Oh the Woes with these Carrier Bunker Surcharges. As Carrier's were just starting to make progress in the battle to recover some of their costs for the Bunker Fuel, the fuel prices drop. This should be a good thing, because if the surcharges are written into the contracts, that means the Carriers should be recovering a higher percentage of their costs. This is true, but too many Carriers are backing off and lowering their surcharge for the purpose of lowering their shipping price. The lower the shipping price the more customers will want to ship with that Carrier. As soon as a couple Carriers lower their surcharge amount, then every Carrier must, or they will suffer from a loss of customers. This is one battle that the Carriers must fight together and not go Volume chasing. If this continues then the cost recovery the Carriers just started to break ground in will be for nothing. The Carriers need the volume to stay afloat in this hard economic time.
When is the Shipping and Transportation industry going to learn what a good customer is and that it is rarely worth it to chase the bad customers. A good customer is a high profit and high volume shipper. A bad customer is a low profit and any volume shipper. Some customers are such poor customers that Carriers lose money on shipping the cargo just to fill space on a ship. SAD SAD SAD. As an industry, we must come together and work together to help each and every customer, terminal, and carrier through this tough economic time. That means, not lowering bunker charges and rates, but cutting costs. Cut the costs, the pork barrel if you must in the middle. Find ways to cut the amount of moves a container makes before loading and discharging. Streamline your processes, don't just take each and every customer possible. Look into each one and make sure it is cost effective.
Just please, don't throw away the progress that has been made.
October 15, 2008
September 22, 2008
Another New Customs procedures - ITN numbers
The following new booking regulation procedure has been released by Customs:
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Export Regulations As of July 2,2008 in accordance with Title 15, Part 30, Foreign Trade Regulations (FTR), Shippers Export Declarations (SED) must he filed electronically via the Automated Export System (AES). Prior to crossing the border, you must have an Internal Transaction Number (ITN) generated from the ABS as proof of filing the required export information. You will have until September 30, 2008 to comply. In accordance with the FTR section 30.71 (a)( I). Any person or entity including U. S. Principal Party in Interests (USPPIs), authorized agents, or transportation carriers (truck, rail, vessel, or air), who knowingly fails to File or knowingly submits, directly or indirectly, to the United States Government false or misleading export information through the AES, shall he subject to a fine not to exceed $10,000 or imprisonment for not more than five years. or both for each violation.
File Shipper Export Declaration information free. Register at www.aesdirect.gov.
For questions, please call 1-800- 549-0595.
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This new process is scaring a lot of exporters, but is really nothing special. What this ITN number does is make it easier for Customs to monitor cargo from each shipper and track each shipment. Customs will now be more up to date with the rest of the world and finally not a pencil driven environment.
Most exporters dont want to be monitored more, who does? But it is not a difficult process. The ITN number will also apply for the entire booking and not just one container.
From what i can gather talking to Customs is the 10,000 USD fine wont be imposed right away either. The process will be monitored per shipper and per carrier by Customs and they will then reprimand each for the first month or two. The process wont be perfect and they know that, and the last thing Customs or this economy is a reason not to trade goods. The 10k fine will be imposed on the shipper and the carrier as Customs deems fit. At no time is the terminal operator liable for an exported container that does not have an ITN number.
How is the going to affect the industry? In my opinion it will not have an impact. This is just another regulation that the industry must get used to and impliment into their daily Standard Practices. The shippers will have to atain the ITN's and submitt them to their chosen carrier. The only real affect this may have in the begining is, many containers missing their intended vessel voyages.
Please let me know how this Regulation is going to affect you.
-------------------------------
Export Regulations As of July 2,2008 in accordance with Title 15, Part 30, Foreign Trade Regulations (FTR), Shippers Export Declarations (SED) must he filed electronically via the Automated Export System (AES). Prior to crossing the border, you must have an Internal Transaction Number (ITN) generated from the ABS as proof of filing the required export information. You will have until September 30, 2008 to comply. In accordance with the FTR section 30.71 (a)( I). Any person or entity including U. S. Principal Party in Interests (USPPIs), authorized agents, or transportation carriers (truck, rail, vessel, or air), who knowingly fails to File or knowingly submits, directly or indirectly, to the United States Government false or misleading export information through the AES, shall he subject to a fine not to exceed $10,000 or imprisonment for not more than five years. or both for each violation.
File Shipper Export Declaration information free. Register at www.aesdirect.gov.
For questions, please call 1-800- 549-0595.
--------------------------------------------
This new process is scaring a lot of exporters, but is really nothing special. What this ITN number does is make it easier for Customs to monitor cargo from each shipper and track each shipment. Customs will now be more up to date with the rest of the world and finally not a pencil driven environment.
Most exporters dont want to be monitored more, who does? But it is not a difficult process. The ITN number will also apply for the entire booking and not just one container.
From what i can gather talking to Customs is the 10,000 USD fine wont be imposed right away either. The process will be monitored per shipper and per carrier by Customs and they will then reprimand each for the first month or two. The process wont be perfect and they know that, and the last thing Customs or this economy is a reason not to trade goods. The 10k fine will be imposed on the shipper and the carrier as Customs deems fit. At no time is the terminal operator liable for an exported container that does not have an ITN number.
How is the going to affect the industry? In my opinion it will not have an impact. This is just another regulation that the industry must get used to and impliment into their daily Standard Practices. The shippers will have to atain the ITN's and submitt them to their chosen carrier. The only real affect this may have in the begining is, many containers missing their intended vessel voyages.
Please let me know how this Regulation is going to affect you.
September 17, 2008
Was it a mistake when many Financial companies bought shipping terminals?
I am very interested in the buying and selling of container terminals and terminal operators by large financial organizations. Companies such as AIG, Deutsche Bank and others have been investing in the Transportation industry by buying Terminals. The thought process being that the industry and container shipping is only going to grow and fast. Some thought of it as a quick flig (5 year) investment oportunity. This has not shown to be the case. Many people do not recognize that the transportation industry also fluctuates with the World economy and high-profit volumes can shrink in a poor market. The world market will always dictate the rise and fall of container shipping, both import and exports.
That being said, the industry is not doing poorly when comapred to the investment and mortgage firms out there. With many terminals not making the large sums as money as expected (but still being profitable) and now being a part of large investment conglomorats; Are they going to be sold? If an investment firm is losing money as a whole, what do they sell to make up for that? I would think they would sell a sector that is semi-profitable with growth potential, such as their shipping terminals. For example; AIG's High Start Capital is the parent company to Ports America. What are they going to do after being baled out by the US government. Are they going to sell to a Carrier company, another investment firm, or hold onto this infrastructure investment in hopes to make money.
The Global economy is so interesting to watch and learn about. Please add your comments and knowledge.
That being said, the industry is not doing poorly when comapred to the investment and mortgage firms out there. With many terminals not making the large sums as money as expected (but still being profitable) and now being a part of large investment conglomorats; Are they going to be sold? If an investment firm is losing money as a whole, what do they sell to make up for that? I would think they would sell a sector that is semi-profitable with growth potential, such as their shipping terminals. For example; AIG's High Start Capital is the parent company to Ports America. What are they going to do after being baled out by the US government. Are they going to sell to a Carrier company, another investment firm, or hold onto this infrastructure investment in hopes to make money.
The Global economy is so interesting to watch and learn about. Please add your comments and knowledge.
August 26, 2008
Fuel Surcharge increases
In an earlier post I spoke about the Fuel surcharges that the Transportation faces, but failed to point out it has only just begun. The fuel surcharge has helped all industry leaders come close to just breaking even with their fuel expenditures but have not helped bring Carrier profits back up to satisfactory levels as seen in the surcharge raise by the TSA (Transpacific Stabilization Agreement) The TSA is made up of many top name carriers in the Container Shipping Industry and acts as a mediator group for any Industry issues.
Please read below from the American Shipper
Liner carriers in the Transpacific Stabilization Agreement said Monday that their floating bunker fuel surcharge will spike to a record level effective Sept. 1.
"The higher surcharge reflects record fuel prices that topped $767 per ton in mid-July, up from $500 at the beginning of 2008 and $296 at the beginning of 2007," TSA said in a statement.
TSA’s surcharge is adjusted monthly according to a formula that tracks world fuel prices at key loading locations.
Although fuel prices have been falling of late, each month’s surcharge reflects average fuel prices during a reporting period 30 to 60 days earlier, said Bill Payne, NYK Line vice president and TSA revenue policy committee member. This is done to comply with U.S. law requiring a minimum 30 days’ advance notice to the market in the event a particular rate or surcharge is to be raised.
“Carriers pay the higher fuel costs out of pocket as those costs rise, cushioning the impact on shippers, and then must pass them through after the fact,” Payne said. “The good news with a floating formula is that, as prices fall, customers will start to see savings 30 to 60 days out.”
The new fuel surcharges will be $1,886 per 45-foot container, $1,676 per high-cube 40-foot container, $1,490 per 40 footer, $1,192 per TEU and $33 per metric ton or cubic meter.
The TSA surcharge is posted by the carrier group as a guideline for the market, but service contracts with customers -- including bunker surcharge terms -- are addressed individually by the lines.
APL Senior Vice President Bob Sappio, also an RPC committee member, said that while carriers and shippers have made significant progress in agreeing on a floating fuel surcharge, much more work remains.
“If people think the high price of fuel is temporary they are mistaken,” Sappio said. “The transpacific trade is simply not sustainable as it is presently constituted. Carriers must recover a greater percentage of actual dollars spent on fuel.”
TSA members are: APL, “K” Line, China Shipping Container Lines, Mediterranean Shipping Co., CMA-CGM, MOL, COSCO Container Lines, NYK Line, Evergreen Line, OOCL, Hanjin Shipping Co., Yangming Marine Transport, Hapag-Lloyd, Zim and Hyundai Merchant Marine Co.
As you can see, Fuel Surcharges for Carriers has only just begun. As a result the more costs associated with shipping goods, the more it costs to buy the goods, The Trickle Down Effect.
Please read below from the American Shipper
Liner carriers in the Transpacific Stabilization Agreement said Monday that their floating bunker fuel surcharge will spike to a record level effective Sept. 1.
"The higher surcharge reflects record fuel prices that topped $767 per ton in mid-July, up from $500 at the beginning of 2008 and $296 at the beginning of 2007," TSA said in a statement.
TSA’s surcharge is adjusted monthly according to a formula that tracks world fuel prices at key loading locations.
Although fuel prices have been falling of late, each month’s surcharge reflects average fuel prices during a reporting period 30 to 60 days earlier, said Bill Payne, NYK Line vice president and TSA revenue policy committee member. This is done to comply with U.S. law requiring a minimum 30 days’ advance notice to the market in the event a particular rate or surcharge is to be raised.
“Carriers pay the higher fuel costs out of pocket as those costs rise, cushioning the impact on shippers, and then must pass them through after the fact,” Payne said. “The good news with a floating formula is that, as prices fall, customers will start to see savings 30 to 60 days out.”
The new fuel surcharges will be $1,886 per 45-foot container, $1,676 per high-cube 40-foot container, $1,490 per 40 footer, $1,192 per TEU and $33 per metric ton or cubic meter.
The TSA surcharge is posted by the carrier group as a guideline for the market, but service contracts with customers -- including bunker surcharge terms -- are addressed individually by the lines.
APL Senior Vice President Bob Sappio, also an RPC committee member, said that while carriers and shippers have made significant progress in agreeing on a floating fuel surcharge, much more work remains.
“If people think the high price of fuel is temporary they are mistaken,” Sappio said. “The transpacific trade is simply not sustainable as it is presently constituted. Carriers must recover a greater percentage of actual dollars spent on fuel.”
TSA members are: APL, “K” Line, China Shipping Container Lines, Mediterranean Shipping Co., CMA-CGM, MOL, COSCO Container Lines, NYK Line, Evergreen Line, OOCL, Hanjin Shipping Co., Yangming Marine Transport, Hapag-Lloyd, Zim and Hyundai Merchant Marine Co.
As you can see, Fuel Surcharges for Carriers has only just begun. As a result the more costs associated with shipping goods, the more it costs to buy the goods, The Trickle Down Effect.
August 25, 2008
Vessel schedule Integrity and Canals
Container vessel schedules are very tight for each voyage. There is very little room for tardiness and even less room to make up for any lost time.
Most liner vessel services are made up of 7-8 vessel completing the same route. Each time a vessel completes its service route the voyage number changes. These services carry many different shipper cargo and each of whom are watching the calender for when the vessel is scheduled to arrive. If the vessel is any amount of time off that schedule the shippers want to know why and are reasonably upset. These delays in the schedule can be caused by many different variables. The first group is called 'uncontrolled.'
The uncontrolled group is made up of any variable that can not be controlled by the vessel master or the vessel schedule manager such as; weather, engine malfunction, Government inspections, natural or unnatural disaster, canal or harbor closings, berth congestion, and many others that can not be foreseen. Berth congestion is a tricky variable that many different sectors blame the others for. Berth congestion can be just that, too many vessel in one area at the same time or a delayed vessel causing others to be delayed. One delayed vessel at a scheduled terminal causing a domino affect on other vessels that are on-time. Some smaller terminals can not fit more then 2/3 vessels on the dock, thus delaying waiting vessels.
The second group are controlled variables such as; volume surges, terminal production, vessel speed, port skips. Out of this group, the port skips category is the most controversial, because sometimes the only way for a Carrier to get their vessel back on schedule, is to skip a smaller port. When a port is skipped the import cargo must be discharged in the next closest port and the export cargo is then rolled to the next vessel in that particular vessel's service. It is very difficult to explain to a shipper why a Carrier skipped their POC and their cargo could not load.
Vessel Integrity is different depending on what US coast you are working out of. The West Coast services have much more extra time built in to their schedule and must only cross one ocean. This is a much easier route, but much more congested. The US East Coast services have extremely tight schedules and do not have much extra time built into the schedules. USEC services also have to work their schedules around the canal they choose to use. For India/Asian/USEC services most Carriers will use the Suez canal. Suez canal services travel longer distances and must face Atlantic Ocean weather but are typically much less expensive to transit, much less congested, and at this time pass larger ships through. Other USEC service vessels must pass through the Panama canal The Panama canal vessels face many delay issues here. The PC is constantly dredging and due to the narrowness of sections can only move a certain amount of vessels and size vessels. The PC also services vessels that have pre-scheduled their transit a year in advance, and the vessel must transit that delay or forfeit their spot. Once a vessel misses their scheduled transit they must buy an auctioned spot from 50,000 USD to 500,000 USD. This can delay a vessel greatly and cost an enormous amount of money.
All these factors cause vessel Service Integrity to be the most difficult part of a Carriers service to provide, yet the most important and Customer driven objective.
Most liner vessel services are made up of 7-8 vessel completing the same route. Each time a vessel completes its service route the voyage number changes. These services carry many different shipper cargo and each of whom are watching the calender for when the vessel is scheduled to arrive. If the vessel is any amount of time off that schedule the shippers want to know why and are reasonably upset. These delays in the schedule can be caused by many different variables. The first group is called 'uncontrolled.'
The uncontrolled group is made up of any variable that can not be controlled by the vessel master or the vessel schedule manager such as; weather, engine malfunction, Government inspections, natural or unnatural disaster, canal or harbor closings, berth congestion, and many others that can not be foreseen. Berth congestion is a tricky variable that many different sectors blame the others for. Berth congestion can be just that, too many vessel in one area at the same time or a delayed vessel causing others to be delayed. One delayed vessel at a scheduled terminal causing a domino affect on other vessels that are on-time. Some smaller terminals can not fit more then 2/3 vessels on the dock, thus delaying waiting vessels.
The second group are controlled variables such as; volume surges, terminal production, vessel speed, port skips. Out of this group, the port skips category is the most controversial, because sometimes the only way for a Carrier to get their vessel back on schedule, is to skip a smaller port. When a port is skipped the import cargo must be discharged in the next closest port and the export cargo is then rolled to the next vessel in that particular vessel's service. It is very difficult to explain to a shipper why a Carrier skipped their POC and their cargo could not load.
Vessel Integrity is different depending on what US coast you are working out of. The West Coast services have much more extra time built in to their schedule and must only cross one ocean. This is a much easier route, but much more congested. The US East Coast services have extremely tight schedules and do not have much extra time built into the schedules. USEC services also have to work their schedules around the canal they choose to use. For India/Asian/USEC services most Carriers will use the Suez canal. Suez canal services travel longer distances and must face Atlantic Ocean weather but are typically much less expensive to transit, much less congested, and at this time pass larger ships through. Other USEC service vessels must pass through the Panama canal The Panama canal vessels face many delay issues here. The PC is constantly dredging and due to the narrowness of sections can only move a certain amount of vessels and size vessels. The PC also services vessels that have pre-scheduled their transit a year in advance, and the vessel must transit that delay or forfeit their spot. Once a vessel misses their scheduled transit they must buy an auctioned spot from 50,000 USD to 500,000 USD. This can delay a vessel greatly and cost an enormous amount of money.
All these factors cause vessel Service Integrity to be the most difficult part of a Carriers service to provide, yet the most important and Customer driven objective.
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