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The FMC Strengthens Carrier Oversight, Port Congestion Increases to Record Levels, & Air Freight Rates Continue to Climb

By September 23, 2021 No Comments

Ocean  

Carrier capacity is expanding on the India-U.S. trade route. More container lines are adding routes to the India-U.S. trade route by adding complementary strings to existing service networks. CMA CGM has set up an eight vessel consortium agreement with Hapag-Lloyd to open a second string to their existing premier Indamex Service between West India and the U.S. East Coast. 

Additionally, Indian shippers will now have to deal with another carrier surcharge: a no-show penalty for containers that fail to turn up for loading. CMA CGM appears to be the first carrier to implement such a surcharge, with other carriers expected to follow suit. This surcharge is intended to optimize vessel loads and ensure other cargo owners can get available space, especially at a time when containers and space are both limited. 

The Federal Maritime Commission (FMC) voted to move forward with two detention-and-demurrage initiatives. These initiatives require formal approval, but serve as guidance “on the scope of the prohibition against carrier retaliation when attorney fees may be imposed on a non-prevailing party, and who may file a complaint with the Commission alleging unreasonable conduct.” The FMC has other proposals that they’ve voted to move forward with, and the Commission will make announcements regarding these proposals as they develop. If you have any questions about these initiatives, don’t hesitate to reach out to one of our experts

Ports 

Top Southeast U.S. ports are experiencing more congestion and persisting backlogs. Port officials in Georgia and South Carolina are saying that elevated dwell times, chassis shortages, and vessel backlogs will remain a problem through peak season. The dwell times for containers has doubled compared to a year ago in Savannah and Charleston, which has caused equipment shortages and port areas that are devoted to exports are now being taken up by import containers. 

The Southern California ports experience worsening logjams, with record-breaking vessels waiting at the port. In the past week, these ports have hit a new record of backlogged cargo ships, with an astonishing aerial view to prove it. As of this week, nearly 100 cargo ships are waiting at the port. This number is more than double what the queue of vessels was a month ago, according to the Marine Exchange of Southern California. Big vessels continue to join the bottleneck as there are few options for moving goods into the U.S. This congestion is a stark reminder of the disruptions and delays attacking global supply chains. 

The ports of LA-LB will have extended gate hours to help curb the unprecedented congestion and awaiting vessels. The ports will now offer expanded night and weekend truck gate hours as record import surges continue to arrive at the port. 

Following Hurricane Ida, Louisiana ports are pushing for more federal aid. Hurricane Ida resulted in severe impacts on Louisiana’s infrastructure, waterways, and communities, so several south Louisiana ports have partnered to request more federal assistance. This assistance would include ensuring ports are included in bills for urgent funding from Congress.

Air

Companies are leveraging Air Canada passenger flights to ship cargo. As congestion continues at Chicago O’Hare Airport, companies have resorted to putting shipments on Air Canada passenger flights to pass through Toronto.

Air freight rates from Asia continue to climb. After Typhoon Chanthu and as the Chinese Golden Week approaches, air freight rates out of China are continuing to rise. Compared to a year ago, rates are up 105.9% from Hong Kong to North America. Other rates out of Asia are at rates unseen since the medical supply shipping fiasco in May of 2020

Rail

Kansas City Southern (KCS) and Canadian Pacific Railway (CP) merger is on track after CN bows out. KCS will continue with the $31 billion deal with CP after CN had dropped out of the race. KCS said that they would move forward with CP due to the deal having an easier path with U.S. regulators. 

Norfolk Southern (NS) chassis repairs are nearly complete after a recall and repair of more than 5,000 chassis. The railway is now lifting ingate restrictions on its domestic intermodal network after the repairs of the chassis are now 86% complete. The repairs were quite necessary as the issue could have caused the wheels to separate from the truck.