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

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.

Freight Rates and Container Shipping Costs up 350% from China

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

5 Tips for 1st Time Cargo and Container Shipping Exporters

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

Making sense of ocean freight and air freight rate fluctuations

In trying to make sense of recent sea freight and air cargo rate fluctuations, we've gathered information from several sources and made the following observations:

1) Rates are going up and staying up, not down

2) Space will be an issue probably all year

3) Expect “new” surcharges

IN SHORT: We're all paying for that great 12 months we all had with the lowest freight rates in History between Oct ’08 through Sep ’09.

• Lack of boxes adds to transpacific capacity squeeze, freight forwarders fear new surcharge
• Battle for Space on the Transpacific: Richard Owens, Asia Pacific CEO for DHL’s global customer solutions unit, told IFW that even “a company with DHL’s clout” was being forced to fight for space.

Here's a rate chart showing what we're seeing (as of 29-May-2010) at Universal Cargo Management, Inc.   

CARRIER	EFFECTIVE DATE	2010 PSS				Remark
APL	2010.8.1	320	400	450	505	from China to USA (except Puerto Rico and Virgin Islands)
CMA	2010.6.15	320	400	450	510	from Asia to USA/Canada (East & West Coast, IPI, MLB) - cargo receipt date at origin
Cosco	2010.6.15	320	400	450	506	from Far East and Indian Sub-Continent to USA/Canada
CSAV	2010.6.15	320	400	450		from Asia to USA
CSCL	2010.6.1 ~ 2010.11.30	320	400	450	505	from Far East, Middle East and Indian Subcontinent countries/areas to USA
EMC	2010.6.15	320	400	450	506	from Far East (except India)/S.Africa to USA/Canada
	2010.6.15	360	450	506	570	from India to USA/Canada
Hapag	2010.6.28	320	400	450	510	from Asia and Indian Sub-Continent to USA/Canada, except India - date of cargo receipt at origin
	2010.6.28	300	375	425	n/a	from India to USA/Canada - date of cargo receipt at origin
Maersk	2010.6.15	320	400	450	510	from Far East Asia to USA/Canada (Transpacific Eastbound)
Matson	2010.6.16	320	400	450	506	Transpacific Eastbound (excluding Hawaii, Guam)
MOL (PSC)	2010.6.15 ~ 2011.3.31	400	500	565	635	from Asia to USA/Canada
MSC	2010.6.15	320	400	450		to USEC and US intermodal points via USEC
	2010.6.15	400	500	563		to USWC and US intermodal points via USWC
OOCL	2010.6.15 ~ 2010.11.30	320	400	450	505	to USA/Canada - base on cargo receiving date
Wanhai	2010.6.15 ~ 2010.11.30	320	400	450	510	to USWC

Making up lost shipping and ocean freight revenues