Shippers should brace for higher fuel surcharges. As carriers attempt to pull back rising fuel costs, shippers are being advised to expect increased bunker adjustment factors on top of already high freight prices. Since the initial impact of the pandemic, fuel prices have risen to levels not seen in previous years. With the rise affecting both IFO380 and VLSFO, IFO380 bunker fuel is now trading above $530 per tonne, and the cost of VLSFO has climbed to $630 per tonne for boats without scrubbers.
Coast Guard issues warning due to 40 adrift containers in the Pacific Ocean. Several cargo containers drifting at the entrance of the Juan de Fuca Strait have prompted the Canadian Coast Guard to issue a caution to mariners. When the Zim Kingston, heading to Canada, came across rough weather just west of the entrance of the Juan de Fuca Strait, 40 containers fell overboard. The Canadian Coast Guard said it is monitoring the situation with the U.S. Coat Guard (USCG) and determining whether the containers pose a risk of pollution or other concerns.
Shipping issues are expected to persist well into 2022. According to economists and some industry leaders who have lately commented, shipping backlogs at major U.S. ports, as well as the consequent goods shortages and price increases, are unlikely to be resolved until well into 2022. According to Goldman Sachs, 77 ships are waiting outside of the ports in Los Angeles and Long Beach, carrying $24 billion worth of products. The challenges are spreading throughout the economy, placing pressure on everything from grocery stores to large industries.
SoCal ports to charge carriers for lingering containers. As terminal congestion at the ports of Los Angeles and Long Beach reach historic levels, the Biden Administration announced on Oct. 25 that the SoCal ports will begin imposing an “emergency fee” on all long-dwelling cargo beginning Nov. 1. The new measure is the latest effort to speed up cargo movement in the ports, where huge increases in stay periods are making it harder to clear cargo off terminals and bring in ships at anchor. When cargo lags at the terminals after November 1, the ports will charge ocean carriers $100 per container, increasing in $100 increments per container each day. The extra will apply to containers scheduled to transport by truck that linger in the port for more than nine days. Additionally, surcharges will apply to containers going by rail if they have been in transit for three days or more.
Two services from Hapag-Lloyd and CMA CGM plan to temporarily bypass Savannah, GA. Due to continuous delays at Savannah’s port, two of the country’s leading container shipping lines have announced plans to stop calling at the country’s fourth busiest port. CMA CGM announced that its Amerigo service will temporarily bypass Savannah due to significant congestion in this port (8 – 10 days). Instead, the service will route into the Port of Charleston in South Carolina, beginning on Nov. 27 with the arrival of the CMA CGM La Traviata. At the same time, Hapag-Lloyd announced that its Atlantic Loop 3 service will temporarily remove Savannah from its rotation and instead route to Jacksonville, Florida. The Hudson Express sailing from Antwerp, Belgium on Oct. 31 will be the first to perform Hapag-Lloyd’s port call change.
Equipment shortage delays new chassis pool in Charleston. Because not enough chassis can be manufactured or leased before the intended launch date of May 2022, the start of a new chassis pool for the Port of Charleston has been postponed by six months. According to the JOC, this news further demonstrates how a lack of equipment and an aging fleet are delaying the movement of containers between terminals and cargo owners, which is among the many reasons why many ships are anchored outside of major U.S. ports.
As part of their consideration of reinstating Section 301 exclusions, the United States Trade Representative (USTR) is seeking public input from Oct. 12 to Dec. 1. By excluding certain products from the additional duties imposed in multiple tranches, the USTR is considering whether to reinstate previously extended exclusions granted under the Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation. Most Section 301 goods exclusion extensions were set to expire on December 31, 2020, or earlier this year. The US Trade Representative’s Office is currently soliciting input on whether or not specific product restrictions should be reintroduced.
Some airlines are implementing breakout surcharges as a result of rising aviation fuel costs. The rising cost of jet fuel is putting further strain on air freight carriers. As a result, rather than continuing to provide an all-inclusive fare, per recent correspondence received by our Navegate team, several airlines are separating the fuel surcharge (FSC), which will be reflected as the price of a barrel varies. Contact one of our air experts if you have any questions concerning air freight or for additional information about FSC breakouts.
2022 should be a year of growth for European airlines with losses narrowing in 2021 and 2022. In 2022, European carriers may benefit from the two fastest rebounding international passenger markets, while only North America is expected to be profitable, according to IATA’s airline industry financial prediction for Oct. 2021. Intra-Europe RPKs are expected to account for 75% of 2019 volumes next year, while North Atlantic RPKs will account for 65%, both of which are ahead of all other major international regions. The reopening of the North Atlantic to European travelers should boost IAG, Lufthansa Group, and Air France-KLM (in that order). Strong global cargo revenue isn’t enough to compensate for declining passenger revenue, which is still well below 2019 levels.The global operating loss margin is expected to fall to -2.7 percent by 2022, according to IATA. To put this in perspective, following 2020 and 2021, this would still be the third lowest margin.
Cost of diesel fuel is still on the rise. Per the data issued by the Energy Information Administration on Oct. 25, the national average price for diesel increased 4.2 cents to $3.713 per gallon. The cost of trucking’s primary fuel has increased by 30.7 cents a gallon over the last four weeks, though the increase this week is less than half of what it was on Oct. 18. (8.5 cents). A gallon of diesel now costs $1.328 more than it did at this time in 2020.
Union Pacific (UP) and BNSF Railway (BNSF) offer rebates to customers who bring containers to their terminals on the weekends. UP and BNSF are taking additional action to improve the flow of goods and products inland from the LA and Long Beach ports, including offering ocean carrier customers incentives to transport containers out of the ports on weekends. For each container in-gated on Saturdays and Sundays at the Intermodal Container Transfer Facility (ICTF) in Long Beach, California, UP announced a pilot program that will run until Dec. 31 providing a $60 per-container refund to ocean carrier customers. The program. Similarly, BNSF is offering a $50 in-gate bonus for maritime containers that in-gate above a certain threshold on Saturday or Sunday in either Los Angeles or Long Beach. This program aims to promote a coordinated 24/7 supply chain operation as well as continuous joint efforts to minimize the present cargo backlog in the Los Angeles and Long Beach port complexes.
Will the next electric battery revolution be in cargo ships? The number of diesel-powered cargo ships anchored off the California coastlines of Los Angeles and Long Beach isn’t just symbolic of the congested supply chain. They also contribute to marine shipping’s annual carbon emissions of one billion metric tons. Fleetzero is a company hoping to provide solutions to both of these issues by developing battery-electric cargo ships to help reduce carbon emissions while also alleviating supply chain bottlenecks by leveraging more of the world’s available ports.
Amazon attempts to help relieve supply chain concerns. Amazon.com, Inc. is touting the size of its shipping operation in an attempt to calm public fears that a supply chain problem could stifle holiday shopping. The world’s largest online retailer said in a corporate blog post on Oct. 25 that it had increased its fleet of drivers, warehouses, and planes to manage a projected surge in orders in the coming weeks, potentially giving Amazon a competitive edge. The blog post also put a spotlight on the company’s efforts to deliver goods to customers without relying on the US Postal Service or UPS Inc.
Bon Jovi performs for trucking executives. Bon Jovi gave a surprise performance at the Freightliner and Western Star 2021 customer appreciation event for an invitation-only crowd of around 1,000 at the open-air Ascend Amphitheater in downtown Nashville. The New Jersey-based rock band performed signature ’80s classics including “You Give Love a Bad Name” and “Livin’ on a Prayer,” as well as more recent hits such as “Lost Highway.” The exclusive concert for trucking industry leaders was hosted by Daimler Vehicles North America, the manufacturer of Freightliner and Western Star trucks, on Oct. 25 during the American Trucking Associations’ Manafest.
Retailers are encouraging shoppers to start holiday shopping early. The holiday shopping spree usually begins on Black Friday, but this year businesses want you to start more than a month ahead. Major retailers are encouraging customers to shop for the holidays sooner than ever before to take advantage of deals and avoid disappointments. Because of shipping and supply chain challenges affecting practically everyone, the holiday shopping season is projected to be chaotic. To ease concerns and make sure customers get what they want before the holidays, retailers such as Best Buy, Amazon, Walmart, Sam’s Club, and Target have declared the holiday shopping season to already be underway by rolling out sales events and Black Friday-worthy deals more than two months before Christmas.