BRi USA News - FMC Seeks to Avoid Coronavirus-linked Port Gridlock
Dear all Valued Customers
The Federal Maritime Commission (FMC) will engage key stakeholders in the maritime industry to keep supply chains fluid even as many non-essential retailers and manufacturers are closing their doors amid the US lockdown to slow the spread of coronavirus disease 2019 (COVID-19). Commissioner Rebecca Dye hopes to navigate the disruption by opening up a line of communication between the agency, port directors, and supply chain innovation teams that would link ports, terminal operators, ocean carriers, beneficial cargo owners (BCOs), freight forwarders, longshore workers, truckers, railroads, and chassis providers.
The steady flow of containers became a challenge a month ago when coronavirus-linked blank sailings in the wake of Chinese New Year left no conduit to return empties to Asia. Now, with Chinese factories producing again, US cargo owners are unwilling to retrieve loaded containers from ports because their customers have cancelled orders.
The Harbor Trucking Association asked the FMC to intervene because empty containers were piling up on the lots of BCOs and trucking companies. Cargo flow was disrupted because truckers were unable to return the boxes and there were no vessels to take empties back to Asia.
In a Monday statement, ocean carriers warned that the failure of cargo owners to pick up their import containers and return empty containers threatens port flow and the availability of chassis. "A major concern is inland equipment velocity. If not maintained, this alone can cause disruption of our intermodal networks. It is important for intermodal equipment to keep moving in order to maintain fluidity, Jeff Lawrence, executive director of the Ocean Carrier Equipment Management Association (OCEMA), said in a statement. "Keeping distribution centres and warehouses open and turning intermodal equipment is essential in this effort.”
Regardless, many companies are now grappling with how to handle inbound containers for customers whose orders have virtually disappeared. That has prompted a renewed discussion about minimizing detention and demurrage penalties by restoring normal cargo flow, with stakeholders eager to see how the FMC decides on a proposed rule in 2019 concerning reasonable detention and demurrage practices. The fact that importers have chosen to risk demurrage penalties or invoke rarely used detention in transit requests is concerning. Forwarders, ocean carriers, terminal operators, and port authorities are all concerned that a supply chain disruption of this magnitude could force ports to declare force majeure.
While ports are trying to help by finding off-dock and near-dock storage space, the task at hand remains, there is a lot of cargo coming in, and it needs to be picked up and moved to keep the global supply chains flowing.
Some Container Lines Offering Importers Storage to Avoid Demurrage
Anticipating potential congestion at global ports as some cargo owners fail to pick up imports, some container lines are offering shippers options to mitigate demurrage fees by allowing them to store containers at their properties. Mediterranean Shipping Co. Tuesday announced a “Suspension of Transit” (SOT) program at six transit hubs in Asia, the Middle East, Europe, and the Americas. The service offering is aimed at beneficial cargo owners (BCOs) and cargo consolidators in need of immediate container storage space and provides potential cost savings for customers faced with high warehousing storage costs at destination, including demurrage, per diem, and other charges, MSC said.
In a similar offering, APL will dray off US import containers from the container yards of rail ramps to its storage yard, resulting in a cargo owner saving money by avoiding the costlier rail storage fees. Maersk is also discussing with cargo owners options to dray-off container or transload into 53-foot container. Hapag-Lloyd has is working with customers to allow them to buy extra storage time up front and move containers off the terminal when possible.
It is worth noting that while many ports are working with carriers and terminals to offer storage space in select locations, please be advised we are receiving reports that the carriers are also being asked to absorb or mitigate the cost of Per Diem (equipment rental) or Demurrage (terminal storage) in cases where importers cannot evacuate freight from containers within the allotted free time. Mitigation requests have been made in conjunction with containers both on, and off marine terminals, and inland container yards (CY). We have been advised that the volume of such requests has reached levels that carriers have stated there is no further room for concession/mitigation, or said otherwise, for them to bear the associated costs.
Loaded containers left on-terminal or CY past allotted free time will result in the consignee or importer accruing charges for Demurrage (or rail storage). If containers are held off-terminal importers will be charged Detention/Per Diem for containers, and chassis. Also, please recall that both Per Diem and Demurrage charges have escalating daily rates based upon how long containers are held past free time.
While the issue has not escalated to this degree yet, know that if the problem becomes more pervasive the carriers may require that charges are paid prior to release of containers. Please ensure you are communicating as far in advance of your ability to receive the freight so that we may make other arrangements when possible. For additional information regarding potential Demurrage, Rail Storage, or Per Diem charges associated with shipments moving through our logistics network please contact your BRi Representative.
U.S. Ports Status Update
Below is a general overview of the operations BRi USA has been able to gather for most major U.S. ports. This list will be updated as information is made available.
Port of Los Angeles/Long Beach - The ports of Los Angeles and Long Beach are generally fluid now, but with outbound vessel space being reduced, terminal operators told customers and truckers not to return containers to their facilities once they were emptied for fear the terminals would be overwhelmed with empties. The port maintains they have reviewed their space and stated they have plenty of space to store containers, as well as the terminal tarmacs also have ample space.
Port of New York/New Jersey - The Port Authority of New York and New Jersey is talking to warehouse owners and operators to gauge their vacant capacity to handle the excess cargo. The port also received the US Naval Hospital Ship Comfort this week, which will treat non-COVID patients, taking pressure off NY/NJ hospitals.
North Carolina Ports (Wilmington & Charleston) – The South Carolina Ports Authority (SCPA) expects a sharp drop in volume through the Port of Charleston due to automakers shutting down plants and not shipping At this time, operating hours will remain unchanged and truckers should not face delays in returning empty container and chassis.
Port of Georgia (Savannah) - Georgia Port Authority has announced that due to current market conditions, it will be extending the Saturday Gate closure through the entire month of April, 4/4/2020 through 4/25/2020, this includes all services for dry and refrigerated containers.
Port of Virginia (Norfolk) – Due to sizeable investments in the port over the past three years, the Port of Virginia has added sufficient storage space to accommodate the additional volume and does not anticipate needing to adjust operations for a surge.
Port of Houston - With eight blank sailings from Asia February – March, volume was down but not near as severe as other with ports. The port is encouraged with the import/export volume in March that they are balanced regardless of the pandemic. The port of Houston that has identified 50 acres nearby to store empty containers and is also adding 120 acres through a container yard expansion.
CBP Launches Website for COVID-19 Trade Announcements
In an effort streamline communication and support, US Customs and Border Patrol (CBP) has created a webpage specifically dedicated messaging related to the impacts of COVID-19 in the trade. The page is updated regularly to reflect the most current information, including Cargo Systems Messaging Service (CSMS) communications related to COVID-19 as well as updates and announcements in trade programs and cargo security.
Trade Associations Request Harmonized State Truck Weights
Several trade organizations ranging from agricultural and food companies to retail associations have sent letters to Governors requesting that all states harmonize truck weights on US highways and Federal Interstate Highways, by increasing their lower end of allowable weights from the current 80,000 to a minimum of 88,000 pounds. Within the request, the organizations maintain truckers will continue to respect bridge and posted seasonal or special road and/or local limitations while improving efficiency and capacity to delivery essential goods to sustain the nation’s supply chain.
Many states have temporarily increased their truck weight limits to varying levels to help mitigate a portion of the loss in trucking capacity caused by COVID-19 and to help with the additional demand for emergency supplies. These states include New York, Connecticut, Delaware, Maryland, Washington DC, Michigan, Ohio, West Virginia, Virginia, North Carolina, South Carolina, Georgia, Florida, Ohio, Kentucky, Tennessee, Georgia, Alabama, Mississippi, Louisiana, Minnesota, Wisconsin, Illinois, Iowa, Missouri, North Dakota, Nebraska, Kansas, Texas, Montana, Colorado and Oregon.
The newly passed Stimulus Bill does clarify that all states have the authority to raise truck weight limits on U.S. interstate highways for the remainder of fiscal year 2020. It is unclear how if/when the Governors will respond. The organizations are hopeful the states will respond quickly to increase truck weights on all highways within its jurisdiction in order to increase the capacity and keep necessary goods moving through the supply chain.
As a valued customer, we hope that you will continue to trust us to source the best options for your supply chain needs now and into the future. Feel free to contact your Customer Solutions Representative, should you have any questions regarding USA News.
Keeping you updated,
BRi Customer Solutions Team
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