Posted by Carrie Brown on Thu, Aug 19, 2010 @ 05:03 PM
Freight shipping volume has been picking up in 2010 and while that is great news for the world economy it has caused an unexpected shortage of containers. According to the July cover article in American Shipper, this shortage in shipping containers is being sited as one of the main causes for the rise in freight rates and has led to difficulty in moving product to buyers. Many shippers have complained about signing contacts with shipping lines only to have rates rise the following week or to be denied space completely. The average price for a 20ft shipping container has grown from about $2,000 to $2,700.
One of the major reasons for the container shortage was the drop in production of new shipping containers in 2008 and 2009. From 2004 through 2008, TEU supply grew by an average of 8% per year. Once the world recession hit, trade dropped dramatically and so did demand for shipping containers. There was a 95% reduction in shipping container production in 2008 and almost no containers were built in 2009. In response to the drop in demand many of the factories that build the containers, mostly based in China, were forced to shut down. Now with the increased demand for there is a reduced capacity for factories to produce new containers. Some estimate that it will be until 2011 before production will be able to catch up with demand.
While this shortage is bad for manufactures and ultimately consumers, container-leasing companies are appearing to benefit in the short run from this problem. Stocks of publicly traded container-leasing companies have reached 52-week highs this spring and summer. Additionally many leasing companies are taking the opportunity to increase their share of containers. Historically, liner carriers have owned about 55% of the world shipping containers with leasing companies owning the remained 45%. However, recently leasing companies have been responsible for 65-70% of the new container purchases. Leasing companies are also purchasing containers from the shipping lines who are in need of building up there cash reserve.
This shortage in shipping containers due to worldwide demand is a very good sigh of economic expansion however many shipper are hoping that container product will soon catch up to demand.
Source: Boxed-Out, American Shipper
Posted by Carrie Brown on Wed, Jul 28, 2010 @ 02:01 PM
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
Posted by Carrie Brown on Wed, Jul 21, 2010 @ 03:43 PM
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
Posted by Mark McAlister on Fri, Jul 09, 2010 @ 01:21 PM
Container volume moving through West Coast ports increased 14 percent in the first five months of the year. Growth was relatively balanced between imports and exports and across the regional gateways Statistics published on the Web site of the Pacific Maritime Association also showed that, except for a slight dip in February, container volume increased steadily from month to month.
The figures for the ports of Seattle, Tacoma, Portland, Oakland, Los Angeles and Long Beach are a good barometer of the U.S. container trade because West Coast ports account for roughly 50 percent of the nation's container trade.
Containerized imports increased 14 percent during the first five months of the year, with April and May showing the largest increase in loaded inbound containers.
Exports were up 13 percent, with March being the busiest month of the year so far. Exports normally enter a seasonal lull in the summer months but rebound strongly in the fall along with the agricultural harvest.
Los Angeles-Long Beach led the coast with a 15 percent increase in total container volume. The Seattle-Tacoma gateway was up 13 percent.
Container volume through Oakland increased 9 percent through May. Unlike the Pacific Northwest and Southern California gateways, exports make up a larger percentage of Oakland's volume than imports. Since U.S. exports last year did not drop as steeply as imports, Oakland's total volume did not drop as much as the rest of the coast, and therefore its rebound this year was not as dramatic as in the other gateways.
Portland was the only gateway to record a drop in container volume. Portland's container volume declined 17 percent compared to the first five months of 2009.
With the economy sending out mixed signals, ports anticipate slower growth in the second half of the year. Some industry analysts, however, continue to project double-digit growth for the year.
The shortage of vessel space appears to be easing as carriers have brought back most of the services they suspended during the winter months. Container availability, however, is still tight, especially in Asia.
Retailers are preparing for a healthy peak shipping season and exporters anticipate strong sales to Asia as the dollar remains weak against some of the currencies there.
Source: Hellenic Shipping News
Posted by David Ige on Wed, Jul 07, 2010 @ 03:53 PM
Key Points:
- Vietnam’s economy has experienced rapid growth since the 1986 economic reforms and growth in international exports to Europe and the United States has accelerated in the past 5 years.
- Exports and imports have grown multi-fold and while there is a trade deficit, this gap is expected to narrow as export industries continue to grow.
- Containerized volumes have grown every year by almost 20%. However port and infrastructure improvements will need to continue to keep up with the growth trend.
- 24 of Vietnam’s 126 ports handle ocean cargo shipping however the country currently lacks deep water port facilities and can currently only handle small feeder ships. Development of deep-water ports are planned and should lead to large improvements in international cargo shipping activity.
- Vietnam’s logistic industry is still being developed and the country currently lacks in key infrastructure including warehousing and depot facilities to match with demand. Logistic costs can be a significant contributor to the high cost of doing business in Vietnam. Improvements over the past 10 years have brought down these costs significantly and these should continue to drop as Vietnam continues to invest in new infrastructure and technology to meet international shipping standards.
- Various companies (including companies in China) are now producing their commodities in Vietnam...the main question is can Vietnam handle the growing exports?
Ocean and Air Port Information:
Ho Chi Mihn city serves as the key port for both ocean and air imports and exports. More than 70% of Vietnam’s transport containers pass through this port. Due to recent growth, congestion has become and will continue to be a problem as container volume growth exceeds port capacity expansion plans.
Alternate ports near Ho Chi Mihn are being developed as well as new international ports at Van Phong Bay (near Nha Trang) and Cai Lan in Quang Ninh providence.
Three international airports serving Hanoi, Danang and Ho Chi Mihn City handle international air cargo shipping. To meet the increased demand in passenger and freight traffic, the government has plans to develop an additional 3 international airports by 2015.
Key Products:
- Major exporter of seafood, rubber, rice and coffee
- Agricultural and aqua-products sector contributes to 30% of GDP
In Summary:
Vietnam has good potential to develop into a major air and ocean cargo shipping hub in Asia. As improvements are made to the ports, infrastructure and the logistics industry opportunities for shipping to and from Vietnam will continue to expand.
Posted by David Ige on Fri, Jun 25, 2010 @ 01:04 PM
If you are an importer from Asia into the U.S. you are tearing your hair out trying to figure out how to afford the dramatic increases in freight rates, coupled with the tremendous space problems occurring in every port throughout Asia, especially China. Freight rates have increased an average of 350% since this time last year if you ship from China to the U.S. West Coast ports.
If you are a student of the events leading up to the present day situation, you will remember it began around last August when the financially drained Ocean Freight Carriers decided to band together and stop the bleeding by parking most of their older, smaller vessels right off the coast of Singapore to create a limitation on capacity, with every intention of raising freight rates immediately. This is exactly what happened in September last year, first with the Freight Forwarders who are the bastard children the Carriers love to kick around, while protecting the ridiculously low rated contracts all of the BCO's held, from a guy that ships 50 Feus a year on up to Walmart. What happened was the inevitable, the BCO's started having a hard time getting space because they were still paying $750/40 from China to the West Coast, while the Forwarders got more space while paying $1,000-$1250/40 on through the end of the year. Then came the first boom being lowered on Jan 15, everybody, including Walmart, had to pay an average of $800 increase immediately or they wouldn't get on board. Since Chinese New Year was coming up, the Carriers timed it perfect and got away with it. But then it became like Crack, and the Carriers were hooked, so another increase came in March, right after CNY, which has never happened, nobody is shipping, China factories are just getting back from 2-3 weeks of playing Mahjong. However guess what, everybody was shipping, due to delays of production from before CNY, cargo not shipped due to space problems, increases in orders in the U.S. due to lack of inventory, and we were off to the races and haven't looked back.
Yes now since May 1, which is always the traditional GRI (General Rate Increase) As all service contracts are renewed between the Carriers and the Shippers, June 15 which was the traditional PSS (Peak Season Surcharge) we are indeed looking at rates from China to the U.S. West coast around $3,000/40 and climbing.
I haven't seen it this high since that brief period during the Longshoreman's Dock strike in the West Coast in Oct and Nov of '02.
And before that in the beginning of '85 before rates plummeted by year's end. Last Summer an importer paid about $2500-3000/40 to ship to interior regions to the door, $2000-$2500/40 to the East Coast cities to the door. Now the rates are over $5,000/40 to interior regions door, and around $4500/40 average to East Coast cities door . Right now coming into July 4th, with the season just kicking in to full swing, which usually lasts through September in a bad year, and through November in a good year, we are still experiencing space constraints, although now that most Carriers are bringing in new vessels, and there has been some softening of space constraints, everything is being tightly monitored and if you don't pay you don't ship. This is the market the Carriers have always dreamed for.
It's payback from '08 and '09 where last year the average carrier lost half a billion, with Maersk reportedly losing $2b, wow !.
So where do we go from here?
Well we have the FMC doing their fact finding investigation looking into vessel capacity, container availability,( unfair practices by the carriers , collusion?) You would think possibly, however when the report due July 31 comes out, don't hold your breath.
Senators Blanche Lincoln of the Senate Agriculture Committee and ranking member Saxby Chambliss have stated regarding the problem of service contract holders not having their contracts honored "These contracts are supposed to ensure that the carriers will provide the necessary weekly equipment and vessel space and the rate will be fixed, unfortunately it has come to our attention that carriers are now routinely failing to honor these contracts."
The two Senators asked the FMC to provide information on what authorities it may have or should have to ensure that these contracts are honored. "Including the ability to penalize carriers for egregious practices." Wow, let's see if the current mood of Washington which is that of punishing any Company that dares to make a profit carriers over to this issue. We shall see.
In the meantime MSC, MAERSK and CMA/CGM, the three largest ocean Carriers in the world have teamed up to jointly operate a transpacific loop starting July 10th. The service called EAGLE by MSC and YANG TSE by CMA will cover just Shanghai, Xiamen, Qingdao, Hong Kong, Kaohsiung with Long Beach.
This will help alleviate a lot of pressure in this very busy loop in the Pacific Rim.
Devin T. Burke, CEO
Universal Cargo Management, Inc.
www.universalcargo.com
Posted by Mark McAlister on Thu, Jun 24, 2010 @ 03:33 PM
Recently we have seen China come out and say that
they will "further reform the RMB exchange
rate
regime and enhance the RMB exchange rate flexibility"
We all know that
CHINA has undervalued their currency for the greater part of the past
decade
where they have been the hub of manufacturing for all developed
countries in
the world. The Chinese government has had the goal of their export
manufacturing being the engine for economic growth and job creation in
China
for the past 25 years. The strategy has largely worked, with China
putting up
better than 10% annual GDP growth for the past 30 years. By announcing
their
plans to reform their fixed-rate system, China is finally signaling a
willingness to allow supply and demand to determine the value of its
currency.
They are following in the vision implemented by Deng Xiao Peng over 20
years
ago when they opened up Shenzen and Guangzhou as their “experiment”
with FREE ENTERPRISE. Interesting that it came about the time the
Berlin wall was coming down and the whole world had seen not only that
communism doesn’t work, it is a destructive force with Tsunami power in
demolishing societies, as it tragically did with China from 1949 until
the
early ‘90’s when China started to wake up and smell the coffee brewing
over in West.
So now if you walk
down a major street in Shanghai, you will see at least 3 Starbucks
within one
block radius. You first have to pass a KFC, McDonalds and a few
Malls the size of a small town (underground up to 5 floors high) and you
would
swear you were in Manhattan.
Given China's
trade surplus and all of that foreign investment cash flowing into
China,
the consensus is that China's currency should appreciate quite a bit --
with
some experts suggesting that their exchange rate will strengthen to 4
or
5 RMB to the dollar rather than the current 6.8 RMB to the dollar , 25%
increase, coming soon !!!
So if you are an
average American that has a home filled with about 75% of goods made in
China,
or worse yet, your business is directly related to imports from China;
Importer, Wholesaler, Logistics, Transportation, retail, etc, you have
to see
the writing on the wall that the U.S. dollar is only going to get
weaker. Besides the China factor, history has proven that
recessions always follow with inflation.
So money will
continue to be tight, consumer costs will continue to rise, and let’s
not
forget about the hidden inflations ; TAXES,( thank you Democrats)
ILLEGAL
IMMIGRATION (Thank you Ted Kennedy ’64), INTEREST on our National debt,
soon 40% of tax revenue to the U.S, Treasury will go towards servicing
the
debt, and who really pays for this ? (Thank you Progressive movement),
the U.S.
Bogus system of calculating actual inflation, cooked books (Thank you
past Administrations
going back 20 years) and then we have the brand new one courtesy of Mr.
Obama,
the HEALTH CARE BILL. Health insurance will go up dramatically, forcing
employers to pay more in premiums and taxes which will be passed on in
the
rising costs of goods and services to the public and further increased
unemployment.
What we are left with
in the coming decade is among other more dire circumstances, which I
will not
delve into, but one of great significance. That is the U.S. will have to
become
an economy dependent upon exports. Not just of Cotton, Lumber, Scrap,
waste paper, Agriculture, Rawhide, etc, but actual consumer manufactured
goods.
Most people don’t
realize that with all the ballyhoo about our trade deficit with China
being so
huge, is that the U.S. economy is still at least 4- 5 times larger than
China’s
and our exports still outnumber those of China. It is mind boggling I
know, but now that you see our dollar destined for another WEIMAR
REPUBLIC, together with CHINA’s growing middle class (more than the population
of
the U.S.) with an RMB at 4 or 5 per USD, it doesn’t take a Rocket
Scientist to deduce that China as well as other healthy economies
(wherever
they are) can afford to buy goods made in the Good old YOO ESS OF AYE.
So if you are
wondering “ where is the future of my business”….now is a
good time to seriously evaluate how manufacturing and exports can fit
into the
picture.
I would also like to
add that it has become “In” and trendy in China to buy goods made
in the USA now. In fact the “Yuppies” of China are willing to
pay higher prices for higher end merchandise and anything that reflects
the
American way of life. The real truth is that people in China are in
love with America and want to emulate our lifestyles. This is the
future.
(that and our children better start learning mandarin)
Devin T. Burke
CEO, Universal Cargo
Posted by David Ige on Tue, Jun 08, 2010 @ 01:43 PM
Tip #1: Save container transport cost by preparing to load your container in less less than 2 hrs.
When the driver shows up to your site, the first 2 hours are included in your fees. We recommend staffing up and preparing in advance to load the container as quickly as possible to avoid overtime charges.
Tip #2: Prepare Shipping Container Contents for Extremes
Containers are subject to extreme conditions. There are wild swings in temperature and humidity inside the container - they go througth the Panama Canal and sometimes around the Cape. Containers are subjected to triple digit heat and humidity to sub-zero temperatures while in storage or in transport.
Tip #3: Carefully Declare ANY Organic Cargo
Plants, Edible Plants, Vegetables and Fruit are all treated differently depending on the origin and destination of the shipment. If customs finds any undeclared organic cargo, the can quarantine your container and charge you daily holding fees.
Tip #4: Properly Insure Your Cargo
Plan for “attrition”. All of the contents don’t always make it all of the time.
There will be some "attrition" - containers get inspected, sometimes by unscrupulous dock/deck hands...this isn't REALLY considered stealing, as the items in transit, technically are the property of the shipping company.
Tip #5: Understand that Freight Forwarding both an art and a science.
Many companies and handlers are involved in moving your container, here are just a few possible examples: Trucking company(ies) outbound (your door to the port of origin or train yard), Crane Operations transferring container from truck to train, and train to ship. that's just to get the container to the ship, then the reverse happens on the other side...it's a REALLY rough ride, even in good weather.
Why Universal Cargo Management, Inc.
By contracting with Universal Cargo Management, Inc. you directly benefit from the relationships and reputation for integrity that we have developed trusted relationships with our international shipping, air freight, ocean freight, and logistics service providers over the past 25-years. You benefit from our experience in keeping the freight forwarding process efficient an effective because we know the ropes as well, if not better than anyone.
Tips for Business Travel To Asia
Posted by Mark McAlister on Fri, Jun 04, 2010 @ 05:24 PM
- U.S. and China Continue to Arm Wrestle
Recently U.S. govt and Chinese govt officials met for the Strategic and Economic Dialogue (S&ED) talks for another round with the indigenous innovation issues.This involves China’s desire to develop and export more “High end” technology and compete with the U.S. WHERE WE RULE and will hopefully continue if our education system ever gets back on track, but I digress. While China's government continues to drag their feet in making it harder for copycats to steal our technologies. However score this round to the U.S. for not only getting China to be more flexible about this issue, but they are now willing to “rewrite” the contract for being in the WTO when they all sit down next month.
The other issue would be on what exactly does China plan to do with their currency evaluation?
If you are in the business if import or international shipping you are most likely crossing your fingers and telling the Obama administration to “shut the hell up”, or if you are an exporter, or a U.S. manufacturer you are screaming at the top of your lungs “ADJUST THE YUAN EXCHANGE RATE to reflect the Market” so America can rebuild it’s competitiveness on the World market for it’s goods and services. Either way, it appears as China is not only becoming a consumer market on the world’s stage, but also slowly moving towards a higher end technology (like what happened to Japan in the ‘80’s and Taiwan in the ‘90’s) they realize that it is inevitable that the RMB strengthens another 10-15% in the coming year. China is just biding their time, while the U.S. keeps nudging them along. So America, it’s time to get your thinking cap on and get back to the workshop and innovate. (That and maybe buy a few RMB along the way maybe)