This piece was originally published in “American Shipper.” In the aftermath of hurricanes Harvey, Irma and Maria, it’s likely to...
TOC Logistics International, Inc. regrets the need to announce an ocean market condition in Europe that has caused a cascade effect to the NVOCC carriers regarding vessel capacity and service delays.
First, some major low water ports have reduced the number of containers on vessels due to the fear of “grounding” their vessels in port. The more weight loaded on a vessel, the deeper the draft of the keel which causes danger of “grounding” the vessel.
While TOC Logistics’ consolidation programs have been fortunate to not be affected by this situation, but that is now changing due to the following:
Containers are now being rolled from all major ports, and the steamship lines have multiple reasons/excuses for doing so, that Beneficial Cargo Owners (BCO) and Non-Vessel-Operating-Common-Carriers (NVOCC i.e. Freight Forwarders) have little to no ability to protect against.
Steamship lines serving the Europe to NAFTA market have also started announcing PEAK SEASON SURCHARGES, which is historically unheard of.
As the new “alliances” are ramping up to start April 1, 2017, there is a significant lack of information from them regarding their string schedules and routings; let alone the contract negotiations for the 2017/2018 season have yet to begin in full swing. Some steamship lines are already announcing blank sailings in preparation of the “alliances” new schedules; and the lack of a new published schedule by the “alliances” is creating a large gap in information from which to make supply chain decisions.
Further evidence of the increased volumes from Europe to NAFTA Region, air cargo capacity is completely full from all traditional European airports, and standard air cargo is experiencing significant risk of “bumps” due to the increase of PRIORITY air bookings as customers are paying higher rates to receive as much of a guarantee as possible of making the intended flight.
TOC Logistics recommends that our clients consider an increase of safety stock at destination plants during this seasonal time, until the Steamship lines either adjust their vessel capacity to accommodate the increased Euro-Exports, or the new normal is achieved.
The power to control the supply chain spend from Europe to NAFTA Region seems to rest squarely with the Steamship lines, as contract negotiations are due to commence in March and this market volume increase from Europe to NAFTA Region allows supply/demand to be a primary negotiating point, which invariably causes higher container rates, or at least GRI’s and PSS applicaton.