The terms “supply chain management” and “logistics” are often used interchangeably. While it is argued that the two mean...
TOC LOGISTICS INTERNATIONAL INC. would like to provide the following ocean market update regarding European Export Congestion and Empty Container situation:
Summarizing previous market updates, the following conditions have caused severe congestion and container shortages over the past 6-8 months
Continuing into 2019, the Chinese New Year schedule and lack of sailings between China and Europe has further reduced the availability of empty containers within Europe. The normal flow would allow incoming loaded containers to be delivered and the empties to be positioned at the ports for export customers. Due to the reduced sailing schedules from Chinese New Year, fewer containers are arriving in Europe that can be turned and made available as empties.
Added to the above conditions that have already caused congestion that has not been resolved, as of this writing, there are no available empty containers at any of the sea ports in Northern Europe, except to VIP customers of the steamship lines. These must be recovered from inland CY’s wherever they are available at higher costs.
Fortunately, TOC Logistics is a VIP customer, but our empty containers are being made available to us at non-traditional locations. It is currently undetermined if the lack of available empties will soon affect VIP clients as well.
Vessels from Europe to North America are already over-booked and vessels are full all the way to the end of April.
Vessel on-time performance has been abysmal for months, and published schedules are not accurate. Vessel operators, rather than focusing on reducing congestion, are instead focused on getting their vessels back “on schedule.” Their decisions to focus on getting back on schedule means they are “sliding” delayed departures to the next “scheduled” departure, essentially causing a blank sailing and further exacerbating the congestion.
TOC Logistics strongly suggests that Buyers, Planners and Logistics personnel make all necessary preparations to review lead times, consider extending lead times, and prepare for a season of unplanned spend that extends beyond Easter 2019.
Transparency, Optimization, Collaboration
TOC LOGISTICS INTERNATIONAL INC. would like to provide the following supplemental ocean market update regarding U.S. port congestion:
We are re-publishing the Ocean Market Update from January 10, 2019, as it is still extremely relevant; and as referenced in that update, we believed the USEC ports would be in a similar situation. This is now evidenced by one of TOC’s core carrier’s announcement here attached. The USEC port delays due to congestion and holiday workforce shortages are now a published reality rather than speculation. The idea that New York port(s) may take 4-6 weeks to clear rail backlogs is frightening and is causing serious financial consequences. Please pay special attention to the AIRFREIGHT comments in the original update, as this pertains to the global airfreight market coming into North America.
Adding insult to injury, back-to-back winter storms have crippled some infrastructure in the midst of volume piling up due to the aforementioned coast port issues.
Chicago rail schedules for this week show multiple cancellations inbound and outbound. See the JOC article posted within the last 24 hours regarding Chicago/Midwest congestion and delays.
Force Majeure announcements are likely to start very soon, putting the entire logistics supply chain on notice of extreme financial burdens to maintain flows. TOC LOGISTICS is prepared to work with our customers to manage alternative flows and modes to keep supply chains open; however, we must officially note that we cannot offer any guarantees of service performance being caused by, or that are affected by, the market and weather conditions everyone is experiencing.
Please connect with your Operations Representative and/or Account Manager to review your in-transit supply chain and begin making necessary preparations for minimizing the effects of this frustrating time.
As always, thank you for allowing TOC LOGISTICS INTERNATIONAL INC to serve you.
Transparency, Optimization, Collaboration
TOC LOGISTICS INTERNATIONAL INC. would like to provide the following ocean market update regarding US PORT CONGESTION at the start of the new year:
The congestion created by the well-known push to get ahead of US Customs Tariffs at the end of 2018 has been further exacerbated by the 2018 Christmas and New Year holiday season.
For instance, US West Coast Port LA/LGB congestion is creating serious transit delays and additional detention/demurrage fees for the following reasons:
Volumes into the US East Coast Ports are also staying at full capacity, and similar conditions as described above are easily foreseeable in the coming weeks.
For supply chains that are affected by these conditions, TOC Logistics expects to receive an increase in AIR FREIGHT requests; as will all of our competitors, thus creating a market condition where space will be competed for at very high-rate levels. We suggest that any air freight requirements be filtered through the following expectations:
As the C in TOC stands for COLLABORATION, we highly recommend that our customers take a close look at their current in-transit product and reach out to their respective operations representative or account manager to review what parts/product could be affected and work on contingent plans to launch if a critical situation arises.
TOC LOGISTICS INTERNATIONAL INC. offers this update to the ocean market at US West and East Coast ports:
TOC Logistics has been advised by our contract carriers at LA/LGB and New Jersey ports of severe congestion occurring over the last few weeks and expected to continue and worsen leading up to January 1, 2019 when the next round of full tariff applications on China imports is implemented.
Dray carriers in LA/LGB are experiencing 8 hour wait times, causing them to only be able to perform one container turn per day/shift. Dray carriers are starting to explore increased wait time rates and bonuses to retain drivers and avoid losing them to other jobs.
Dray carriers in New Jersey have reported consistent 2-mile long lines entering the port for drops and pickups. While they haven’t addressed what the time factor is that this creates, we believe the wait times to be similar here as well.
TOC Logistics needs to prepare our customers, with this announcement, of the possible economic effect and likely service delays we are all going to experience leading up to January 1, 2019.
Actual rate increases or surcharges are not published by anyone as of this writing; however, our customers may be assured that TOC Logistics will make such announcements immediately when that happens.
As always, we greatly appreciate the privilege of serving you.
TOC LOGISTICS INTERNATIONAL INC. here offers an ocean market update with information on the concerning water levels in the German inland waterways and rivers. Because of an extremely long and dry summer, with a lack of rain in the past six months, the water levels in the rivers fell to historic lows. Pictures showing the low water levels are below.
Low Water Surcharges
As a result of the low water level, the barge (inland vessels) can only load 15%-20% of their capacity, in an effort to avoid running aground; meaning 80-85% of the containers assigned to barge/inland waterway routings are sitting at inland waterway ports and not moving anywhere.
Congestions in Antwerp & Rotterdam
Because of the low water on the German inland waterways, the ocean carriers are having trouble getting import freight, coming from Asia, out of the terminals in Rotterdam & Antwerp. The terminals are over 100% capacity and are overloaded. Terminals are moving slowly and extra time is being taken because containers are being buried under the continued onslaught of arriving containers, and making it difficult to find and maneuver containers to truck or rail terminals for delivery or transfer. It is taking 2x-3x longer to load trucks and trains. Because of this, there will be extreme congestions in the ports of Rotterdam & Antwerp.
Empty Container Supply
Due to the low water situation and the congestion in the ports of Rotterdam & Antwerp, the supply of empty containers at inland CY’s (container yards) is critical. The primary reason for this is that loaded containers are now stuck in the ports. With carriers not being able to get containers to their recipients, this means they are not being unloaded, and empties are not being positioned at the inland CY’s and made available for exports. Shipping empty containers to the inland CY’s is not happening because all available truck/railcar capacity is focused on getting full-containers out of the seaports. Empty containers may only become available from the seaports, and not inland CYs very soon.
With the potential for only obtaining empty containers from seaports, and the reduced capacity and availability of trucks/drivers to recover them, the costs for ocean exports from the European Union to North America is likely to spike in the coming days until such time as the rainy season starts and the rivers fill back up.
TOC Logistics International Inc will be publishing an emergency congestion surcharge, in line with the announcements by steamship lines and trucking companies, within the next few days. These charges will ONLY apply if applied to TOC by EU carriers; and will likely be ad hoc, or situational, in nature. We do not expect this to be an across the board rate hike, but only as it happens. Meaning, it might apply one week, but not the next.
We have no other choice but to warn of a semi-Force Majeure situation loosely related to weather.
Emergency Congestion Surcharges will be provided to the financial stakeholders at our clients within the next few days; but, again, will only apply situationally and not across the board or continuously.
Please do not hesitate to reach out to our team with any questions.
Thank you for allowing TOC Logistics International Inc. to serve you.
TOC LOGISTICS INTERNATIONAL INC. here offers an ocean market update pertaining to new PierPass Peak/Off-Peak container surcharges and terminal operations:
A flat TMF (Traffic Mitigation Fee), per TEU (Twenty Foot Equivalent Unit) is being imposed on all import containers during BOTH traditional peak and off-peak periods at the LA/LGB west coast ports/terminals, effective November 19, 2018.
The previous TMF per TEU during PEAK times (day shift) of $72.09 will be reduced to $31.52 per TEU ($63.04 for 40’ containers) and will now be applicable to ALL import containers during both PEAK and OFF-PEAK (day and evening shifts). Appointment requirements will not change, however will expand to more terminals.
There is no change to the types of containers being assessed the TMF; the following items, however, will continue to be exempt:
All ocean importers will now be experiencing the TMF regardless of when containers are pulled from the terminals.
For more detailed information directly from PierPass, please see the links here for FAQ’s from the original April 2018 announcement October 2018 announcement and official Pier Pass press release:
As always, we thank you for the pleasure of serving you.
TOC LOGISTICS INTERNATIONAL INC. would like to offer this US Customs fee application update:
Merchandise Processing Fee (MPF):
MPF is a statutory fee assessed by Customs on most US Customs entries.
October 1, 2018, the Merchandise Processing Fee will increase; applied to the following entry types:
The MPF rate of 0.3464% does not change. For additional details see: https://csms.cbp.gov/viewmssg.asp?Recid=23668
TOC Logistics is happy to support your efforts to realize and document the impact of this increase. Do not hesitate to contact TOC’s Customs Brokerage Department.
Thank you for allowing TOC Logistics to serve you.
We have been informed by our carriers that the congestion and overbooking situation in Asia for the TransPac Eastbound lanes is going to get much worse over the next month, at least.
TOC has had reports from our carriers that several strings are so overbooked that there will likely be some double rolls occurring , meaning an automatic roll of at least 2 vessels. This is an extreme measure that is very rarely necessary.
What are the factors that have led to such actions?
There are a number of factors impacting this:
We urge you, our customers, to immediately engage your planners, buyers, suppliers and TOC service representative(s) to put a contingency plan in place to deal with these imminent disruptions to all our supply chains.
Thank you for allowing TOC Logistics International Inc. to serve you.
TOC Logistics International Inc. offers the following ocean market announcement:
In light of significant fuel cost increases, the top ocean carriers of the world are announcing Emergency Bunker Surcharges. This is in addition to any normal quarterly fluctuations. TOC traditionally maintains ocean rates to be inclusive of standard Bunker Adjustment Factor (BAF), however this surcharge is an emergency surcharge implemented outside of normal contractual terms.
We do not yet know if these surcharges will be implemented in full, if they will be able to be mitigated, or waived entirely. Much depends on the trajectory of the oil price over the next 3 weeks, but the carriers are very aggressive to recoup losses so it is safe to assume some level of Emergency Bunker will be implemented.
As of this message, primary TOC carriers have announced following:
CMA – July 1 2018 effective date. $55/TEU (press release attached)
MSC – June 21 2018 effective date. $100/TEU (official notice attached)
Hapag – No official announcement however one is expected at similar levels in the coming days.
In accordance with FMC regulations, TOC is providing its customers with 30 days’ notice of implementation of an Emergency Bunker Surcharge of $100/TEU effective July 1, 2018, for all FCL shipments to or from United States and Mexico.
We will negotiate this charge with our carriers, and implementation will be a pass through cost of whatever the final amounts are.
The final Emergency Bunker Fee amount will be communicated to each client once mitigation conversations are completed and further reflected in the updated client Negotiated Rate Agreements (NRA’s) which will be provided prior to July 1, 2018.
We thank you for allowing TOC Logistics to serve you.
TOC LOGISTICS INTERNATIONAL INC offers the following ocean market update:
The National Coordination Committee for the six port workers federations in INDIA has called for a nationwide, one-day, strike on May 28, 2018. Followed immediately by an indefinite strike beginning May 30, 2018.
Worker demands have gone unattended by the Ministry of Shipping and attempts of resolution between the competing entities have proven unsuccessful.
The following major ports in India are expected to be affected:
TOC strongly encourages our customers to take immediate action to review your supplier release schedules and seek counsel with your operations agent or Account Manager to explore alternative modes of bringing your product in or out of INDIA.
March 12, 2018: US Trucking and Container Drayage Market Update
The US Trucking capacity and pricing struggle continues; affected modes beyond traditional trucking are intermodal, and container drayage.
The previous updates from February 5, 2018 and February 23, 2018 (below) are still valid and offer a realistic progression of the situation leading up to today’s update.
The latest tactic taken by vessel operators, whether they are handling “door” moves or not, is to boost their revenues by reevaluating accessorial charge application.
As of this writing, 2 vessel carriers have announced a reduction of free time at origin loading, or destination unloading from 2 hours down to 1 hour; and an increase from $75.00/hr up to $125.00/hr. TOC must adjust our application of free/wait time for all moves controlled by vessel operators to the same.
This is added to our announcement from February 23rd, advising that all vessel operators are now charging demurrage without exception.
This article from the Journal of Commerce, while lengthy, is the best commentary on the spread of the US Trucking industry situation and the modes being affected, so far. The scariest statement in this article is the estimate that 50% of the container dray drivers in the US are looking to convert to long-haul, over-the-road, jobs; further exacerbating the already traumatic situation at the container ports.
Please remember that in today’s market, long validity rate contracts DO NOT guarantee capacity. Spot quoting to obtain capacity is at its highest level ever, in our opinion. The inland and ocean port dray situation is not better, and pundits claim will not level out until sometime in 2019.
We urge you, our customer, to stay in close contact with your Account Manager and/or Operations Specialist, to all be on the same page about your hot shipments/releases and the associated additional costs to meet your delivery or production expectations. TOC’s procurement efforts are non-stop and we will provide the best cost and capacity availability possible, to meet your service demands.
February 23, 2018
TOC LOGISTICS INTERNATIONAL INC offers this supplemental market update from our previous notice of under capacity and shortage of drivers in the US Trucking and Drayage Market;
The snowball effect resulting from the following current conditions, has reached critical mass:
Vessel operators are now claiming FORCE MAJEUR in major ports and refusing to provide origin/destination “door” moves, leaving the NVOCC, Forwarders and, yes, even the BCO’s, to fend for themselves to get containers either delivered to the port or delivered to the end customer.
Vessel operators who have not claimed FORCE MAJEUR, have announced a line item increase to contracts of at least $300 per container to continue managing “door” moves under their existing contracts.
Further, because of the lack of availability of equipment, “dwell times” ( the number of days it takes for a container to be pulled from the port ) have risen, nationally, to 7-10 days; this is particularly important to understand because there are TWO surcharges at risk of being applied with this increased dwell time:
Regarding demurrage charges, until now, these charges could be waived or greatly reduced so as not to affect the supply chain spend to volume customers; but now, in order to manage the increased costs of the current under-capacity market, vessel operators are applying demurrage without exception.
TOC Logistics International Inc must officially announce here that all demurrage charges by the vessel operators, NOT caused by negligence of TOC Logistics, will be passed on to our clients via a demurrage line item charge on invoices generated AFTER March 15, 2018. Since these demurrage charges are unable to be forecasted, TOC Logistics recognizes the need to increase our attention to each client’s container reality and make every effort to provide advance warnings of additional charges; but we must state that this will not be a perfect solution or outcome and we will make appropriate notices as we are made aware.
The supply chain conditions today are not just challenging, but truly critical, and surviving this will be very expensive for ALL of us. Please endeavor to stay closely engaged with your TOC Account Manager and/or Operations Representative to collaborate together on maintaining as smooth a supply chain as humanly possible.
February 5, 2018
TOC Logistics International, Inc. regrets to inform that the truck capacity situation in the United States is creating a severe problem to the supply chain community.
Our team received a letter from the 3rd largest vessel operator stating, “The US trucking industry is facing a growing shortage of qualified drivers in both the international and domestic markets. The shortage is having a dramatic effect on our ability to deliver freight in a timely and effective manner.” The vessel operator is experiencing a significant increase in service delays as a direct result of the current trucking situation in the United States.
This letter that we received in evidence of what the rest of the vessel operators and the NVOCC industry is facing.
This same vessel operator that sent us the above letter had also reached out to our team asking if we could handle dray moves for containers that were not TOC’s. This is proof that the situation is not just affecting long-haul FTL providers, but also port dray carriers. While there are many factors at play, the eLog regulations are playing a huge role.
The new US eLog requirements, which were enforced beginning December 18, 2017, have truly caused capacity reduction. In regards to the container dray carriers, the simple facts are:
Some of the impacts to NVOCC operations are:
TOC Logistics is committed to finding and having alternative options in place in order to keep our programs running on-time. However, should the capacity situation become a regular detriment to operations at current rate levels, all supply chain users must be prepared for expected rate increases.
Also, please note this article which details the troubles that some of the largest companies in the U.S. are facing when it comes to keeping their supply chains going, some of which includes paying DOUBLE the contracted rates for certain critical lanes.
The impact for 2018 supply chains is not yet fully realized or understood, but costs are sure to increase rather than stay static. Contracting long-rate validities does not guarantee capacity, which means “out of gauge” services will become more prevalent in order to keep supply chains moving.
We offer this market update for your information and benefit.