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Market Advisory

HOLIDAY IMPACTS ON CHINESE GOODS – September 3, 2019

TOC Logistics International would like to provide the following update regarding Chinese-origin products:

Upcoming National Chinese holidays may delay the shipment of goods. Typically, the Mid-Autumn Festival that takes place in September does not affect A/F and O/F shipments. However, pickup over this holiday is subject to shippers allowing for cargo to be available for pickup.

Please continue to read below for the dates and specific impact of each upcoming holiday.

Hong Kong Statutory Holiday

  • Mid-Autumn Festival – September 14 (Saturday)
  • National Holiday – October 1 (Tuesday)

Hong Kong offices will be closed on both days. A/F operations will be on duty to process shipments. O/F shipments will not be affected, since they are prepared in advance. Rate requests may incur a one day delay due to festivities.

Mainland China Statutory Holiday

  • Mid-Autumn Festival – September 13 (Friday)
  • National Holiday – October 1-7 (Tuesday through Monday)

Guangzhou and Shanghai offices will be closed during this holiday. Skeleton crews are scheduled to process shipments booked prior to each holiday. Rate requests may incur a delay due to festivities and reduced staffing.

Information on Holiday Delays

Based on trends from previous years, 2-3 weeks prior to the National Holiday is considered to be peak season. A/F rates may increase as frequently as four times per week. Although it may be tempting to shop around for cheaper rates, by the time lower rates are found, the space is likely to be gone and rates may have increased several times over. Additionally, available space will be pushed to a later shipping date. For this reason, it is advised to book shipments as early as possible.

During the National Holiday, pick up and delivery to terminals may still be arranged for A/F, FCL, and LCL shipments that are booked at least one week prior to the beginning of the National Holiday. This is subject to suppliers/shippers allowing for cargo to be available for pickup.

If a shipment flags a customs inspection, it will be inspected after the holiday and once the proper information and documentation is sent from the supplier.

Blank sailing by carrier, FCL, and LCL cutoffs have yet to be announced. In the past, the delivery cutoff for these shipments was 3-4 working days prior to September 30th.

Consolidation Shipments

Warehouses will operate as usual for stuffing and container delivery to terminals, for releases booked and picked up prior to the holidays. This is subject to sailing during the holiday dates. If the shipment flags a custom inspection, it will be inspected after the holiday and once the proper information and documentation is sent from the supplier.

US Exports to China

Imports to China will be handled on a case-by-case basis. TOC advises advance conversations prior to booking or releasing shipments for export to China during the holiday dates.

TOC Logistics will report more information about these holidays as it becomes available.

As always, thank you for allowing TOC Logistics to serve you.


PRESIDENT TRUMP DECIDES ON A 5% INCREASE ON ALL SECTION 301 DUTIES FOR CHINESE-ORIGIN PRODUCTS – August 26, 2019

TOC LOGISTICS INTERNATIONAL INC. would like to provide the following update regarding Chinese-origin products:

On Friday morning August 23rd, news broke that the Beijing decided to impose an additional 5% – 10% duty on approximately $75 billion in US exports to China. The news couldn’t have been worse for companies in the automotive and seafood sectors. US manufactured autos and auto parts, beginning December 15th, would be subject to an additional 25% – up from the 5% now in place. Seafood exporters face a 10% increase that takes effect on September 1st – from 25% to 35% in just under a week.

The President took to Twitter to simultaneously express his displeasure and outrage, advising that he would have a response by the afternoon. After meeting through the day with Treasury Secretary Mnuchin, chief economist Peter Navarro and USTR Robert Lighthizer, late in the day he broke the news which was shortly thereafter matched by language on the USTR’s website.

In summary, here is the action that is proposed and, we surmise, will be published in the Federal Register this week:

  • Lists 1, 2 and 3 comprising $250 billion in imports and were already subject to additional Section 301 duties of 25%. Those three lists are increasing by 5% from the current rate of duty of 25% and on October 1st will be 30%.
  • List 4, which was supposed to be subject to an additional 10% beginning September 1st per the President’s August 1st tweet was split into lists 4A and 4B in an announcement by the USTR mid-month with effective dates of September 1st and December 15th. List 4 has been increased by 5% from the current 10% to now 15%, still with the same effective dates of 9/1 and 12/15.

We are left to ponder the next steps by both the US and China. Both countries have domestic issues at home which are delaying or hampering their efforts to find a solution. For the US, a slowing economy and the 2020 election are leading to political decisions that are designed first and foremost to bolster the President’s popularity as the elections draw nearer. For China, the 70th anniversary of the People’s Republic comes in October and the continuing demonstrations in Hong Kong also weigh on their policy decisions.

While the short- and long-term prognostication business has proven to be nigh-impossible as this saga continues, we are comfortable in offering the following guidance to US importers and exporters.

For importers – the issue of Customs bond sufficiency in the wake of increasingly larger Section 301 duty deposits weighs heavily. Examine your supply chain and HTS numbers to identify goods of Chinese origin and assume it will get worse before it gets better. Determine if an increase to your bond amount is needed on your terms, versus on CBP’s terms.

For exporters – the continuing increase in duties to products of US origin entering China, coupled with the potential EU retribution in the Airbus dispute give a reason to diversify global client bases. We encourage exporters to visit export.gov for resources and help identifying markets. TOC stands ready with our network of airlines, ocean lines and overseas partners to ensure your US-made goods get to those markets where they will face fewer tariff and non-tariff barriers to entry.

Thank you for allowing TOC Logistics to serve you.


TRANS-PAC CARRIER QUESTIONABLE PERFORMANCE AND DELAYS LIKELY TO CONTINUE – June 11, 2019

TOC LOGISTICS INTERNATIONAL INC. would like to provide the following update regarding Trans-Pac delays:

The recent implementation of 25 percent tariffs on Chinese-made goods by the Trump administration have the potential to cause imports to drop this peak season, possibly by double digits. However, this decrease in volume does not mean that freight rates in the eastbound Trans-Pac will drop, as carriers will likely manage capacity by scheduling “blank sailings” or cancelling sailings in order to keep demand high and prices high.

This means that current delays in the eastbound Trans-Pac, caused by poor performance, congestion, and bad weather, will likely continue or worsen. When carriers choose to schedule “blank sailings” there will be more delays to the supply chain transit times. Many carriers, in the past, have responded to the fluctuating US import volumes by adding blank sailings when bookings are low, and adding in extra loaders during surge periods. However, adding extra loaders increases capacity and the ocean carriers are not likely to give up the leverage they’ve earned over the last year and risk having the spot market pricing drop and reduce or eliminate their margins.

While many importers are moving quickly to reserve space in Foreign Trade Zones, the already-limited FTZ space in the country could be at full-capacity in short order. FTZ activity in certain areas has reportedly tripled over the last nine months, meaning this option is not a fail-safe.

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 possible continued delays.

Thank you for allowing TOC Logistics to serve you.


INCREASED TARIFF ON EXPORTS FROM MEXICO – May 31, 2019

TOC LOGISTICS INTERNATIONAL INC. would like to provide the following update regarding Mexico exports:

The White House announced May 30th that unless Mexico takes immediate steps to stop illegal immigration into the US, a 5% tariff will apply to all products exported from Mexico beginning June 10th. This tariff will increase by 5% each following month, to a maximum of 25% on October 1st, unless Mexico “substantially stops” the flow of migrants at the southern border. These tariffs will supersede any duty free treatment currently provided under NAFTA. US Customs and Border Protection has not yet announced specific implementation measures, but we will follow up when this occurs.

Thank you for allowing TOC Logistics to serve you.


TRUMP THREATENS TO RAISE TARIFF ON CHINESE IMPORTS BY 15% TO 25%  – May 15, 2019

As an update to the previous advisory regarding Chinese import tariffs, please be aware of the following updates:

  • Chinese items previously subject to 10% Section 301 duties will now be subject to 25% duty if exported on or after May 10 and entered before June 1.
  • 25% duty will apply to these items if entered on or after June 1, regardless of export date. Link to customs announcement on this increase here.
  • The United States Trade Representative has published a 4th list of tariff numbers for which it is proposing duties of up to 25%. This list covers nearly all Chinese products not already subject to additional duties. The USTR will hold a hearing on June 17th, after which any tariff numbers and duty rates will be known.

Thank you for allowing TOC Logistics to serve you.


TRUMP THREATENS TO RAISE TARIFF ON CHINESE IMPORTS BY 15% TO 25%  – May 6, 2019

TOC LOGISTICS INTERNATIONAL INC. would like to provide the following update regarding Chinese imports:

On Sunday, President Trump tweeted two statements that threatened to increase the 10% tariff on $200 billion in Chinese imports to 25%. The president indicated that this new rate may be in effect as of Friday, May 10. Additionally, the president announced his intentions to impose a similar 25% tariff on all imports from China that were not previously included in the 10% tariff bracket.

It is imperative that importers begin evaluating different methods to reduce the effect of these possible tariffs before they potentially take effect on Friday, May 10. However, discussions will be held with Chinese delegates later this week that may alter or negate these tariff increases. Still, until policies are made clear, we recommend that importers operate as if the 25% tariff is guaranteed, and that they seek out alternative options.

President Trump’s statements are as follows:

“For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%.  The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!”

Thank you for allowing TOC Logistics to serve you.


OCEAN MARKET UPDATE – April 25, 2019

TOC LOGISTICS INTERNATIONAL INC. would like to provide the following ocean market update regarding the European Low Water situation:

While the Low Water conditions from 2018, previously advised in November 2018, improved over the Christmas and New Year season, the actual winter/spring 2019 rain and snowfall in Europe was far below normal, thus causing the Low Water situation to again impact European Supply Chains, presently.

Low Water conditions cause barges, that normally shuttle containers from inland to ocean ports, to reduce vessel capacity in order to raise or reduce the draft levels of the vessels so as not to “ground” themselves on the riverbeds. The busiest ocean ports that receive these river barge moves are primarily Hamburg, Antwerp and Rotterdam; therefore EU export containers risk experiencing significant congestion pileups along the inland waterways because fewer containers are boarding the river barges, AND EU import containers start piling up at the sea ports for the same reason.

This puts a strain on the truck and chassis market in Europe, where exporters and importers attempt to divert containers via ground and rail, in a market that already has the trucking community in Europe operating at greater than 100% capacity.

TOC Logistics has just received notification from vessel carriers of the implementation of Low Water Surcharges, effective April 24, 2019. Unfortunately, TOC cannot provide a “price list” for the surcharges because the vessel carriers do not universally apply the charges using universal methods. Plus, Low Water surcharges are applied variably based on the recorded water levels on any given week.

Please accept this as official notice to TOC Logistics customers, that Low Water surcharges, as a pass-through line item, may begin showing up on our invoices at any time; and diversions and diversion costs (truck/rail/transloads) may be required to minimize delays and keep supply chains flowing.

Please communicate closely and often with your account manager(s) and/or assigned operations representative to maintain awareness of how the Low Water conditions are affecting your supply chain and what arrangements need to be made to reduce the impact to your business, financially.

Thank you for allowing TOC Logistics to serve you.

Click here to download a PDF with more information.


OCEAN MARKET UPDATE – March 18, 2019

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

  • Exploding volume of EU exports
  • Low capacity on current vessel strings between Europe and North America
  • Low water conditions on rivers/canals causing backup of containers throughout Europe and congesting alternative routes to the sea ports
  • 2018 Christmas/New Year holiday schedules with blank sailings

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.


OCEAN MARKET UPDATE – January 30, 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.


OCEAN MARKET UPDATE – January 10, 2019

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:

      • Christmas and New Year’s Days were “no-work” days
      • Christmas Eve and New Year’s Eve were both half-work days
      • Tenured, or veteran longshoremen, take vacation days during the two weeks of the holidays; requiring an increase in less experienced part-time workers, which slows down any scheduled operations
      • LA/LGB Port terminals are all running at full capacity (80%+ utilization), which is causing:
        • Empty containers to be stored in non-designated storage areas
        • Terminals to refuse to accept empty containers; meaning dray drivers attempting to drop empties and pick up loaded containers at the port are being turned away
        • Not being able to make dual, or roundtrip, runs into and out of the port effectively cuts the driver capacity in half
        • Reduction of available appointments to recover loaded import containers increases the number of days a container sits in the port; collecting storage fees
        • Lastly, a chassis shortage is created because empties needing to be returned to the port are being refused at the port, so empties sit on chassis that cannot be used for loaded containers; and loaded containers are sitting on chassis at shippers’ doors and in yards unable to be delivered into the port
      • The traditional heavy push to ship ahead of Chinese New Year (February 4-10, 2019) will likely pile on to the above situation.

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:

      • Standard Air Service:                            space available only (potentially experiencing transit times of 10-20 days)
      • Priority Air Service:                               Booked 1 week in advance (likely still 5-7 day transit times)

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.


US WEST AND EAST COAST PORT CONGESTION UPDATE – November 5, 2018

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.


URGENT OCEAN MARKET UDPATE – October 31, 2018

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.

  • Impact: 50% of all containers leave the ports of Antwerp & Rotterdam by barge. These containers are now searching for new routes. Because of this, the capacity of the road carriers, as well as the rail carriers are overwhelmed. Finding available trucks or railcars will be extremely difficult, and all rates (truck drays, FTL’s and rail moves) are skyrocketing.

 

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.

  • Impact: Rates for alternate transportation, like truck and rail, will be rising because of the congestions in the port 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.


OCEAN MARKET UPDATE – PIER PASS 2.0 IMPLEMENTATION: November 19, 2018

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:

  • Empty containers
  • Rail intermodal containers
  • Transshipped containers (cargo that arrives at the Port of Los Angeles or Long Beach on one vessel and leaves on a second vessel without entering U.S. commerce)
  • Domestic cargo
  • Bare chassis

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:

https://www.pierpass.org/wp-content/uploads/2018/10/QA-on-New-OffPeak-Program_10-11-18.pdf

www.pierpass.org/wp-content/uploads/2018/04/QA-on-New-OffPeak-Program_4-16-18.pdf

https://www.pierpass.org/about/extended-gates-review-process/

As always, we thank you for the pleasure of serving you.


US CUSTOMS FEES INCREASE: October 1, 2018 

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:

  • Minimum MPF for formal entries will increase from $25.67 per entry to $26.22 per entry.
  • Maximum MPF for formal entries will increase from $497.99 per entry to $508.70 per entry.
  • Minimum MPF for informal entries will increase from $2.05 to $2.10 per entry.

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.


TRANSPACIFIC OCEAN MARKET UPDATE: September 20, 2018

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:

  1. Back-to-back typhoons in Asia
  2. Severe draft restrictions out of Shanghai; (meaning only shallow draft vessels are getting berth spots)
  3. Using multiple terminals in Shanghai. Carriers being forced to switch between different berth locations due to ongoing construction. It’s difficult to move the cargo from one terminal to the next when vessels keep calling different berthing locations.
  4. Extremely high volumes out of Korea and North China.
  5. All this added to the previous congestion caused by early and high-volume bookings from manufacturers and buyers trying to get goods onto US soil prior to tariffs being implemented.

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.


OCEAN MARKET ANNOUNCEMENT – August 2, 2018

A capacity crisis has built up and reached critical mass in the TransPacific Eastbound ocean trade.  See the bullet facts following:
  • Currently, the ocean “spot rate” market is running $1,500-2,000.00 HIGHER than most contracted rates.
  • Vessel operators, in collusion with the “alliance members” have been systematically reducing available capacity on the TP routes for many months; including using “blank” sailing strategies and even suspending or outright eliminating entire strings, permanently.  7%+ of the TransPacific capacity has been removed from service in the last 60 days.
  • This is causing significant “roll” risk to the NVOCC’s and BCO’s alike.
  • Alliances and vessel operators are subjectively reducing contracted allocations, in order to open up capacity to the “spot rate” market where they are achieving higher than contracted rates.
  • BCO’s (Beneficial Cargo Owners) & NVOCC’s (Non-Vessel Operating Common Carriers/Forwarders) who have not fully utilized their allocations in any given month are having their allocations reduced or removed to accommodate the higher margin “spot rate” market.
  • Allocations for contracted rates are NOT being increased for anyone right now.
  • GRI’s and PSS have been announced early and anyone not accepting them are at risk of being rolled for the higher margin “spot rate” containers.
  • The new China Import tariffs that are set to apply over the next two months are also causing huge increases in container volumes for importers increasing their PO release numbers to hurry the product into the US before the tariffs hit.
All of the above is creating pressure on the ocean supply chain that has not been seen previously;  with the global economy currently increasing demand for containers, while at the same time alliances systematically removing capacity, we find ourselves in a situation of “pay to play” in order to keep containers moving and sailing on intended vessels.

 

In the same way passenger airlines purposely overbook in order make sure planes are “full”, the ocean alliances find themselves in this position right now with all vessels being +100% booked, and able to choose what containers load or roll.  In this scenario, alliance members are able to load the higher rated, higher margin containers ahead of the lower rated/margin containers.

 

TOC Logistics International Inc. must engage our TransPacific clients in serious Peak Season Surcharge discussion for their specific lanes where vessel operators are refusing to load containers under contracted rates without a PSS, and where vessel operators are refusing to allow bookings outside of contracted allocation counts.  Whether TOC Logistics is your provider or not, it is imperative that you engage your provider ASAP to make appropriate arrangements to minimize the impact to your supply chains.
We encourage you to search all market publications and ocean news outlets to see for yourself the serious nature of the TransPacific situation.   We look forward to working with each of our clients to review and negotiate the right resolution for them.

OCEAN MARKET ANNOUNCEMENT – MAY 31, 2018

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.


OCEAN MARKET UPDATE – May 24, 2018

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:

  1. Jawaharlal Nehru Port (Nhava Sheva)
  2. Mumbai Port
  3. Chennai Port
  4. Tuticorin Port
  5. Kolkata Port
  6. Cochin Port
  7. Vishakhapatnam Port
  8. New Mangalore Port
  9. Mormugao Port
  10. Paradip Port
  11. Kandla Port
  12. Ennore Port
  13. Port Blair Port

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.


U.S. TRUCKING AND CONTAINER DRAYAGE MARKET UPDATE – MARCH 12, 2018

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.


US TRUCKING AND DRAYAGE MARKET UPDATE – 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:

  • Heavy gate congestion
  • A chronic lack of truck power (reduction of available drivers due to eLog enforcement)
  • A near zero availability of chassis’ at major ports and inland CY’s
  • Bunching of inbound trains ( including trains being held indefinitely at switching yards, due to no space to receive them at the next stop )
  • Lack of available railcars for ocean containers at inland ports
  • Increased container volumes, both import and export
  • Heavy snowfall and loss of yard storage

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:

  1. Free days at the port hover around 5 days nationally; thus an extended dwell time causes port storage to kick in;
  2. Demurrage ( the number of days the container is away from the port before being returned ) has an industry standard of only 2-3 days, thus the extended dwell times and lack of actual equipment for either the delivery or empty return is now triggering per day demurrage charges.

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.


TRUCK CAPACITY UPDATE – 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:

  • Before December 18, 2017, dray drivers could handle up to five “turns” per day using manipulative log practices.
  • Since December 18, 2017, dray drivers who stick to strict hours of operation (11 hours per day), can now only do a maximum of three turns per day (based on average of 3 hours per turn).
  • Without reducing the number of drivers or equipment, the above results in a 40% reduction in capacity.
  • For longer dray runs, if a driver could previously do 2 turns per day, he might only now be able to do one. This alone will significantly drive up the price of the jobs, as it represents a 50% pay cut to the dray company/driver that must somehow be recouped.

Some of the impacts to NVOCC operations are:

  • A last-minute lack of drivers available to bring “empties” to a loading site
  • Lack of drivers available to deliver containers to ports to meet cut-offs
  • Drivers cancelling on one job in order to take a higher-paying job

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.