US Ports Gain Asia Import Market Share
The Boston Consulting Group and Local Logistics provider have released new research that is being heralded as the most comprehensive public study of the effects of the Panama Canal’s recent expansion, and comes as good news to US ports. According to their most recent research, the opening of the recently expanded Panama Canal could result in an increase of up to 10 percent in shareholding of the container traffic from East Asia to the United States. Supply chain management analysts explain more here.
According to this study, the United States will see a significant shift from west coast ports to east coast ports. This shift is predicted to result in a nearly 10 percent increase in the United State’s share of East Asia markets and forever alter the competitive balance between east and west coast ports in our country. Experts believe that the difference will not necessarily be seen in the amount of traffic handled by the respective coasts, but in the levels of growth seen in their ports. The west coast will likely continue to see a higher level of traffic, but the east coast is where we will see significant growth rates (along with a reduced market share) in the industry.
How will it work? At the current time, goods from East Asia are shipped into west coast ports and then transported as far as the Ohio River Valley. The Panama Canal project, which boasts an estimated cost of 5 billion dollars, will construct a third lane of traffic designed to allow larger ships to pass through its ports. With this expansion, larger ships will be able to reach east coast ports, thereby lowering the cost of maritime shipping. This reduction of cost will even out the competitive landscape between the coasts and make shipping more cost effective. Shippers will have more options, and carriers will compete with one another to provide these services.
Logistics solutions experts have reviewed the data and estimate that by the year 2020, up to 40 percent of container traffic from East Asia to the United States will arrive at east coast ports, even without the Panama Canal expansion. With the upcoming expansion, however, that percentage could easily reach 50 percent.
To learn more about how this change will affect your company’s shipping, call Jaguar Freight at 516-239-1900 to speak with a shipping logistics specialist today.
The Impact of New Government Administration in Logistics
The livelihood of your business relies on delay free, efficient, and cost effective domestic and international shipping. Changes in policies, regulations, and taxation can have a significant impact on your business’s ability to get your goods where they need to be on time. To better understand the effect that the government plays in transportation logistics, let’s turn to a recent article from the Wall Street Journal.
According to the Wall Street Journal, “more than 40 government agencies, including the EPA, the Department of Agriculture and the Department of Commerce are involved in trade shipments” and more than a dozen agencies have “release and hold” authority that surpasses that of border control and customs. Furthermore, a recent Market Watch article spotlights the fact that, “once containers clear the ports, the US Consumer Product and Safety Commission, Food and Drug Administration, Environmental Protection Agency, and the United States Department of Agriculture are also required to put their stamp of approval on imported products.” All of this points to the tremendous power the United States government has over global supply chain services and sparks fear in the hearts of transportation management systems analysts nationwide.
There are two critical ways in which the incoming government administration and presidency can affect the logistics industry. These include:
- Zoning and Permit Laws: For far too many waterfront ports, the costs of zoning permits surpasses the revenue from any given project. To create a fully functional, highly efficient maritime trade industry, waterfront agencies need to be to able to build ports to receive and send shipments, house equipment, and handle inspections. Sadly, most of these companies are bogged down by permit costs and legal hoops they have to jump through. The government needs to address this problem nationwide.
- Taxation Regulations: Similar to zoning and permit laws, taxation protocol plays a huge part in the efficiency and viability of the country’s maritime business capabilities. Nationwide, taxes are being raised at astronomical levels. Brooklyn, for example, experienced a 122% tax increase on their waterfront properties last year. That sort of increase is threatening the ability of businesses across the country to continue operations.
When considering your pick for the next President of the United States, pay attention to his or her attitudes regarding zoning, permit, and taxation regulation for international and domestic shipping. When it comes to your business’s ability to continue to compete in the international shipping world, your success will likely boil down to these factors. To understand more about how the government policies and regulations will affect your business, call the shipping logistics experts at Jaguar Freight. Call us today at 516-239-1900 to speak with an expert about your concerns.
Shipping Industry Emissions
Shipping Industry Emissions Remain Unchecked by International Oversight
The detrimental impact of greenhouse gas emissions is now recognized on a global scale. Regulations have been imposed across a variety of industries in an effort to mitigate the harmful effects of these emissions. Curiously, the International Maritime Organization (IMO), the United Nations’ agency responsible for maritime transport, has yet to take a definitive stance on global industry regulation standards.
According to the IMO, maritime shipping accounts for approximately two and a half percent of greenhouse gas emissions worldwide. Although sea vessels, on average, emit fewer greenhouse gasses than air or ground transport, the impact of maritime shipping is considerable due to the frequent and abundant use of this form of transport in the ever-growing industry of global supply chain management.
Of course, the lack of standard regulations allows for the environmental and health consequences resulting from maritime transport to continue to go unchecked. But it also presents a difficulty for the industry if individual regions or countries take it upon themselves to develop their own standards. This could potentially create a situation in which, because of the variety in regulations, companies that do adhere to best practices around emissions and environmental protection would be at a disadvantage compared to those who pollute freely.
The European Union, for example, has taken a step in the direction of developing its own regulations, requiring that after 2018, large ships must report annual carbon dioxide emissions to regulating government body. The EU points out that many of the operational measures and innovative technologies that could curtail emissions are actually cost effective for the shipping industry, in addition to being environmentally beneficial.
Still, in the absence of uniform global standards, well-meaning siloed requirements could disrupt business as usual for supply chain managers, shipping companies, and the industry as a whole. Stakeholders should stay abreast of any developments, both globally and in their specific geographic areas of business, to ensure compliance with all regulations.
Continue to follow the Jaguar Freight Blog for the latest news and information ranging from logistics to regulatory changes, and so much more!
SOLAS Regulations
Starting on the first of July, 2016, all shipping containers departing from any port in the world will be required to be accompanied by a document signed by the shipper which fully lists and accounts for the verified gross mass (VGM) of the container before it may be loaded onto any ship. This mandate from the International Maritime Organization (IMO) of the Safety of Life at Sea (SOLAS) agreement comes as an emergency response to many mis-declared weights which, in numerous cases, have contributed to casualties and damage at sea and in port. One example is the breakup and beaching of the MSC Napoli on the U.K. southern coastline in 2007. Another well-known example is that of a feeder ship capsizing the port of Algeciras, Spain in 2015.
According to the new rule, the weighing must be completed in one of two ways which SOLAS calls “Method 1 and 2.” The weighing must be done on scales that are both calibrated and certified according to local standards established by the country wherein the weighing is to be done.
Transportation Logistics Points of the New SOLAS rule;
- Containers must be weighed after they are filled, or all items in the container must be weighed and calculated.
- The shipper named on the bill will bear the final responsibility for accurate and proper weight verification, and must communicate the weight as verified in advance.
- For the shipper weight declaration to be considered SOLAS compliant it must be signed on behalf of the shipper.
- The container must not be loaded onto any vessel if the declared and verified weight is not present on the manifest prior to shipping.
- The maritime authorities of individual countries are expected to endorse the new rule and to employ various levels of implementation depending on region and nation.
Many of stipulations of the regulation are not yet finalized. How the rule is to be enforced is yet to be announced. What is to be done with containers found in violation of the rule, without the required documents, or bearing inaccurate documents, is also yet to be announced.
Alternative Container Weighing Verification Methods for the US
The U.S. Coast Guard approved two alternative methods for obtaining certified container weights to comply with new international regulations: one proposed by agricultural shippers and another proposed by the South Carolina Ports Authority.
The move paves an easier path for exporters, particularly agriculture shippers, but it’s not yet certain how container terminals and carriers will respond individually. The announcement from the USCG, the U.S. agency tasked with implementing the SOLAS amendment, comes just a few weeks before the new requirements making container weight verification a condition for vessel loading legally binding on July 1, 2016.
“That statement may trigger some further consideration by terminal operators about their policies on providing SOLAS-compliant container weights using their existing scales,” John Butler, president and CEO of the World Shipping Council, said in a statement Friday.
In a letter sent to the International Maritime Organization, the USCG repeated its stance that there are multiple ways to meet the IMO’s new SOLAS rule mandating no container shall be allowed to board a vessel without an accompanying verified gross mass, or VGM. Shippers, carriers, terminals and maritime associations have outlined multiple acceptable methods for providing VGMs to carriers.
A couple examples are: (1) the terminal weighs the container, and when duly authorized, verifies the VGM on behalf of the shipper, and (2) the shipper and carrier reach agreement whereby the shipper verifies the weight of the cargo, dunnage and other securing material, and the container’s tare weight is provided and verified by the carrier.
The first method is one that was originally floated by the SCPA. The authority announced in February that it would be willing to weigh containers on site in order to help shippers comply with the new IMO rule — making the Southeast port the first and only U.S. port to do so to date.
Under the plans that Jim Newsome, SCPA president and CEO, has drawn up and circulated to customers, the Port of Charleston would offer to weigh export containers with its weigh bridges currently used to comply with existing Occupational Health and Safety Administration rules. The cost to the shipper will be $25 per container.
Newsome has repeated on a number of occasions that the service is not significantly different from the operations and procedures already in place, due to OSHA regulations.
For the purposes of determining the VGM of a container, any equipment currently being used to comply with federal or state laws, including the Intermodal Safe Container Transportation Act and the container weight requirements are acceptable for the purpose of complying with SOLAS.
Source: JOC
Stay tuned to our blog for more information about SOLAS requirements and the upcoming changes in 2016.
We are The Freight Architects™. Custom transportation solutions for a global community. The support of a dedicated team, with intuitive technology, that’s what Jaguar delivers.
Maher Terminal NJ Port Tour
Our team at Jaguar Freight visited the Maher Terminal in New Jersey. Our experience there helped us to see firsthand the inner workings of Maher Terminal. The tour was very informative and impressive to see how the containers are moved around the terminal.
Maher Terminals is one of the largest multi user container terminal operators in the world. As a vital link in the container cargo movement chain, they are responsible for helping customers effectively compete in the global marketplace by handling their cargo as expeditiously and economically as possible. Maher takes this responsibility very seriously and has developed North America’s largest marine container terminal in the Port of New York and New Jersey.
This highly efficient container terminal operation strategically located in the heart of one of the world’s most affluent consumer markets provides ample container throughput capacity to efficiently meet and exceed the current and longer term operating requirements of their ocean carrier customers. The scope and flexibility of their highly automated multi user marine terminal operation truly makes their facilities a “Port within a Port.” This is best supported by the many ocean carriers that have been utilizing Maher’s facilities for decades, ranging from single trade lane operators to the world’s largest global alliances.
The Jaguar team at the Maher Terminals
Maher Terminal Models
Containers at Maher Terminals
Vessel docked at terminal being discharged.
Founded in 1993 in New York and London, our roots are in logistics. As we’ve grown with our customers, we’ve developed state-of-the-art technology expertise that transforms logistics and shipping services into world-class supply chain solutions.
Clear supply chain leadership, expertly coordinated around the globe, backed by an exceptional degree of customer care. That’s what Jaguar delivers.
Change is on the Horizon for US East Coast Container Imports
Ports on the U.S.’ eastern coast saw a busy 2015. BIMCO reports 7.9 million TEU of loaded containers passing through the U.S. East Coast in 2015 alone, a 12% increase from 2014. Several factors contributed to the growth on the U.S. East Coast, including diverted traffic from the U.S. West Coast, higher American purchasing power, and lower commodity prices.
Teetering Coasts: Decline in the U.S. West Coast
While the U.S. East Coast ports experienced historically high traffic, complications with labor unions and subsequent port congestions stifled the U.S. West Coast.
The beginning of 2015 saw a flurry of contract negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA). Continued negotiations, and the inability to reach a negotiation halted traffic at ports on the western coast. Dozens of ships were subjected to delays and had to anchor to wait for berths to open.
In efforts to ease the congestion as negotiations and delays on the U.S. West Coast continued, traffic began to be diverted to U.S. East Coast ports. To the benefit of the U.S. East Coast ports, on top of the acceptance of the diverted traffic, something else was taking place in the U.S. – a rise in personal consumption of goods.
Lower Oil Prices Surge American Purchasing Power
A basic Economics 101 class explores the dynamic relationship between supply/demand and how it relates to the pricing of goods, services, and commodities. The game changer in this scenario has been the decline of commodity prices, particularly the price of oil. The average American consumer suddenly found themselves with a little extra disposable income, or purchasing power, in 2015.
This increase in purchasing power led to a boost in the consumption of personal goods – which together go hand-in-hand with the increase of inbound containers destined to the U.S. A sharp and dramatic decline in commodity prices, especially oil, spiked the purchasing of the average U.S. consumer, which then drove demand for consumable goods, and consequently the need for them to be transported to the country of consumption. This phenomena, combined with complications on the U.S. West Coast, drove the 12% increase of container traffic to the U.S. East Coast in 2015.
Cultivating Growth on the U.S. East Coast
Looking ahead, leaders in the transport industry are questioning whether or not the U.S. East Coast ports can sustain the new business.
The Port of New York and New Jersey (PANYNJ) sees the majority of the container trade on the U.S. East Coast. Loaded containers headed into The PANYNJ increased by 9.2% in 2015, but they’re not alone in these waters. The entire U.S. East Coast port community benefitted from strong growth in 2015. For example, in Savannah, Georgia, The Port of Savannah experienced the highest growth rate, rising by 20.4% from 2014.
The hasty peak of diverted traffic from the U.S. West Coast last year seems to be a proverbial test for what is on the horizon for the ports on the U.S. East Coast. With the expansion of the Panama Canal, ports on the U.S. East Coast have already been preparing to cater for their larger visitors – and if 2015 is a testament of growth on the U.S. East Coast, well it seems like they’re ready.
About Jaguar
Founded in 1993 in New York and London, our roots are in logistics. As we’ve grown with our customers, we’ve developed state-of-the-art technology expertise that transforms logistics and shipping services into world-class supply chain solutions. Clear supply chain leadership, expertly coordinated around the globe, backed by an exceptional degree of customer care. That’s what Jaguar delivers.
Panama Canal Expansion Promotes Global Trade
About the Expansion
The expansion of the Panama Canal will offer new business opportunities to shipping ports located in the southeastern United States. Set to be completed in early 2016, the $5.25 billion expansion of the Panama Canal is aimed to the boost East and Gulf Coast container trade. The Panama Canal expansion consists of much larger locks, opening up trade for larger Pacific-Atlantic cargo ships. The larger locks are already boosting prospects for more exports to Asia from U.S. Gulf ports and vice versa, coal and grain amongst the commodities transported. Larger hauls are expected to increase efficiency with shipping cargo, ultimately maintaining the affordability of many critical goods for the public.
Doubling in Size
The connector between the Atlantic and Pacific oceans will be doubled in size, and once completed, will change the global routes for many of the world’s shipping lines. The canal will soon be able handle double the capacity in size of shipping containers, allowing for shippers to bring Asian goods to the East and Gulf Coasts of the United States for less money.
Bypassing Smaller Ports
While still passing through the Panama Canal, the shippers will now be able to bypass smaller port stops in lieu of a streamlined route with bigger hauls. In conjunction to the expansion of the canal, many key shipping ports have begun to expand their ship docking capacity to accommodate the larger ships now passing through the Panama Canal’s bigger lock system. The new locks will be able to handle larger vessels that can carry nearly three times as many containers.
Panama as a Global Shipping Leader
The project is expected to bolster Panama’s strategic position as a global shipping hub and business center for much of Central and South America. The capacity to process larger freighter ships through the canal, has sparked the interest of companies in the Southeast U.S., who have already begun seeking business opportunities in Panama or other parts of Latin America. Southern and Central America could benefit greatly from the expansion, as increased exports and imports expand job opportunities. Economists are hoping to see the quality of life increase for many Southern and Central Americans, as many citizens in the regions struggle to meet their basic needs.
West Coast vs East Coast
With the expansion of the Panama Canal, and the subsequent expansions of trade ports along the Southeastern United States and Caribbean, ships from the Far East can now ship directly to the Gulf regions without having to stop on the West coast of the United States. Ships from the Far East used to arrive on the U.S. West coast, then transport the cargo via railroad line to the East coast. Shippers can soon take advantage of the expansions on all ends as the ports in the Caribbean accommodate the larger ships.
The US East and West coasts are in constant competition for business from the Far East. The $5 billion expansion will permanently alter the competitive balance between the ports of the US East and West coasts. According to industry analysts, despite the changes taking place in the Panama Canal, the market share of imports of East, West and Gulf Coast ports this year is set look a lot like it did during the second half of 2015.
Change Could Take Time
The completion of the Panama Canal expansion is a hefty project that will inevitably have a huge impact on the international shipping and trade sector.
Our team members at Jaguar Freight are always ready to answer your questions about the ever-changing shipping landscape. Clear supply chain leadership, expertly coordinated around the globe, backed by an exceptional degree of customer care, that’s what we deliver.
How to Keep Your Supply Chain Operating During Chinese New Year
The celebration of Chinese New Year is fast approaching. The holiday essentially shuts down the world’s production hub for a one to two week period. Take precautions to avoid a Chinese New Year 2016 shipping delay.
Chinese New Year marks the start of the Lunar New Year and, for 2016, we will be entering the Year of the Monkey. The official start of the holiday is Monday, February 8th, with the national observance of Chinese New Year running from the 7th through the following Friday, February 13th. However, the holiday is typically celebrated for two weeks or longer. In addition to China, Chinese New Year is celebrated throughout the Asian region, creating possible shipment delays from countries like Vietnam, Thailand, Cambodia, the Philippines, Japan, and more.
During the Chinese New Year celebration, tens of thousands of migrant workers from all across China will return to their homes for what will likely be the only time they spend with their families all year. These workers are the backbone of the global production giant and, without them, the world’s workshop comes to a screeching halt. Most businesses and factories will be completely shut down for a period of fifteen consecutive days, though some remain closed for as long as a month. Additionally, many companies resume operations without their full workforce returning on time, further lengthening this period of limited production.
While it may appear excessively generous of Chinese businesses to grant these extensive leave periods for the holiday and to accept such a sustained period of nonproduction, there is more than just altruism fueling this custom. To begin with, China’s factory workforce is not large enough to meet the country’s production demands. A worker in the Chinese manufacturing economy need not be concerned about being fired from a job because they can easily find work elsewhere. Although the challenging conditions of factory work in China tend to be uniform among the various manufacturing companies, denying workers their Chinese New Year leave would exacerbate existing staffing challenges.
This massive shutdown in global production of all variety of products–from clothing to toys, to cosmetics, and more–can give rise to a number of logistical struggles for distributors and retailers. Some of these include:
- Supply Shortages: Plain and simple, many products will not be available, or will not be available in the necessary quantities, during the period of Chinese New Year.
- Shipment Delays: In the weeks prior to Chinese New Year, distributors and retailers may pre-emptively increase shipments to hold inventory over during Chinese New Year. Running close to the holiday season in the US and Europe, substantial delays in shipment time can be encountered.
- Increased Shipping Costs: Many cargo carriers will capitalize on this period of heightened demand by increasing prices of air and sea carrier vessels.
These challenges and others associated with the Chinese New Year bottleneck can be alleviated or avoided altogether with a bit of foresight and strategy. Consider the following tactics to maintain your competitive edge in the Chinese New Year season.
- Anticipate shortages by moving a higher volume of shipments to be kept in inventory for the duration of the Chinese New Year shutdown. The post-Christmas market in the US is typically slow, and older merchandise can be highlighted at sale cost. Keeping inventory low is not an advisable goal during this time.
- For any orders that will be needed during Chinese New Year and in the weeks following, allow three to four weeks for your shipment to arrive to anticipate likely delays. Some recommend placing orders as early as October or November. Reserve carriers and prepare declarations well in advance of Chinese New Year.
- Keep in contact with your vendor to stay abreast of any delays in production or issues with quality during this high-demand period. Elevated production increases the likelihood of quality defects, and the sooner such issues are addressed, the less likely they are to impede an already tight production schedule.
Support in shipping and receiving logistics can assuage some of the challenges associated with keeping supply chains out of Asia operating smoothly before, during, and after the Chinese New Year. Having access to up to the minute details of your shipments is essential to ensuring your clients receive their goods when they need and expect to. Jaguar Freight’s CyberTrax software gives you real-time access to your shipments through our state of the art transportation management system while providing insight into the most cost-effective strategies for your specific needs.
Do not underestimate the impact Chinese New Year will likely have on your supply chain. Maintain the professional identity of your business and minimize elevated shipping expenses by enlisting the support of a world-class supply chain logistics expert today.
Container Weight Mandate 2016: How to Stay in Compliance
The global supply chain market will be subject to new regulations in maritime transport, effective July 1, 2016. The Maritime Safety Committee of the International Maritime Organization (IMO) has approved amendments to the Safety of Life at Sea (SOLAS) convention of 1974. These amendments require that shippers provide a verified gross mass (VGM) for all containers, either electronically or in hard copy. After the mandate is in effect, failure to provide the VGM for each container will result in the container not being loaded onto the vessel.
US regulations already require that all export containers be weighed and verified prior to shipment. The container weight mandate 2016 will provide international accountability for proper weight declaration. Other IMO affiliated countries may have existing regulations in place regarding verification of carrier weights that must be adhered to in addition to the international mandate.
Purpose of the Mandate
The new international requirement is intended to reduce safety hazards and operational issues that result from inaccurate and unstable loading. Some of the results of improper loading can include:
- Serious accident, including sinking or fire aboard maritime vessels
- Supply chain interruptions
- Decreased efficiency
- Unnecessary delays
It has been estimated that $12.8 million in losses was attributed to mis-declaration of cargo between 2006 and 2011. Additionally, several recent fire and sinking incidents, including the MSC Napoli in 2007 and the MSC Flaminia in 2012, have been connected to cargo mis-declaration and subsequent improper loading.
Steps for Compliance
Under the mandate, the VGM for each container is required to account for the following:
- Tare weight of the container
- Weight of any dunnage or other filler packaging
- Weight of all items within the container
- Weight of items’ packaging
This weight can be determined in two ways. First, shippers can weigh each item individually before loading and add the weight of the container and dunnage. The second option is to pass the carrier over a weigh station scale while loaded to a truck and then subtracting the weight of the truck, chassis, and fuel from the scale reading. The mandate specifies that all measurement instruments used must adhere to accuracy standards of the State in which the container is loaded.
The new regulations place responsibility for ensuring the VGM is provided accurately on the shipper. Due to the somewhat unclear definition of “shipper,” this could potentially hold liable a number of entities, including the client that packs the carrier, the logistics company, or the freight forwarder. In the event of an accident, if any or all of these parties were aware of a misrepresentation of the reported VGM, they could be held responsible, fully or partially.
Failure to accurately report the weight of the container could result in the following penalties:
- Fines and other penalties as imposed by the State in which the carrier is loaded
- Repacking costs
- Administration fees for amending documents
- Demurrage charges
- Cost of delayed or cancelled shipments
Implications of the Mandate
As shippers prepare for this mandate to go into effect, the supply chain industry could be effected in a number of ways. To date, a number of questions about the rollout, implementation, and enforcement of the mandate still exist.
For example, it is unclear how containers deemed mis-declared at the terminal should be dealt with–whether the shipper should be responsible for returning and re-declaring the container or the transporter. Additionally, training may be required for various stakeholders in order for the mandate to roll out effectively.
Weighing technology must also be acquired by the shippers responsible for declaring the VGM. This type of technology, in the past, was not a necessary part of their operations. The need for new and additional technology will likely raise costs. The burden of these cost increases will either fall on shippers or consumers.
The mandate does not require that weighing entities be verified or accredited, only that the technology employed be calibrated and in compliance with national accuracy standards. It is at the discretion of the individual States as to whether or not they will require a “verified weigher” status for the party weighing the container.
Support for Implementation
Global supply chain systems are complex and may involve any number of state and international regulations. To avoid violating any obligations or requirements, businesses can turn to Jaguar Freight, a world-class supply chain logistics management company. Our CyberChain technology will ensure that all aspects of your supply transport are in compliance with both international standards and those specific to any state your goods travel through en route to their destination.
Contact us today to learn more about how Jaguar Freight can support you in adhering to the container weight mandate.
