blip of the Covid period.
It’s good to remember that apps by themselves can’t create huge value; it’s the actual services and products they provide that are the real source of value. The shipping itself has to be conducted in a way that’s worth it for the customer.
By Charlie Bartlett, European Correspondent 21/10/2021
Supply Chain and Logistics 