This year has been quite the whirlwind with changes in our industry. From the expansion of the Panama Canal, to new SOLAS regulations, and now the Brexit transition. Per usual, change is the only constant when it comes to global freight movement. We see advancements in technology almost daily, and international politics contribute to the constant influx of change, but what about massive change, such that as Brexit?
Wanting to get a deeper understanding of how Brexit is affecting the logistics industry, we interviewed Jaguar Freight’s CEO, Simon Kaye, a native Londoner. Simon’s experience with international trade is rooted in UK and US logistics. Having studied accountancy and finance at the City of London University, Simon founded Jaguar Freight Services with his father, Percy Kaye, in both London and New York in 1993. Simon moved permanently to the United States to establish Jaguar’s New York headquarters in 2002.
Some people are suggesting Brexit is the biggest step backward since World War II, what do you have to say about this?
Backwards or forwards no one really knows, but it’s certainly the most significant change in Britain’s relationship with mainland Europe, as well as its global trading partners, in decades.
Post-Brexit UK needs a new trade deal with the European Union, what do you think that will look like?
Britain is the second strongest economy in Europe and the largest single destination for Germany’s auto industry, as well as many other European manufacturers, so whatever the outcome, Britain will be going into the negotiations in a strong position. It is in no one’s interest, Britain or the EU, to try and impose a punitive trade deal on the other..
There is word about trade negotiations taking place on a country-by-country basis, what countries do you think will be most affected by Brexit, why?
Germany’s position will become even more significant after Brexit. Due to its strong and successful manufacturing economy, many countries will be looking to Germany to “steady the ship”. On the other hand, countries like; Austria, Greece, Poland as well as France and Italy will have to tackle their own political rumblings for an in/out vote. There are many who think that Britain is just the first domino to fall.
Brexit affects every E.U. member and those wanting to join it. Free-market economies rely heavily on open trade, as a logistics expert, how do you think limiting a free-market economy will change the logistics of goods and services internationally?
The flow of goods and services will not stop due to Brexit. Britain and the other European nations trade freely with almost everyone other country around the world and are only limited by the regulations imposed as part of bilateral trade agreements. The negotiations that will occur over the next 2 years will be instrumental in how easily trade will flow between global trading partners. What bureaucratic barriers will be imposed and what tariffs will be agreed will go a long way in determining the impact on global trade.
What, in your opinion, will happen in the short-term?
My opinion is that the British economy and currency will suffer in the short-term due to uncertainty and concern around negotiations with the EU. However, ultimately I believe that due to Britain’s strong economy and history of international trade and political prowess, it will emerge even stronger than it currently stands as a global trading nation.
Continue to follow the Jaguar Freight blog for more information on the Brexit transition. 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.
On June 23, 2016 the UK electorate voted for Brexit, and consequently started the beginning process of leaving the European Union. The UK will be the first Member State to do so since the creation of the first European “Community” in 1952.
Post-Brexit UK, what might change?
Laws of particular importance to the shipping industry are likely to be those regarding trade, insurance, environmental regulation, international sanctions, contract terms, competition law, employment, dispute resolution and trade treaties with non-EU states. We discuss some of these below.
Competition Law: EU competition law applies to agreements and market conduct that affect trade between Member States, and the EU Commission has primary jurisdiction to enforce EU competition law, including granting clearance to mergers and investigating cartel activity. Where the effects of an agreement or market conduct are confined to a single Member State, national laws apply. Brexit would likely lead to a separate competition regime applying to the UK and to competition enforcement in the remaining 27 Member States, leading to the need for dual clearances in the case of mergers and exposure to regulatory investigation under two parallel, but distinct, regimes. Brexit would likely mean that compliance with both UK and EU competition rules would become more complex and burdensome.
Contract Terms: Many shipping contracts (for example voyage and time charters) provide for trading to certain countries or geographical regions. Since Brexit, there may be uncertainty as to whether a contract signed pre-Brexit (which contains such a clause) which refers to the EU will continue to include the UK. If existing contracts are drafted in a way that presumes the existence of an EU containing the UK, or makes a reference to the EU without specifically defining what that is, such contracts may give rise to disputes as to the meaning or ambit of the contract. Care will need to be taken in the event that an existing contract is renewed, as the court would likely apply the definition of EU as at the time the (renewed) contract is entered into, which might be different from the original or intended definition. The impact of Brexit on any related contracts will need to be assessed, including those intended to be on ‘back to back’ terms, in which relevant clauses may not be similarly defined.
Insurance: Any insurer in the EU is automatically entitled to write insurance business in other member states. This means that, for example, German insurers can write business in the UK, and London underwriters can write shipping risk in Germany (and indeed all other EU states). This is known as “passporting” and the idea is that the insurer’s “home” regulator regulates that insurer’s activities, removing the need for the insurer to be regulated in each Member State. Brexit would undermine this and, unless alternative measures were introduced, may restrict the ability of insurers (and those buying insurance) to shop around and get the best price and terms for their business.
Sanctions: As a member of the EU, Britain is party to, and therefore must comply with, the sanctions regime imposed by the EU. Those sanctions are currently against states such as Russia, North Korea, Belarus, Syria, and Yemen. The situation regarding Iran is currently, as widely reported, in a state of change. It remains to be seen whether the UK would implement mirror legislation, or even harsher or less strict sanctions. Regardless of whether it were to impose any replacement sanctions regime, the UK would not be ‘sanctions-free’, as it would still be a party to, and therefore have to comply with, the sanctions imposed by the United Nations against several regimes.
Trade: Under EU law, trade within the Union is liberalised as between Member States, allowing goods and services to be traded within the EU without internal customs barriers or tariffs. In addition, EU citizens can move freely, establish themselves commercially or as residents and can trade without restrictions (except for certain professional qualification rules). EU membership therefore gives UK businesses access to the EU “Single Market”. As to external trade with non-EU countries, the EU benefits from a wide range of bilateral and multilateral trade treaties, allowing preferential access to EU goods and services in these countries, as well as reducing or eliminating customs or tariffs.
Now that the UK has voted to cease its EU Membership, UK businesses will no longer benefit from EU internal trade access without a bilateral agreement between the UK and the EU. Although it is possible to be a member of the European Economic Area (EEA) as an associate state of the EU, it is not clear whether the UK is seeking to do this or seeking to enter into an entirely new free trade or association agreement with the EU. Operating within the EU market may become increasingly complex and consequently potentially more expensive for UK operators, as might operating in the UK market for EU operators. Those operating in the UK and also in the rest of the EU would face the burden of having to comply with both EU and UK laws on trade, rather than complying with the current harmonised EU system.
The key issues for U.K. shipping are visas and work permits, fiscal arrangements including tonnage tax, and border controls at ferry terminals.
The impact of the UK exit could also affect exporters from a variety of EU nations. The U.K. is the leading destination for exports from Norway with the value of that export trade sometimes double the nearest runner up in recent years. Ireland, Turkey and Poland are the U.K.’s second-largest sources of imports. Ireland sends largely pharmaceuticals and meat, Turkey sends auto parts and apparel, while Poland exports machinery, automobiles and electronics, according to GTA.
One of the cargo sectors likely to be hit particularly hard by a reintroduction of customs and duties is the automotive sector. Germany is the third-largest source of U.K. imports and automobiles make up a third of the value of those imports. Other key exports to the U.K. from Germany include machinery and pharmaceuticals.
All of the above mentioned implications assume the EU structure remains status quo. However, further fallout from the Brexit vote may be that the future of the EU, as we currently know it, is now in question.
Continue to follow our blog for more information on the Brexit transition. 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.
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 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:
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 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!
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;
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.
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.
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.
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.
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.
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.
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.
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.