Author: global

Klochubar and Thune introduce Ocean Shipping Reform Act in the Senate

Klochubar and Thune introduce Ocean Shipping Reform Act in the Senate

Following the passing of the Ocean Shipping Reform Act (OSRA) in December 2021 by the United States House of Representatives by a convincing 364-40 vote, the bill was introduced yesterday in the Senate by Senator Amy Klochubar (D-Minn.) and Senator John Thune (R-S.D.).

The main objectives of the bill, according to Klochubar and Thune, is to update federal regulations for the global shipping industry, adding that the bill “would level the playing field for American exporters by making it harder for ocean carriers to unreasonably refuse goods ready to export at ports, and it would give the Federal Maritime Commission (FMC) greater rulemaking authority to regulate harmful practices by carriers.”

Key components of the Ocean Shipping Reform Act of 2021 include:

  • requiring ocean carriers to certify that late fees —“detention and demurrage” charges—comply with federal regulations or face penalties;
  • shifting burden of proof regarding the reasonableness of “detention or demurrage” charges from the invoiced party to the ocean carrier;
  • prohibiting ocean carriers from unreasonably declining shipping opportunities for U.S. exports, as determined by the FMC in new required rulemaking;
  • requiring ocean common carriers to report to the FMC each calendar quarter on total import/export tonnage and 20-foot equivalent units (loaded/empty) per vessel that makes port in the United States;
  • authorizing the FMC to self-initiate investigations of ocean common carrier’s business practices and apply enforcement measures, as appropriate;
  • establishing new authority for the FMC to register shipping exchanges;
  • allowing for third parties to participate in legal cases brought by the FMC against ocean carriers for anticompetitive harm; and
  • letting successful third parties in those legal cases receive money damages, with additional financial penalties designed to deter anticompetitive conduct

“Congestion at ports and increased shipping costs pose unique challenges for U.S. exporters, who have seen the price of shipping containers increase four-fold in just two years. Meanwhile, ocean carriers have reported record profits,” said Klobuchar in a statement. “This legislation will help level the playing field for American exporters so they can get their goods to market in a timely manner for a fair price. As we work to improve our supply chains, I’ll keep fighting to establish trade opportunities for the U.S.”

And Thune said in a statement that South Dakota producers expect that ocean carriers operate under fair and transparent rules, but unfortunately, that is not always the case, and producers across America are paying the price.

“The improvements made by this bill would provide the FMC with the tools necessary to address unreasonable practices by ocean carriers, holding them accountable for their bad-faith efforts that disenfranchise American producers, including those throughout South Dakota, who feed the world,” he said. “Especially with record inflation in prices of goods, this legislation would also benefit consumers by promoting the fluidity and efficiency of the supply chain.”

The House’s passing of the OSRA and this week’s introduction of the legislation in the Senate follow a November endorsement issued by the White House, amid various federal efforts to help curtail the ongoing port congestion and global supply challenges, stemming from the pandemic. At the time, the White House noted that Congress needs to provide the FMC with an updated toolbox needed to protect exporters, importers, and consumers from what it called unfair practices, adding that this bill serves as a good first step on the path to the “longer-term reform to shipping laws that would strengthen America’ global competitiveness.

This legislation represents the first type of its kind going back to the Ocean Shipping Reform Act of 1998.

Since then, China was granted permanent normal trade relations, or “most-favored nation” status with the U.S. in December 2001 after it was admitted to the World Trade Organization. In 2001, the U.S. trade imbalance with China stood at around $83 billion, based on U.S. Census Bureau data, with the trade imbalance at $310 billion in 2020.

This bill was strongly endorsed by Steve Lamar, president and CEO of the American Apparel & Footwear Association.

“The shipping crisis has seen excessive costs passed onto American companies by international carriers looking to take advantage of the situation,” said Lamar. “The Ocean Shipping Reform Act meets a dire need for increased enforcement by the Federal Maritime Commission, and the apparel and footwear industry strongly encourages the Senate to pass this bill quickly so that President Biden can sign it into law and end these predatory practices.”

Paul Bingham, Director, IHS Markit Economics and Country Risk / Transportation Consulting, said that there were not any big surprises in the House version of the OSRA.

“However, this legislation will bear watching as it evolves, as it could force helpful changes in some of the practices under current law that have so upset BCOs, especially exporters during the pandemic,” he said. “Carriers may not be happy with this legislation, but they can’t be shocked by the reaction to the consequences of the situation they’ve benefitted from financially so strongly this past year.”

And he added that the final language of what would pass the Senate, go through reconciliation and then be signed by the President in to law is what really matters to the industry.

“If the language from the House bill survives in the final law passed, it will change how the FMC approaches their role with the added responsibility to promote exports and consider carriers services standards from a public interest perspective,” he said.  “The annoying detention and demurrage charges having the burden of proof shifted to the ocean carriers would help shippers.  The required quarterly reporting by the carriers to the FMC sounds useful but in reality likely to do little since that information is already available through commercial data vendors such as PIERS and Panjiva.”

Brian Whitlock, Senior Director Analyst with Gartner’s Supply Chain practice, explained that the most positive impacts will come from the bill’s provisions directing the FMC to establish rules prohibiting unjust and unreasonable detention and demurrage fees, as well as rules requiring carriers to meet minimum service standards.

“The bill also shifts the burden of proof for reasonableness of detention and demurrage to carriers, meaning many more cases will likely be brought to the FMC,” he said. “The requirement to meet minimum service standards will finally bring relief to U.S. exporters who have seen a decline in exports of 22% (according to MarketWatch). No longer will carriers be able to take advantage of the U.S.’s highly profitable eastbound trade while ignoring westbound exports.”

As for how OSRA could make the FMC a more effective regulator, Whitlock explained that that the FMC has had a more passive role in ensuring fair trade given the limitations of its directives.

“Going forward, it will be much more active in defining how carriers must behave and holding them accountable through their rules making process and remedies, including refunding overcharges and issuing penalties,” he said. “It’s likely that, once this bill passes in the Senate, we will see an immediate change in how carriers treat detention and demurrage charges, as well as how they support exports, even without knowing the rules the FMC may set.”

With the expectation that the impact of the OSRA on supply chain delays and port congestion is likely to be limited, Whitlock pointed out that global ocean markets are highly disrupted due to significant increases in demand combined with major disruptions that have had the result of reducing supply of ships and containers. And he added that disruptions have also caused a precision network to no longer be reliable, having to operate with surges in volumes between ports globally.

“This has been the main cause of U.S. port congestion, combined with increased volume and port inefficiencies,” he said. “This bill will not impact the variables of demand and supply nor will it change how disruption impacts the market.”

On a longer-term basis, Whitlock said the FMC should consider how ocean carriers and terminal operators at U.S. ports combine to deliver minimum service standards.

“For example, in Los Angeles and Long Beach ports, five of the 13 terminals are owned or operated by carriers,” he said. “This combination should be looked at closely to ensure they are operating efficiently and in ways that reduce or avoid detention and support timely exports.”

American Associations of Port Authorities (AAPA) President & CEO Chris Connor told LM late last year that when the original drafting of this bill was being done, the AAPA could not support the bill as written.

“It is addressing a lot of issues that have come to light through the pandemic and supply chain crisis in this one bill,” he said. “There are provisions insight the bill that undermine freight mobility, meaning it is putting requirements on ports and marine terminal operators, as well as carriers, to pre-certify the legitimacy of charges for demurrage and detention. In this environment, where the freight system is already congested and there are bottlenecks across the entire freight mobility network, we are just uncomfortable and reluctant to endorse something, which may undercut the very issue that is plaguing us already by putting more requirements on the operators to pre-certify these charges in advance.”

Valenciaport improves pre-pandemic activity: More than 5.6 million TEUs in 2021 and 85 million tonnes mobilised

Valenciaport has closed the 2021 financial year with over 5.6 million TEUs (standard 20-foot container) and 85 million tonnes, numbers that improve activity with respect to 2020 and 2019, the latter being a pre-pandemic year. The import/export pull of Spanish companies operating through Valenciaport’s docks has been key to these records and reaffirms the Port of Valencia as a strategic ally of the economy. Moreover, these figures, which confirm the forecasts of the Port Authority of Valencia (PAV), place the Valencian port as the fourth port in Europe in terms of containers, surpassing the Greek port of Piraeus, and behind Rotterdam, Antwerp and Hamburg.

On the verge of maximum capacity

According to the APV Statistical Bulletin, a total of 5,604,478 TEUs were moved through Valenciaport last year, an increase of 3.25% over 2020 and 3% over 2019. The president of the PAV, Aurelio Martínez, analysed the figures for the end of the year 2021 which has been characterised by “having two parts, in the first we grew at a very strong rate while in the second this increase slowed down a little. These figures show that the Port of Valencia has the beginning of saturation. We are close to our maximum capacity of 7.5 million TEUs and, when there is a lot of operational cargo, these limitations are already noticeable. That is why the new northern container terminal is essential if we want to continue to be a port of reference in world traffic”.

In 2021, the dynamism of the business fabric operating through Valenciaport must be highlighted, both in sales abroad and in the acquisition of products. Thus, full containers of cargo reached the figure of 1,081,103, 13.89% more than in 2020, while those of unloading were 837,584 with an increase of 17.38%. “These figures are very positive and reflect the activity of Valencian and Spanish companies over the last year. We have handled between import/export almost two million TEUs and this is where the service provided by the port to the companies in our hinterland, which represents 41% of the full export and import containers moved by the Spanish port system, is evident”, explains Aurelio Martínez.

On the other hand, the figures for 2021 reflect a decrease of 3.45% of full transhipment containers (those which for strategic reasons are transported to main ports such as Valencia and from here are transferred to the ports of destination). For their part, empty containers have grown by 0.74% in 2021.

5% more freight traffic

In total, Valenciaport handled 85,269,726 tonnes of goods in 2021, representing 5.42% and 5.18% more than in 2020 and 2019, respectively. Compared to 2020, liquid bulk (44.69%), solid bulk (16.11%), non-containerised cargo (16.15%) and cargo arriving by container (1.2%) have increased.

In this period, ro-ro traffic (system by which a vessel transports cargo on wheels) has exceeded 12.86 million tonnes, 14.61% more than in 2020. The transport of automobiles as freight in 2021 amounted to 493,697 units, representing a decrease of 7.4%.

In terms of passenger traffic, 635,689 people travelled during these 12 months, 51.67% more than in 2020. Of these, 130,869 have been cruise passengers who have arrived in Valencia since this activity began at the end of June.

China, the main trading partner

In full container traffic, China continues to be Valenciaport’s main trading partner with 612,497 TEUs handled in 2021 and an increase of 14.37%. In terms of dynamism, the growth of Morocco (26.96%), Italy (26.78%) and Israel (22.74%) stands out. It should also be noted that the United States is the most important country in the movement of export containers, with a total figure of 145,953.

In terms of sectors, all of them have grown in 2021. The most important sector is vehicles and transport elements with 11.5 million tonnes, followed by the agri-food industry with 8.96 million, construction materials with 8.19 million and other goods with 7.91 million tonnes. The most dynamic in foreign sales were energy products with an increase of 73%, construction materials with a rise of 24.61%, iron and steel with a growth of 18.41%, and agri-foodstuffs and livestock with an increase in exports of 17.53%.

Valenciaport improves pre-pandemic activity: More than 5.6 million TEUs in 2021 and 85 million tonnes mobilised
Maersk is no longer the world’s largest shipping line

Maersk is no longer the world’s largest shipping line

Mediterranean Shipping Company (MSC) has unseated Maersk as the world’s largest shipping line by container capacity, according to data from the shipping analytics firm Alphaliner. The shakeup ends Maersk’s 25-year reign as the undisputed champion of cargo shipping.

MSC reached that milestone a Jan 5 when Alphaliner’s daily updating database recorded that MSC now owns or charters enough ships to carry the equivalent of 4,284,728 shipping containers, narrowly edging out Maersk’s total capacity of 4,282,840 containers. Each 20-foot shipping container can carry the equivalent of 400 flat-screen TVs (or 48,000 bananas).

The largest container ship of COSCO SHIPPING Lines arrived at the Valencia’s Port

This past weekend, the container ship ‘CSCL Pacific Ocean’, belonging to COSCO SHIPPING Lines with a capacity of 19,000 TEU, has scaled for the first time at the CSP Iberian Valencia Terminal, being the largest container ship of the shipping company that until date has operated in the Valencian dock.

The ‘CSCL Pacific Ocean’ is assigned to the AEU7 service that connects Asia with Northern Europe, with a port rotation that starts in Xiamen (China) and ends in Felixstowee (UK). With a length of 400 meters, a beam of 59 meters and a draft of 14.7 meters, the ‘CSCL Pacific Ocean’ docked at the CSP Iberian Valencia Terminal in the port of Valencia on Saturday night and, after carrying out nearly 900 loading and unloading movements of full and empty containers, set sail the next day.

The operation was completed successfully thanks to the coordination between the different human teams of COSCO SHIPPING Lines Spain and CSP Spain, in permanent communication with those responsible for the service in Asia. COSCO SHIPPING Lines, as a member of The Ocean Alliance, has announced the Ocean Alliance 6 Product, to be launched in April 2022 with 42 services, 352 container ships and an annual capacity of 22.4 million TEUs on the world’s main routes. . The stopover in Valencia of the ‘CSCL Pacific Ocean’, which operates in the AEU7 service, is due to the shipping company’s strategy of testing the operational capacities of its terminals in the Mediterranean for Ultra Large Container Vessels (ULCV).

Operations at the terminal were carried out successfully thanks to the fact that CSP Spain has recently incorporated a new gantry crane at the main dock of its Valencia terminal, the STS 21, whose features allow speeding up the operations of these extraordinarily large container ships , optimizing and reducing the ship’s stopover time.

The largest container ship of COSCO SHIPPING Lines arrived at the Valencia’s Port
Freight rates continue to climb, no decline in congestion at ports

Freight rates continue to climb, no decline in congestion at ports

Has been off to an ominous start for shippers – no let-up in climbing freight rates, port congestion globally at higher levels and demand continuing to increase in key markets like the U.S.

The Drewry’s composite World Container Index (WCI) increased 1.6 percent to $9,698.33/40ft container this week. This is 82 percent higher than a year ago.

The average composite index of the WCI, assessed by Drewry for year-to-date, is $9,551/40ft container, which is $6,656 higher than the five-year average of $2,895 per 40ft container.”

Spot rates on transpacific lanes have steadily been increasing for the seventh consecutive week, Drewry added.”Freight rates from Shanghai–Los Angeles gained five percent to $11,197 Drewry is expecting rates to climb higher in the coming week.

No decline in congestion, K+N highlights 11.6mn TEU waiting days
Congestion across Los Angeles/Long Beach ports continues with 103 container ships backed up as of Thursday, January 20, 2022, according to information from Captain J. Kipling (Kip) Louttit, Executive Director, Marine Exchange of Southern California & Vessel Traffic Service Los Angeles and Long Beach San Pedro, CA.

The 103 total container ships backed up includes eight container ships at anchor or loitering inside 40 miles from the portsplus 95 slow speed steaming or loitering outside the Safety and Air Quality Area.

Kuehne+Nagel recently launched the Seaexplorer disruption indicator, and said the indicator reflects a waiting time and scale of 11.6 million TEU days. “In nine specific ports (Prince Rupert, Vancouver/Seattle, Oakland, Los Angeles/Long Beach, New York, Savannah, Hong Kong, Shanghai/Ningbo as well as Rotterdam/Antwerp), normal would be less than one million TEU waiting days. At present, roughly 80 percent of the disruption is associated with North American ports.”

The Omicron variant of Covid-19 is impacting the number of dockworkers with estimates of 1 in 10 staying home (as of last week), says Flexport in its weekly market update.

“Shippers with urgent cargo or those working to replenish depleted inventories are willing to pay premium rates for scarce space although some softening is expected to be seen post-CNY.”

Demand for space is increasing in the Indian subcontinent (ISC) as we are heading into the region’s traditional peak from January to April. “This time period is the last quarter of India’s financial calendar where we see demand rise as manufacturers look to close their books strongly to end the year.”

A slight increase is seen for the second half of January. Rates are expected to continue to climb into February as is typical during the ISC peak season, Flexport added. “Space to the USWC is and will remain a challenge into 2022. Port omissions on services to the USWC continue to cut capacity out of the ISC.”

Suez Canal expansion due to finish in July 2023

A project to expand parts of the Suez Canal is expected to be completed after two years of work in July 2023, the chairman of the Suez Canal Authority (SCA) said on Sunday.

The SCA announced accelerated plans to extend a second channel of the canal and to enlarge an existing channel after the Ever Given container ship ran aground and blocked the waterway for six days last year.

“The project will be completed in 24 months. We started in July 2021 and God willing we will finish in July 2023,” Chairman Osama Rabie said on the sidelines of an event in Dubai.

Ships pass through the canal in convoys, and the extension of the second lane would increase capacity by six ships, Rabie said, without giving further details.

The southernmost 30 km of the canal, where the Ever Given became grounded, is set to be widened 40 metres eastward and deepened to 72 feet from 66 feet, according to previously announced plans.

“This will improve ship navigation by 28% in this difficult part of the canal,” Rabie said.

The Suez Canal Authority and its companies were developing the entire project, he said.

Asked about shipments of Iranian fuel or oil passing through the Suez Canal despite U.S. sanctions on Iranian oil sales, he said: “There’s no discrimination when it comes to a country flag on ships, and Iranian oil does pass through the canal.”

Lebanese armed group Hezbollah imported Iranian fuel last year, a move it said was aimed at addressing shortages. Shipments were routed via Syria to avoid complications with sanctions.

Suez Canal expansion due to finish in July 2023
The US is spending billions of dollars deepening port harbors to make room for ‘mega’ container ships that are only getting bigger

The US is spending billions of dollars deepening port harbors to make room for ‘mega’ container ships that are only getting bigger

The Ever Ace, the world’s largest cargo ship, is as long as four football fields and can carry over 23,000 containers.

Container ships like this one have more than doubled in size over the past decade. While the massive vessels can hold more Amazon orders than you can imagine, the rapid growth presents a problem for US ports — the ships can’t fit into most harbors.

In response, the Army Corp of Engineers has allocated billions of dollars to deepen ports across the US.

From Massachusetts to Alabama, officials say ports must accommodate supersized ship dimensions in order to remain competitive in global trade.

At The Port of New York and New Jersey, a $2.1 billion harbor-deepening project freed up access to “post-panamax” ships, the name for mega ships too large to travel through the Panama Canal.

The vessels’ larger-than-life size may be contributing to the supply-chain crisis that’s caused record-breaking backlogs at US ports, one expert told Insider.

“Part of the problem is the ships are double or triple the size of the ships we were seeing 10 or 15 years ago,” Kip Louttit, executive director of the Marine Exchange of Southern California, said. “They take longer to unload. You need more trucks, more trains, more warehouses to put the cargo.”

Proponents of harbor-deepening projects like New York’s point to the benefits port economies have on local job markets. Other dredging proposals like North Carolina’s $834 million Wilmington Harbor Navigation Improvement Project face pushback over environmental concerns.

Global port congestion is getting worse+

According to data from Sea-Intelligence, overall, 11.5% of the global capacity has been taken out of the market due to vessel delays in November 2021, a slight improvement from 12.3% in October 2021.

“However, it seems that there is no sign of imminent improvement, while the normal state of affairs in the market is that 2% of global capacity is ‘trapped’ in delays somewhere in the world,” noted Sea-Intelligence.

Container-news.com reports that 2021 was a year where demand grew 7% year-on-year, partly due to the downfall in early 2020, and at the same time capacity effectively was reduced by 11%. Sea-Intelligence used the bi-weekly customer advisories from the major South Korean container carrier, HMM, to calculate a terminal congestion index.

Maersk warns congestion is continuing to impact supply chains
The Maersk shipping company has also warned that port and terminal congestion will continue to cause delays to customers’ supply chains, with several major ports proving to be “particularly challenging”.

“Unfortunately, 2022 has not started off as we had hoped,” the company said in a customer advisory. “The pandemic is still going strong and unfortunately, we are seeing new outbreaks impacting our ability to move your cargo. General sickness remains high as key ports in key regions are seeing new coronavirus peaks.”

Global port congestion is getting worse+

La china Cosco comprará la hongkonesa Orient Overseas por 5.524 millones de euros

La china Cosco compra el 51% del mayor operador portuario de España tras la reforma de la estiba

Barco de mercancías de la china Cosco. Fuente: Cosco

 

Esta adquisición transformaría a la compañía pública china de transporte marítimo de mercancías en la tercera mayor empresa del sector a nivel mundial.

Cosco Shipping Holdings, junto a Shanghai International Port, han presentado una oferta para la adquisición de Orient Overseas International (OOIL) por 49.231,2 millones de dólares de Hong Kong (5.524 millones de euros), lo que transformaría a la compañía pública china de transporte marítimo de mercancías en la tercera mayor empresa del sector a nivel mundial.

La propuesta contempla el pago de 78,67 dólares hongkoneses en efectivo por cada acción de OOIL, una cantidad que representa una prima del 37,8%respecto al último día de negociación de las acciones de la compañía de Hong Kong.

Cosco Shipping Holdings y Shanghai International Port han llegado a un acuerdo con el principal accionista de la hongkonesa, con una participación del 68,7% en la compañía. Una vez completada la transacción, asumiendo que todas las acciones de OOIL se adhieren a la misma, Cosco Shipping Holdings controlará el 90,1% de la compañía, mientras Shanghai International Port ostentará un 9,9%.

Los ofertantes han acordado mantener la cotización de las acciones de OOIL una vez cerrada la compra de la compañía y han pactado el pago a OOIL de una indemnización de 253 millones de dólares (222 millones de euros) en caso de no completar la transacción.

De este modo, Cosco Shipping Lines, filial de Cosco Shipping Holdings, y OOIL operarán una flota de más de 400 barcos con una capacidad superior a los 2,9 millones de TEUs.

Las acciones de Cosco Shipping Holdings han registrado una revalorización del 4,9% en la Bolsa de Hong Kong, mientras los títulos de OOIL han despedido la sesión con una escalada del 19,6%.

La china Cosco comprará la hongkonesa Orient Overseas por 5.524 millones de euros

La china Cosco compra el 51% del mayor operador portuario de España tras la reforma de la estiba

Barco de mercancías de la china Cosco. Fuente: Cosco

 

Esta adquisición transformaría a la compañía pública china de transporte marítimo de mercancías en la tercera mayor empresa del sector a nivel mundial.

Cosco Shipping Holdings, junto a Shanghai International Port, han presentado una oferta para la adquisición de Orient Overseas International (OOIL) por 49.231,2 millones de dólares de Hong Kong (5.524 millones de euros), lo que transformaría a la compañía pública china de transporte marítimo de mercancías en la tercera mayor empresa del sector a nivel mundial.

La propuesta contempla el pago de 78,67 dólares hongkoneses en efectivo por cada acción de OOIL, una cantidad que representa una prima del 37,8%respecto al último día de negociación de las acciones de la compañía de Hong Kong.

Cosco Shipping Holdings y Shanghai International Port han llegado a un acuerdo con el principal accionista de la hongkonesa, con una participación del 68,7% en la compañía. Una vez completada la transacción, asumiendo que todas las acciones de OOIL se adhieren a la misma, Cosco Shipping Holdings controlará el 90,1% de la compañía, mientras Shanghai International Port ostentará un 9,9%.

Los ofertantes han acordado mantener la cotización de las acciones de OOIL una vez cerrada la compra de la compañía y han pactado el pago a OOIL de una indemnización de 253 millones de dólares (222 millones de euros) en caso de no completar la transacción.

De este modo, Cosco Shipping Lines, filial de Cosco Shipping Holdings, y OOIL operarán una flota de más de 400 barcos con una capacidad superior a los 2,9 millones de TEUs.

Las acciones de Cosco Shipping Holdings han registrado una revalorización del 4,9% en la Bolsa de Hong Kong, mientras los títulos de OOIL han despedido la sesión con una escalada del 19,6%.