TSA Carriers Implement and Increase Peak Season Surcharges
| SIGNALS NEWSLETTER – JULY 6, 2010 EDITION
The carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223, serving the East Asia/USA trade lane have recently implemented Peak Season Surcharges as recommended by the group’s 2010 Revenue Recovery Plan. Strong demand for service in the trade has prompted Carriers to implement these surcharges earlier than planned and to amend their tariffs to increase the surcharge amounts later this month or on August 1, 2010.In their 2010 Revenue Recovery Plan the TSA Carriers noted a Peak Season Surcharge (PSS) of US$ 400 per FEU to be effective August 1, 2010. This surcharge was planned to address higher cargo handling and equipment positioning costs during the peak season. Due to strong demand, many of the TSA Carriers implemented a PSS in this trade lane as of June 15. In recent weeks, Carriers have amended their tariffs to increased PSS amounts effective in late July or on August 1. The increased PSS amounts vary; ranging from US$ 600 to $1200 per 40ft ctr. The PSS is generally at the lower range on shipments to US Pacific Coast Ports and higher to US Inland Points and to US Atlantic Coast Ports. Some carriers have included an expiration date of November 30 for this PSS, but many have not included an expiration date for the PSS.This PSS, combined with the current bunker adjustment factors (BAF), and recently implemented General Rate Increases (GRI), produces total ocean freight charges that are at the highest levels seen on in the East Asia/USA trade lane in several years. On the heaviest volume routes, for example, from Hong Kong to Los Angeles, the lowest total freight now available on the spot market is about $2600 per 40ft ctr.The TSA’s 15 carrier members are American President Lines, CSCL, CMA-CGM, COSCO Container Lines, Evergreen Marine, Hanjin Shipping, Hapag-Lloyd Container Line, Hyundai, Merchant Marine, “K” Line, Maersk Line, Mediterranean Shipping, NYK Line, OOCL, Yang Ming Marine and Zim Integrated Shipping Services. Visit www.tsacarriers.org. |
-
FMC Reports to Congress, Requests Greater Authority Over Carrier Contracts
SIGNALS NEWSLETTER – JULY 6, 2010 EDITION
Chairman Richard A. Lidinsky, Jr. and Commissioner Rebecca F. Dye of the Federal Maritime Commission (FMC) visited the House Committee on Transportation and Infrastructure, Subcommittee on Coast Guard and Maritime Transportation for a Subcommittee hearing which focused in part on the status of the Commission’s investigation into vessel capacity. The Commission recently initiated Fact Finding Investigation No. 26 into vessel capacity and equipment availability in the United States export and import liner trades, in response to shipper complaints.
At the June 30 hearing Commissioner Dye reported in detail of the status of the investigation. According to Commissioner Dye the investigation focused on vessel space shortages, chronic container shortages in certain parts of the U.S., and ocean carrier practices regarding service contracts. The FMC recently conducted a series of confidential interviews around the country to gather information for the investigation. Commissioner Dye along with FMC Chairman Richard Lidinsky reported that while vessel capacity has increased in recent months, this increase has not kept pace with growth in U.S. trade. Furthermore, growth in demand for container imports and exports in the upcoming peak shipping season may strain current vessel capacity. Container availability for export cargo in some regions of the country may continue to be difficult and expensive to arrange. In March of this year, President Barack Obama directed agencies “to use every available federal resource” to increase U.S. exports over the next five years, and the FMC is making a strong effort to support this directive. Commissioner Dye presented the following recommendations for immediate action which were approved by the Commission at its meeting on June 23rd:
- Rapid Response Teams: Teams within the Commission’s Office of Consumer Affairs and Dispute Resolution Services (CADRS) have been organized to quickly address and help resolve disputes between shippers and carriers – particular problems involve cancelled bookings, rolled cargo, and container unavailability.
- TSA and WTSA Oversight: The Commission will increase oversight of the Transpacific Stabilization Agreement (TSA) and the Westbound Transpacific Stabilization Agreement (WTSA) by requiring transcripts of certain Agreement meetings of these groups whose member Carriers service the USA-Asia trade lanes.
- Global Alliance Oversight: The Commission has directed staff to prepare recommendations for prompt Commission action on ways to increase oversight of global vessel alliances.
- Extend Fact-Finding Investigation: The Fact Finding Investigation No. 26 is extended to November 30, 2010. This will allow the Commission to continue the investigation through the peak shipping season and to fully develop additional solutions. The interview process also will continue during this time.
Chairman Lidinsky also suggested to the Subcommittee that Congress begin considering adjustments to the Shipping Act that would complement Commissioner Dye’s initiatives. He suggested a modification to give the Commission a greater role in resolving disputes between importers or exporters and ocean carriers quickly through mediation or arbitration. He also suggested a regulatory or legislative response to ocean carriers who refuse to provide or accept shipping containers from U.S. exporters. Representative Elijah E. Cummings, Chairman of the Subcommittee on Coast Guard and Maritime Transportation, requested a preliminary list of such legislative proposals from the Chairman within 30 days.
Logistic Support Aids Midwest Soybean Producer In Selling Direct on the World Market
Based on strong export sales, primarily to China, the USDA raised its 2008/09 soybean export projection to 31,300 million metric tons (mmt) in its February 2009 World Agricultural Supply Demand Estimates (WASDE). Soybean exports are now projected to be 4.5 percent higher than the USDA January estimate and less than one percent lower than last year. This is good news for soybean producers such as Wayne Knewtson, a Minnesota farmer and marketer of grain products to world markets through his company, Knewtson Soy Products Company. Wayne gets his containers from North Star Container, LLC, and a lot of logistical support to make certain they reach their destinations safely.
After going through third parties for many years to sell his grain on the world market, Wayne took the plunge in the late 90s into exploring going direct to buyers out the U.S. It was a financial decision that has both risks and rewards. The reward is being able to retain a greater margin of profit because he no longer has to share profits with the middleman. The risks are in finding the markets, being able as a small producer compared to the Fortune 500 agribusinesses in finding the resources needed to get his soybeans from Southern Minnesota to ports in China and Japan and other world markets.
After many hours of due diligence and two trips to Japan to exhibit at trade conferences, Wayne got his first direct sale in 2002, earning a $1 or $2 more per bushel than he could have secured through a third party. He began exporting his soybeans in containers to ports in Japan. Getting to the right ports presented some challenges as the shipping lines available to him did not regularly visit some of the smaller ports where his products were destined.
About two years ago, Wayne attended North Star Rail Intermodal’s open house at the newly opened NSTerminals transloading site in Montevideo, Minn., where he was re-acquainted with professionals now on North Star’s team who he had engaged at former companies to ship grain products. Because of his excellent service experience with this team, he began working with Bob Reinecke, president of North Star Container to access containers and arrange shipping to several Asian ports.
“North Star has the relationships that enable my shipments to reach some of the smaller, more out of the way ports that I had challenges reaching,” says Wayne. “Because they have contracts with multiple shipping lines, they also get a good rate for me.”
“North Star has professionals who are very experienced and know how to get things done,” say Wayne. “For example, when exporting products, documentation is always a concern. But, they get the paperwork to the port in time for my buyers to claim their freight.”
In addition to his seed and soy products businesses, Wayne and his son also farm about 2,000 acres that provide a portion of the soybeans they export. They acquire the remainder from other soybeans producers in order to meet the growing needs of the markets both in and outside the U.S.
Being able to have North Star Container as a cost-effective and reliable partner on the logistics side, allows the Knewtsons to continue to expand their agribusiness from the traditional family farm model to one of global provider of grain and grain products.
North Star Container International Opens Chicago Office
Grain and Grain Products Shipped to Global Markets
NAPERVILLE, ILL. — North Star Container has opened an office in the Greater Chicago area to serve suppliers of grain and grain products shipping commodities to markets in Asia and Europe. Containerized shipping lowers costs and increases profitability for farmers, processors and ethanol producers. North Star Container is a full service non-vessel operating common carrier (NVOCC) that also has operations in Minneapolis.
“Containers allow us to maintain the quality of the products being shipped,” says Robert (Bob) Reinecke, president of NSC. “By combining short-line railroads and containers, we bring the containers closer to the product origination point, again saving transportation costs for our customers.”
North Star Container’s scheduled intermodal train service enables customers to commit specific quantities in advance to global customers on a year round basis, giving both sellers and buyers abroad the ability to secure product more efficiently with greater profit margins. In the Greater Chicago area, commodities are transloaded from trucks to containers at a number of terminals contracted by NSC. In addition to the intermodal terminals, NSC has negotiated contracts with several major shipping lines serving the Asian and European markets.
NSC ships:
- Distiller’s dried grains solubles (DDGS), a by-product of ethanol production that is used for livestock and poultry feed.
- Identity-preserved grains and grain products that need their unique pedigrees maintained as they move from farms or elevators to their final destinations.
- Other high-quality grains and grain products that can command higher prices because they are not mixed with lesser quality products and arrive in sealed containers that prevent contamination.
Reinecke joined North Star Container in January bringing more than 20 years of experience in global shipping with CP Ships and Hapag-Lloyd. He has extensive experience in linking Midwest commodities with global markets. While with CP Ships, Reinecke helped launch their Midwest Transpacific providing additional volumes and services for Midwest import/export.