Shipping Containers Go Green

Worried about the environmental impact of your ocean shipping containers? An article in the June 2010 issue of America Shipper details a variety of companies that are taking on the challenge of finding ways to make ocean cargo shipping containers more eco-friendly without too much impact on shipping container cost. The international cargo shipping business lives of thin profit margins and cost is a major factor for containers. Methods that being explored for the 20' and 40' containers include changing the wood used in the container floors, changing to a water-based exterior paints and switching to high tensile steel in box construction.

Shipping containers have traditionally used all wood flooring. In many cases this wood is harvested illegally in Asia. A reduction in illegal harvesting has resulted in greater demand and limited availability. Since 2007, IICL's Flooring Working Group has been exploring different materials to use for the floor of the shipping containers that would not have as negative an impact as the wood. After a variety of tests with various materials the group found that a mixture of wood and steel was a good compromise. These new boxes are currently being tested and the IICL plans to review the results from the test in October. Initial results are looking  positive. Other groups including CMA CGM have been purchasing containers with bamboo flooring.

The solvent based paint used on most shipping containers is another factor that has a negative impact on the environment due to its adverse effects on the earth's ozone layer. The challenge here is that most water-based paints require temperature and humidity controls for drying.  Container manufacturing is done mainly in China and manufactures there rely on the quick-drying heavy solvent-based paints which can dry within 24 hours.

Triton Container International together with Valspar have been working on developing low solvent, non-zinc, water-based paint that can be used for ocean containers. Additionally, Triton has also began testing 40 HQ containers made from high tensile steel.  These containers are 11 percent lighter than comparable steel containers in the market. Having lighter boxes will help to reduce the amount of fuel needed during transport.

Whether these new boxes take off or not depends largely on the container purchasers. However demand from shippers for more eco-friendly shipping containers could have a big impact. You can check out more about greener shipping containers and shipping practices on the The Green Logistician.

Source: Greener Boxes, American Shipper

Business Travel Language Tips for Asia

Devin Burke, CEO of Universal Cargo Management, Inc. shares pragmatic advice on language and culture in this "how to" series for Business Travelers. More videos in this series can be found on the Learning Center page.

Language Tips for Asia Lesson #1

Language Tips for Asia Lesson #2

Business Travel Health Tips for Asia

Universal Cargo Management CEO Devin Burke gives tips for staying healthy while doing business in Asia. Topics include eating well, vaccines, avoiding viruses, adjusting to weather and getting massages. More videos in this series can be viewed on the Learning Center page.

Business Travel Health Tips for Asia

Shipping Container Imports to US Ports Up 16% in July

Global Port tracker is predicting a 16% year-to-year rise in shipping container imports to the 10 busiest ports in the US. This comes after a 20% and 22% increase in year over year growth seen in May and June respectivly. Positive growth has been seen in each month since December 2009, which marked the end of a 28-month streak of declines.

However, this positive trend isn't expected to continue through fall. “The latest economic indicators are starting to look bleak, including consumer confidence, industrial production and employment numbers,” said Ben Hackett, founder of Hackett Associates, which produces the Global Port Tracker. “Sales will be slower in July and August; that much is certain. Inventories will rise, resulting in some sharp seasonal volume reductions.”

This table shows the Container Imports to the 10 busiest ports in the US for May 2010 and predictions for July through November. October, which is usually a high-volume month of the year as retailers stock up for the upcoming holidays, is only predicted to show a 3% increase from 2009 and November only a 4% increase.

Month	Container Imports (TEUs)	% YOY Increase
May-10	1.25 Million	20%
Jun-10	1.24 Million	22%
Jul-10	1.29 Million	16%
Aug-10	1.26 Million	9%
Sep-10	1.29 Million	13%
Oct-10	1.24 Million	4%
Nov-10	1.13 Million	3%

Global Port Tracker data covers the ports of Long Angeles/Long Beach, Oakland, Seattle and Tacoma on the West Coast; New York/New Jersey, Hampton Roads, Charleston and Savannah on the East Coast, and Houston on the Gulf Coast.

Source: Hellenic Shipping News

100% Air Cargo Shipped on Passenger Planes to be Screened

Frequent air cargo shippers, are you ready? Starting August 1st the Transportation Security Administration (TSA) will begin enforcing the 100% screening requirement for all air cargo shipped on passenger plans. This is in accordance with the 9/11 Act of 2007 and helps to close the security gap that many argue left our passenger plans open to possible terrorist attack. Each year more than 6 billion pounds of air cargo are shipped on passenger planes. While this new bill will now require all of this cargo to be screened prior to boarding, air cargo shipped on cargo planes, 75% of all air cargo, will not need to meet this new requirement. 

While some may argue that this shift to 100% screening will mean the end of passenger plane cargo shipment others are getting ready to meet the new requirements. Airports are already investing in new equipment and huge X-ray machines to aid in the screenings. To help ease the load on airports, cargo can also be inspected by one of the more than 800 independent facilities that have been certified by the Transportation Security Administration. 

The impact for shippers is that air cargo shipment rates will likely increase. The increased equipment and time needed for screening will lead to higher shipment costs. Also, the time needed to ship the goods could also increase. Many airports will now require shipments to be delivered earlier in order to have enough time to be properly screened.

The TSA has also created a program called the Certified Cargo Screening Program (CCSP) to allow business to become Certified Cargo Screening Facilities (CCSFs). For more info on some of the pros and cons of becoming a CCSF check out this blog post on Logistics Today. The TSA website also has lists of where to find an Independent Cargo Screening Facility that has been TSA approved. 

For companies with large volumes of air shipments it is important to start reviewing how these changes will impact your business now so you can be ready for a smooth transition come August 1st.

Freight Rates Bubble About to Burst?

Despite this year’s huge volumes and ridiculous increases in rates for container shipping lines, a better indication of the “recovery” will begin to be apparent by late August early September when most of the backlog that has plagued the China to U.S. market is out of the way.  One good indicator of this is the recent dramatic drop in freight volume from the U.S. back to China in raw materials like Lumber and Scrap Metal.  This is due to the fact many Manufacturing Companies in China are not getting new orders past Aug-Sep, so they don’t need any more raw materials from the U.S.

Meanwhile all of the Carriers are “Getting it while the getting’s good.”  Can you believe another $400-$600/40 increase set for August 1 for the Pacific Rim eastbound trade ?  My advice to anyone listening is to hold off your shipping till maybe Sept –Oct when rates will probably drop and space problems be alleviated, and I am a Shipping Company !

I personally do not see a dramatic slowdown, because we are in PEAK SEASON after all, which traditionally lasts until around Oct-Nov when Christmas orders are all in.  This year witnessed an intense backlog in China that was due to many factors such as China’s continuing problem of a shortage of skilled labor coupled with rising labor costs, factories no longer getting government subsidies which have resulted in mass shutdowns and relocations to central China, shortages of equipment and of course the manipulated vessel space shortage created last year by all of the Carriers.  We can sit back and marvel at how well this strategy worked for the Carriers as all are again profitable by now rising back from the precipice of near disaster and bankruptcy last year.  Economists and Economy majors in Universities will be studying this for years to come.

However this was not a true indicator of a real recovery in the U.S. Economy nor was it for the Shipping Industry (Although most Freight Companies are relieved to see their profits up this year from last year’s dismal dance with an actual economical depression )  If the U.S. Economy doesn’t have a true recovery that is sustainable we are in for a slide in the 2nd half of the year. But have no fear, the freight rates will probably be propped up to no more than a 20% drop by you guessed it…more vessel’s parked in Singapore as well as the newest method of Carrier cost saving….”Slow Steaming.”  Most Carriers have learned from their mistakes and have figured out how to stay profitable in a down market. But hey, isn’t what is supposed to happen?  What doesn’t kill you makes you stronger.

The old days of the big volume Importer “ VIP account “ appear to be over, as everybody including Walmart had to “pay the piper” this year and will continue to do so.  I have no problem with that personally as it was getting embarrassing to see the “Big Dogs” make every carrier their female canine for so long.

But that doesn’t mean there won’t be repercussions.  I am sure in the coming months as Carriers start to come begging for more freight, they will find they have lost some loyal customers….either that or with high freight rates and the inevitable re evaluation of the Chinese RMB, some importers may end up becoming exporters one day…WHICH IS A GOOD THING.

Devin T. Burke
CEO, Universal Cargo Management

Household Goods Shipping Problems

The Federal Maritime Commission voted unanimously June 23 to star a major investigation into complaints from several people who have shipped  household goods and personal property in U.S. to foreign countries via Ocean Freight. This investigation is about the nature, scope and frequency of the problem of potentially unfair, unlawful or deceptive practices of several Shipping Companies and to make recommendations for possible FMC action. An interim report is due no later than Nov. 15 and a final report is due no later than Feb. 15, 2011.

Apparently between 2005 and 2009 the FMC received over 2,500 consumer complaints related to household goods moving companies that were shipping personal effects and vehicles between various locations in the U.S. to various foreign destinations.

Among the complaints were a failure to deliver the cargo and refusal to return the pre-paid ocean freight charges, loss of cargo,  delays in delivery, charges to the customer for marine insurance that was never obtained, wrong information as to the whereabouts of the goods, over pricing, and after some shipments were delivered there have been threats to withhold the shipment unless the increased charges were paid that were not pre-quoted, in some cases the Forwarder refused to pay the common carrier engaged by the company as the intermediary, which resulted in the customer having to pay double for freight. Another problem was that some individuals and companies had falsely represented themselves to perform ocean transportation and accept responsibility for the movement of these shipments without obtaining an ocean transportation intermediary (O.T.I) license which also provides the required proof of financial responsibility.

So in short, BUYER BEWARE.   If you are thinking of shipping your personal goods anywhere from the U.S. to a Foreign country, do your due diligence, as there are sharks out there looking to take advantage of your naivety.  Make sure the Company has references, they are licensed with a good track record.

Or to make things easier just use Universal Cargo Management.

U.S. needs to step up to the plate in manufacturing exports

The US manufacturing sector generates about $1.2 trillion or 12% of our GDP.  Our manufacturing sector produces about two thirds of our nation’s total exports of goods and services.  The manufacturing sector supports about 20 million HIGH PAYING jobs.  I believe our nation still leads the world in ideas, innovation and cutting edge technology. Where would China be without their amazing capacity to copy us?  However at current pace, China will indeed pass us up in “cutting edge” technology, as well as “Green” or “Sustainable” technology, simply because they work harder and outpace us in graduates from Universities in Science and Engineering degrees.

The U.S. is one of many countries with a decline in manufacturing employment

However our culture and free society still provides the best potential for future innovation let alone our far superior skilled labor force to lead the world in the coming decade for what the next Global generation will consider to be “IN”.

Our future societies in America will depend upon our ability to maintain a strong manufacturing industry to improve our quality of life and develop the job growth our nation so desperately requires.  The primary focus should be to look at what the Global community needs (not so much wants) instead of what the U.S. needs.  Without an exporting vision behind what we manufacture in this country, I am afraid we will sink slowly into the Abyss we are now heading into as a nation of debt ridden consumers with rising unemployment.  The hindrances we face now include an incredibly huge bureaucratic  government that is intent on destroying our nation’s manufacturing power (see small business, the backbone of our industries) with rising health care costs, unions, taxes, and  inflation which forces industries to look elsewhere to outsource to low wage countries.  You add that to the ability for countries like China to cheat on international trade rules and we have an awfully hard uphill battle on our hands to be able to compete in the Global marketplace.

A bright spot in current trends is that certain sectors like finance, information, technology services are growing in this country.  This of course is the backbone of any manufacturing industry.  What we need is a renewed focus on how to make manufacturing work in this country with more efficiency and less waste.  American’s just waste too much, we waste everything from what we consume to how we spend our time.  Thomas Friedman hit the nail on the head in his latest book HOT FLAT and CROWDED when he addressed this problem.    But we also need new people in our Government who will make it their priority to ensure government paves the way for the exporting industry to flourish rather than impede it’s progress.

Some facts:

• Nearly 80% of all patents filed come from the U.S. manufacturing sectors
• U.S. manufacturing are responsible for two thirds of all R&D investment in this country.
• American manufacturing are the leading buyers of new technology in the U.S.
• American manufacturing directly employs 14 million Americans while creating an additional 8 million jobs in related sectors.
• American manufacturing is the largest single contributor to our economy.
• America leads the world in technologies related to Robotics, Nanotechnology, Laser and Bio technologies.

It’s time for American’s to step up to the plate and renew our focus on where we are strong and don’t give in to the temptation to acquiesce to developing countries that are hungrier.  I liken it to the L.A. Lakers continuing to get stronger so they can defend their title next year against those hungry “Beasts” of the east.

Devin T. Burke
CEO, Universal Cargo Management

The Coming U.S. Export Boom

As we see the writing on the wall, CHINA will re evaluate their RMB relatively soon, we just don’t know how soon.  In fact China (the People’s Bank) went so far as to claim in it’s statement that “the basis for a large-scale appreciation of the RMB exchange rate does NOT exist”.  (Are they still smoking Opium ?)  Don’t forget even with all of this surging growth in China, they are still at best 50% unemployed.  A slight dichotomy to say the least.  That is because there is all of those hundreds of millions of former government subsidized farmers still out of work.  Behind the veil of prosperity lies the seeds of a real cultural revolution.  A society abandoned by it’s self serving (another word for communism-socialism) government long ago.

So if the RMB goes to say 5 per $1.00, what happens to that percentage of the existing employed that gets their walking papers in the urban communities where all of the factories will be shut down and moved into central China, where they are moving anyways ?

I would say China has quite a delicate time bomb on their hands.  But  they will eventually figure out how to create more jobs while inspiring their own half a billion middle class (with a savings rate of 34%) to spend more once their currency gets strengthened, and feel like the wealthy people they so desire to become. (Mao Tse Tung would be turning in his grave) when that happens get ready for an emergence of a new world superpower.

But an even larger factor holding China back is the People’s Bank , the very body behind China’s exchange rate policy, is currently stuck in U.S. Treasury bonds to the tune of $2 trillion.  Although China would love to create a new wave of appreciation in the Euro, Gold, Steel, etc and get a better return on their reserves, they have their hands tied to a sluggish recession in the U.S., which is the backbone of the China economy.  You take away the power of the American consumer that borrows and borrows so it can spend and spend, you break the back of China’s biggest customer.

So with the Obama administration and other world superpowers pushing hard on China and calling it a “currency manipulator”, the most obvious reason China has made it’s recent overtures to re evaluation is to inspire goodwill ahead of the upcoming G-20 Summit.

So bottom line here is that China is continuing to be very shrewd with buying time to see where they can move some of their reserves, inspire confidence in with the “ Old Money Club”, wait for the U.S. to get stronger, deal with this Oil spill and eventually move one step closer to being the guys running the show.

In the meantime us Americans need to think what do we have, or what can we produce that China will if not right now, eventually need ?  Because deep down inside the Chinese admire and want to emulate our backbone of honor, pride , integrity and ingenuity that is ingrained in the people of this great country while China’s honor is all about “saving face”.

Devin T. Burke
CEO, Universal Cargo Management

16% increase in Container Imports to US Ports expected for July

The Global Port Tracker is reporting that shipping container imports to the 10 busiest US ports are expected to increase 16% compared to the prevous year. This follows a 20% year-over-year increase in shipping container volume seen in May and an expected 22% year-over-year increase for June. This growth in shipping imports is being felt as shipping ports are dealing with tight vessel capacity and congestion problems.These double digit increases are not expected to continue into the Fall.

Part of the increases seen in the first half of 2010 can be attributed to the fact that the 2009 numbers make for an easy comparison, however some of this is coming from real growth seen in the economy and consumer demand and spending. Retailers are continuing to be cautious though as they watch the numbers for employment, housing and the availability of credit. Better growth in those areas will be needed to continue on this positive trend in shipping imports through the year. 

Source: Container Imports to Rise 16 Percent in July, Hellenic Shipping