Welcome to my blog series that dives deep into the ever-evolving world of ocean freight logistics! Join us as we embark on a journey through the vast seas of trends, opinions, and innovations that shape the shipping industry today. From the latest technological advancements transforming supply chains to the diverse perspectives of industry experts, we’ll explore how ocean freight logistics continues to navigate the tides of change, carving new routes towards a more efficient and sustainable future. Whether you’re a seasoned maritime professional or a curious enthusiast, this series will keep you anchored to the forefront of this dynamic and vital global business. So, hoist the sails and let’s set course for an enlightening voyage together!
Art Chrapko
VP, Head of Ocean Services USA, DB Schenker
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Biden’s $653 Million Splash is Boosting U.S. Ports for a Smoother, Greener Supply Chain
Guess what just dropped? The U.S. Department of Transportation’s Maritime Administration (MARAD) just threw over $653 million into the ring for 41 port projects across the nation! It’s all part of President Biden’s grand plan – Bidenomics, if you will – to beef up capacity and efficiency at coastal seaports, Great Lakes ports, and inland river ports. And where’s the cash coming from? The Port Infrastructure Development Program (PIDP) under the bipartisan infrastructure law, which set aside a whopping $17 billion for ports and waterways.
Why is this such a big deal? Well, over 2.3 billion short tons of domestic and international U.S. commerce move by water, and these projects are set to ensure that movement is as smooth as butter. Secretary of Transportation Pete Buttigieg chimes in, saying these investments will not only amp up port capacity but also speed up the movement of goods, create cleaner air, and toss in some more good-paying jobs for good measure.
Let’s rewind a bit to when Biden first stepped into the Oval Office. The pandemic had supply chains in a chokehold, and we were all paying extra for everyday stuff. Remember those days when over a hundred ships were lined up to dock at West Coast ports? Yeah, not pretty. But guess what? Thanks to this administration and some hardworking port folks, there’s been a 90% drop in ships waiting around, and global shipping costs have nosedived by over 80% since the 2021 peak. Talk about turning the tide!
Now, let’s dive into the nitty-gritty. The PIDP is all about improving port and freight infrastructure to meet the nation’s transportation needs. Today’s grants include over $172.8 million for 26 small ports, making sure they’re upping their game in moving freight reliably and efficiently. It’s not just about the big players; it’s about boosting local and regional economies while keeping a lid on air pollution.
Some of the cool projects getting a slice of the funding pie:
– Port of Tacoma Husky Terminal Expansion Port One in Tacoma, Washington ($54,233,330)
– Reconstruction of Berth PN-308 at Port Newark in Newark, New Jersey ($32,000,000)
– Velasco Terminal Sustainable Expansion Project in Freeport, Texas ($15,958,380)
– North Harbor Transportation System Improvement Project in Long Beach, California ($52,633,331)
– Dock Infrastructure Replacement in Cold Bay, Alaska ($43,376,746)
Each of these projects is set to bring their own flavor to the table, from upgrading docks and railroads to building new warehouses and silos. It’s not just about moving goods; it’s about doing it smarter, greener, and with an eye on the future.
Navigating Troubled Waters: Urgent Maritime Security Alert in the Red Sea
Hang on tight because the next story might not be as heartwarming as those shiny new infrastructure tales, but it’s definitely a nail-biter. The International Maritime Security Construct (IMSC) recently issued a warning on November 16th due to apprehensions about shipping in the Red Sea region, particularly in the critical Bab al Mandeb area.
We were not given details on specific incidents in their warning, but word on the street is that the Houthi rebels threw a direct threat into the mix. They’ve got their eyes on Israeli shipping and vessels linked to the U.S. and the Hamas war, thinking they’re the prime targets.
To amp up security, the U.S. and the UK have beefed up their naval presence in the region. The USS Carney, part of the Gerald R. Ford Strike Group, sailed through the Suez Canal into the Red Sea in October, reporting some missile interceptions from Yemen, but the U.S. Pentagon insists the Carney wasn’t the target.
Fast forward to this week, the USS Thomas Hudner shot down a suspicious drone after the Houthi rebels threatened Israeli shipping. The Pentagon confirmed the incident, emphasizing they took the drone down to keep U.S. personnel safe.
With the threat level cranked up, IMSC and the Coalition Task Force Sentinel from Bahrain are suggesting vessels make the transit at night to avoid being spotted by not-so-friendly folks. Be advised that if there’s any cause for concern, vessels should give a heads-up to either the UK Maritime Trade Operations or U.S. Naval Forces Central Command.
Their final piece of advice? “Should your vessel be threatened, don’t stop and be a hard target through your maneuver.” My two cents? Stay informed and plan routes strategically, maintain effective communication and reporting, and implement best management practices (BMP) and security measures.
This involves regularly monitoring maritime security information, choosing recognized safe corridors, and avoiding high-risk areas. Effective communication and reporting are paramount, so be ready to adapt plans based on real-time information.
Finally, make sure that your Best Management Practices (BMP) and security measures encompass adherence to industry-accepted guidelines, utilization of physical security measures, and ensure the crew is well-trained on security protocols and emergency response plans.
Remember that each maritime route has unique challenges, so tailor your security measures to the specific risks associated with the waters you are navigating. Most importantly, always prioritize the safety of the crew and the security of the vessel.
Port of Los Angeles Navigates a Shipping Comeback
More exciting news fresh from the Port of Los Angeles – things are definitely looking up! In August, this bustling port managed to move a whopping 828,016 Twenty-Foot Equivalent Units (TEUs), and guess what? That’s a 3% increase compared to the same period last year. And why is that such a big deal? Well, because it marks the Port’s first monthly year-over-year increase in a whole 13 months. Talk about a comeback!
The man of the hour, Port of Los Angeles Executive Director Gene Seroka, shared the good news at a media briefing. He said, “August was a very solid month with increases both on the import and export sides of our business.” It seems like the global trade winds are shifting favorably this year, and the Port of Los Angeles is ready to ride that wave. Seroka added, “Overall, global trade has eased this year, and we expect that trend to continue in the coming months. Operationally, Los Angeles stands ready with capacity we’re prepared to scale on demand.”
One key factor in this turnaround is the recent ratification of a six-year contract between the International Longshore and Warehouse Union and the Pacific Maritime Association. This contract is like a shot of adrenaline, restoring stability and confidence to customers as they decide where to ship their cargo.
Seroka was enthusiastic about it, stating, “With this contract in effect through 2028, you can continue to count on our longshore workers and terminal operators to keep cargo moving through the nation’s busiest port.” He emphasized, “When we are operating on all cylinders like we are right now, there’s no better choice for cargo than the Port of Los Angeles.”
Now, let’s break down the container stats. In August 2023, loaded imports were a substantial 433,224 TEUs, marking a remarkable 7% increase compared to the previous year. Loaded exports also shone at 124,988 TEUs, a whopping 22% increase compared to 2022. However, empty containers saw a 10% year-over-year decline, totaling 269,804 TEUs. When you put all these numbers together, you get a 3% increase in August volumes compared to last August – a pretty sweet deal!
But here’s the bigger picture: as of August 2023, the Port has processed a total of 5,649,686 TEUs in just eight months. That’s 21% less than the same period last year, but hey, things are definitely trending in the right direction. Just keep in mind that the container counts for August 2023 may still change a bit, subject to final verification.
So that’s the scoop – the Port of Los Angeles is back in action, making waves, and ready to handle your cargo needs. With a solid contract in place, increasing volumes, and a commitment to excellence, it’s a fantastic time to consider Los Angeles as your go-to port!
Riding the Waves of High Shipping Rates
In the realm of international trade, the recent surge in shipping spot rates paints a complex picture of wins and woes for everyone involved. So, let’s talk about what’s been happening in container shipping across the trans-Pacific route this year.
It all started in late June when the spot rates began to climb, and they’ve pretty much stayed up there for most of 2023. Now, the big question on everyone’s mind is, what’s driving this rate hike? Is it because of the usual peak season demand, or are the shipping companies intentionally holding back on available space?
Well, when we take a closer look at U.S. import numbers, it seems that at least a chunk of this rate increase is indeed fueled by demand. According to Chris Jones, the Executive Vice President of Industry and Services at Descartes Systems Group, the imports in August followed a pattern that’s quite similar to what we see in a typical peak season during non-pandemic years. He also pointed out that U.S. import volumes are showing a remarkable consistency with the numbers we saw back in 2019, which is a good sign.
Now, here’s another interesting tidbit of information from the Global Port Tracker, a report by the National Retail Federation and Hackett Associates. They predict that total imports will likely stay above 2 million TEUs per month for the next three months, from August to October. In a broader perspective, Global Port Tracker anticipates that the ports it’s tracking will handle a total of 22.3 million TEUs throughout 2023. That’s a 2% increase compared to 2018 and a 3% jump compared to 2019, the year before the pandemic hit.
Jonathan Gold, the NRF’s Vice President for Supply Chain and Customs Policy, had some encouraging words about these numbers. He mentioned that these robust figures suggest that retailers are feeling pretty optimistic about the upcoming holiday season. After all, they wouldn’t be bringing in all this merchandise if they didn’t believe they could sell it.
Now, those trans-Pacific spot rates might have stopped climbing, but they’ve settled at or near their recent peak levels. That said, I believe there is still strong support for these prices, so your team must make the proper preparations when budgeting for Q4. It’s a dynamic situation in the world of container shipping, and it’ll be interesting to see how it all plays out in the coming months as we close out 2023. I’ll keep an eye on these trends for you, so be sure to check back with me soon so you can stay ahead of the curve.
Cargo Ship Safety: Lessons from the Fremantle Highway Incident
You won’t believe what happened off the coast of the Netherlands! The Fremantle Highway cargo ship caught fire near a famous bird habitat. Now, here’s the scary part: the ship was carrying almost 3,000 cars, including 25 electric ones.
If the ship sinks, fuel, and pollutants will start leaking into the sensitive North Sea ecosystem. “A totally normal car transport by sea could turn into an environmental catastrophe of unknown proportions,” German Environment Minister Steffi Lemke said in a statement.
The ship was on its way from Germany to Singapore when the fire broke out late Tuesday night. It happened in the North Sea, not far from the Dutch island of Ameland. The cause of the fire is still a mystery, but the situation seems to be under control for now, according to the Dutch coast guard. Though, there is still worry about the potential environmental impact on the migratory birds in the area.
This was no easy task. Firefighters and salvage crews had to wait until the flames calmed down before trying to board the ship. They managed to turn the vessel using the tide and a tugboat, so it’s drifting eastwards away from the coast. Earlier this month, a similar incident in New Jersey occurred with another car-carrying cargo ship catching fire. It took them almost a week to put out that fire, so it is really important that your logistics company are using crews that are properly equipped to handle disasters of any size.
Ensuring the proper handling and stowage of cargo, especially when transporting hazardous materials like cars with electric batteries, is crucial to prevent accidents that can lead to devastating consequences. Check out how DB ensures safe transport and storage for all kinds of batteries: new, used, and damaged. Our dangerous goods experts ensure hassle-free processes and more peace of mind.
I highly recommend reviewing your company’s risk profile to ensure that your logistics partner can deliver your good safely. With the current El Nino forecasts, we can expect maritime transportation to be disrupted, and crews will face hazardous conditions like storms and increased wave heights. When those on board are exposed to high-risk conditions, it is important for everyone to feel safe, even in the most challenging circumstances.
This unfortunate incident with the Fremantle Highway serves as a reminder that maritime authorities and shipping companies must continuously work together to enhance safety standards, minimize risks, and safeguard sensitive ecosystems from potential disasters. Regular inspections, adherence to safety protocols, and firefighting equipment onboard are essential to swiftly respond to emergencies and protect the crew and the environment.
Let’s hope the Dutch Coast Guard continues to control this situation and prevent further environmental damage. Fingers crossed for the crew’s safety and the wildlife in the area!
July Sees Exponential Rise in Asia-US Spot Container Shipping Rates
Good news on the shipping front! It looks like shipping lines are finally getting a grip on managing vessel capacity in the Asia-U.S. trades. Spot rates have been rising for three weeks straight, reaching levels last seen in early 2023 and late 2022, according to several index providers.
The U.S. import bookings are still going strong, even surpassing pre-COVID levels. And guess what’s helping these positive rate effects? Yep, reduced vessel capacity is doing the trick.
Interestingly, even though demand has improved, liners are focusing on tightening service offerings. This has led to some capacity constraints, forcing shippers to book earlier and driving expectations of continued spot rate gains in August.
The trans-Pacific and Asia-Europe trades are experiencing divergent trends. The trans-Pacific rates are rising, while the Asia-Europe rates are still falling, partly due to the new ships with a capacity of 24,000 twenty-foot equivalent units designed for Asia-Europe service.
Spot rates in the trans-Pacific are gradually getting closer to breaking even and have already exceeded or are close to pre-COVID levels. Different indexes might have slightly different numbers, but they all show an upward trend in the past three weeks.
U.S. import bookings are looking healthy, and if they keep up or increase in August while carriers continue to reduce trans-Pacific capacity, we might see spot rates moving closer to profitability.
All in all, shippers need to be aware that rates are changing. Working with your logistics provider will allow you to project future trend and keep your business profitable.
