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Dear all Valued Customers
South China’s Ship Delays Set to Widen Trade Chaos
Originally, when Yantian International Container Terminal (YICT), one of China’s busiest ports, announced it wouldn’t accept new export containers in late-May because of a Covid-19 outbreak, it was supposed to be operational again in a few days. However, as the partial shutdown drags on, it’s further impeding trade routes and lifting record freight prices even higher.
Now, the Yantian port says it will be back to normal by the end of June, but just as it took several weeks for ship schedules and supply chains to recover from the vessel blocking the Suez Canal in March, it may take months for the cargo backlog in southern China to clear while the fallout ripples to ports worldwide.
The Effect of Continued Blank Sailings
Hundreds of missed vessel calls through the first half of June are leaving a growing backlog of loaded containers at YICT that the fully stretched ports and logistics industry will take weeks to clear.
According to recent industry data, 298 container ships with a combined capacity of over 3 million TEU skipped Yantian between June 1 and June 15, a 300 percent increase in blank sailings compared with the first two weeks of May.
Still, the congestion will take 6 - 8 weeks to clear. That timetable is a problem because it extends the disruptions into the late-summer period of peak demand from the U.S. and Europe, where retailers and other importers restock warehouses ahead of the year-end holiday shopping rush.
BRi USA is continuing to monitor this ongoing situation and provide updates to clients with affected freight.
Vessel Group Says Exporters Should Not Fear Retaliation When Filing FMC Complaints
U.S. exporters should not fear payback from container lines if they complain to the Federal Maritime Commission (FMC) about excessive cargo fees or cancelled contracts, according to the carriers’ representative in Washington.
Testifying at hearing before the House Transportation & Infrastructure Committee on Tuesday, president and CEO of the World Shipping Council John Butler responded to members of the Federal Maritime Commission who recounted reports from exporters of threatened retribution by the carriers, saying that he did not believe that shippers are being threatened for reporting complaints.
Earlier during the hearing, FMC Commissioner Rebecca Dye said her agency had been self-initiating complaints against carriers due in part to a lack of complaints filed directly from exporters. “We didn’t get as many complaints as we wanted, because our exporters are concerned about retaliation,” Dye told the committee. “I can assure you that that is a violation of the Shipping Act. And we would take prompt and decisive action if we heard about any carrier actually retaliating against any exporter or any other supply chain actor for coming to the FMC with a complaint.”
FMC Chairman Daniel Maffei echoed her sentiments saying “There’s a fear of retaliation that is keeping individual shippers from filing their own complaints,” he said. “They don’t have to wait for us [to initiate a complaint], but they’re not doing it.”
Pressed about the FMC’s ability to adjudicate whether contracts between carriers and shippers have been broken, Maffei stated that the Shipping Act currently does not allow for that. However, “I do believe that the commission should maybe have a bigger role in reviewing contracts for clauses that are violations of the Shipping Act,” he said.
US Import Disruption Opens Up LTL Transload Opportunities
US importers frustrated by shortages of chassis at inland intermodal railyards and limits on excess intermodal cargo are looking for space in over-the-road trucks as they struggle to get product to shelves or assembly lines. This creates an opportunity for shippers to consider transloading containerized freight moving through terminals near sea ports and major inland ramps.
As you have seen in our communications, many global supply chains have been turned upside down with rates, lack of equipment availability, port congestion, and more. Supply chain movement is taking longer and sometimes becoming more complex in dealing with these issues. Carriers have been giving preference to cargo that terminates in major port cities, and in some cases, even refusing cargo to inland point intermodal (IPI) locations such as Memphis, Chicago, and Kansas City.
U.S. and EU Agree to Suspend Airbus-Boeing Trade Fight
The U.S. and the European Union agreed to suspend their trade dispute over government subsidies to Boeing Co. and Airbus SE , significantly easing trade tensions amid a broader effort to improve trans-Atlantic relations.
The agreement would lift for five years tariffs that have been authorized by the World Trade Organization and had been temporarily suspended in March. Read more here.
India's Lockdown is Easing, but Capacity Shortages Continue
India may be slowly easing out of lockdown, but limits on factory production and tight air and sea freight capacity are still jeopardizing exports – particularly to the US.
Covid-19 restrictions vary from state to state, but major economic hubs like Chennai, New Delhi, Mumbai and Tamil Nadu are allowing businesses to reopen.
However, factories in Mumbai, Ahmedabad, Chennai, Delhi and Bangalore are still limited to 50% occupancy.
Keeping you updated,
BRi Customer Solutions Team
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