Supply Chain Archives | Page 38 of 89

Felixstowe train derailment

Jun 27, 2024 | 4PL, Automotive, Chemical, eCommerce, Exports, Foodstuffs, Hazardous, Intermodal, International Trade, Logistics, Rail, Retail, Sea, Supply Chain

At 22:09 on Wednesday 19th June a GB railway locomotive and loaded wagons en-route to the Port of Felixstowe derailed on the branch line approaching the main Central and Northern railheads, causing significant damage to the track and closing both terminals to train movements.

The Central and Northern terminals, the main railheads at Felixstowe were closed, and while the Southern terminal continued operating, a large majority of import/export services were suspended, with rail throughput at 40% last Friday.

While access to all other areas of the container terminal remains unaffected, with shipping and haulage operations continuing as normal, the derailment impacted all train services serving the port, including those by Freightliner, GB Railfreight and Maritime Transport.

To help mitigate the impact, Felixstowe released additional vehicle booking slots for hauliers, which was welcome, but this does not entirely replace the lost collection/delivery capacity.

Network Rail engineers have been on site since the incident, clearing and repairing the damaged track, with the derailed wagons cleared at the weekend.

The Central terminal is now operating alongside the Southern terminal and rail throughput is back to 50%, but having undertaken a full assessment of required repairs the Network Rail engineers estimate that the port’s rail capacity may not be fully operational until next week.

Update 26th June 2024 – Port of Felixstowe confirm that normal rail service will resume on the 4th July 2024, from 12:00.

With rail companies cancelling services we are unfortunately being impacted by the consequential issues, for example exports missing booked trains as operators work around the situation.

Issues will continue to arise in the coming days, and potentially after normal service is resumed, as empty containers are left inland and not returned, as laden containers will be prioritised where space is limited.

These issues will work through and in the meantime we will continue with our contingency planning. If you have concerns about any consignments, or would like to discuss our transport strategy, please EMAIL Simon Balfe, our Multimodal Transport Manager.

Image courtesy of the Ipswich Star

New US demurrage and detention regulations in force

Jun 27, 2024 | Automotive, Chemical, Exports, Foodstuffs, Hazardous, International Trade, Sea, Supply Chain, United States

The Federal Maritime Commission (FMC) final rule on demurrage and detention billing requirements came into force on the 28th May, except for two provisions that are delayed.

The rule applies to ocean common carriers trading to or from the US, including vessel-operating common carriers (VOCCs) and non-vessel-operating common carriers (NVOCCs), and to marine terminal operators (MTOs).

The rule mandates that common carriers and MTOs include specific minimum information on demurrage and detention invoices, with set timeframes for issuing invoices, disputing charges, and resolving disputes.

Financial Impact
The FMC reports that between 2020 and 2022, nine of the largest carriers serving US liner trades charged a total of approximately USD 9 billion in demurrage and detention fees and collected roughly USD 7 billion.

Background
Demurrage and detention refer to charges assessed by ocean carriers and terminals for the use of shipping containers and marine terminal space, in addition to agreed freight charges.

During pandemic-related supply chain delays, many cargo shippers were surprised by large bills, leading to numerous complaints to the FMC.

Final rule
The final rule follows a notice of proposed rule-making published in October 2022, and incorporates changes based on feedback from shipping industry stakeholders. The FMC has been considering these rules since at least 2021, when its Fact Finding Investigation No. 29 recommended industry input on minimum requirements for demurrage and detention billing.

The US Congress addressed this topic in the Ocean Shipping Reform Act of 2022 (OSRA 2022), which listed the minimum information that common carriers must include in a demurrage or detention invoice. OSRA 2022 authorised the FMC to revise these requirements and to define practices for assessing charges. The final rule announced on the 26th February 2024, implements these provisions.

New Regulation Details
The new regulation will appear in the Code of Federal Regulations at 46 CFR Part 541—Demurrage and Detention. For now, it is published in the Federal Register at 89 Fed. Reg. 14362-14363.

Compliance Highlights
Applies to invoices issued by VOCCs, MTOs, or NVOCCs for demurrage or detention charges, excluding the billing relationship between MTOs and VOCCs.

If an invoice fails to include all required information, the billed party does not have to pay it.

The detailed information that must be included in any invoice, such as identifying details, timing, rate, dispute procedures, and certifications, will be specified at a future date.

Invoices must be issued within 30 days of the last incurred charge; otherwise, the billed party is not required to pay.

NVOCCs receiving invoices from VOCCs or MTOs must issue their invoices within 30 days.

The billed party has 30 days to contest charges, and the billing party must attempt to resolve disputes within 30 days.

Purpose
The primary purpose of the new regulation is transparency, allowing billed parties to understand and verify the accuracy of demurrage or detention invoices and the origins of the charges.

Detention and demurrage (D&D) cases handled by the Federal Maritime Commission (FMC) in the United States have trebled since the pandemic and are set to reach historical highs by the end of the year.

This briefing is not legal advice and does not address any specific situation. Should you have any questions about this topic or FMC regulations in general, please EMAIL our Chief Commercial Officer, Andy Smith.

India exporters face more challenges

Jun 27, 2024 | 4PL, Chemical, Exports, India, International Trade, Sea, Supply Chain, United States

Shipping lines are imposing surcharges and raising freight rates as capacity from India to Europe, North America and The Rest of The World tightens. Indicative of why this is, can be seen with exports to the US up 13% and significant ocean network changes expected on the India-North America trade lanes.

With demand strong and vessel capacity tightening – not helped by port congestion – Indian shippers face additional surcharges to secure confirmed bookings.

Rate increases
One carrier is charging an equipment imbalance surcharge (EIS) of $300 per container, while another leading carrier is imposing an emergency space surcharge (ESS) of $500 per container from 1st July, with other carriers expected to follow suit.

This looks to be a consequence of the Far East challenges, now impacting a wider spread of manufacturing regions across Asia.

As capacity problems grow and carriers are already able to fill most vessels through to the end of July and into August, freight rates are also moving significantly higher, with one carrier imposing a hefty increase of its freight-all-kinds (FAK) rates through July, with prices likely to mirror the elevated levels seen at the beginning of the year.

The India-US trades have also seen a stream of general rate increases and peak season surcharge (PSS) announcements, ranging from $500 to $2,400 per container and with service cuts to try and support “schedule recovery” capacity will get tighter still. This is without the current week’s spot rates, which are at even higher rates into the US and Europe and still rising.

Disruption
Vessel delays have been easing at key gateways in North and Southeast Asia, including Singapore, Ningbo, Qingdao and Klang in Malaysia and equipment availability is improving, but congestion is spreading to India.

India’s largest container gateway, Mundra, is hugely congested, which is affecting quay operations and the movement of containers between CFSs and terminals, with some carriers skipping the port to enable vessels to return to Asia faster.

About 50% of Mundra’s traffic moves by rail, but backlogs for railed freight have increased from the normal 7 to 9 days to 15 to 20 days, while a new process of issuing port entry permits appears to be a major source of frustration, with truckers facing longer waits to move containers in and out terminals due to their inability to secure entry permits promptly.

India to US
India and the United States last week committed to address barriers to trade, technology and industrial cooperation, in a bid to boost bilateral trade from the current $200 billion annually, to $500 billion in the coming years.

Ocean Network Express (ONE) injected additional capacity into the India-USEC trade lane last month via a standalone loop known as WIN and given that the India to US market is forecasted to keep growing, we would expect to see more container shipping service expansions, including upsizing in different forms.

Hapag-Lloyd is withdrawing from the Indamex service that it has operated in conjunction with CMA CGM for decades and from early August is launches a standalone service (TPI) on the route, which will rotate Port Qasim (Pakistan), Nhava Sheva and Mundra, and then New York, Norfolk, Savannah and Charleston before returning to Port Qasim.

CMA CGM is launching a revamped India-USEC routing, with additional stops at Savannah and Charleston, providing a 77-day round-trip via the Cape of Good Hope.

The changes unfolding on Indian trades may be setting the scene for the Gemini Cooperation alliance between Maersk and Hapag-Lloyd, starting early next year.

CMA CGM and Hapag-Lloyd have other ongoing joint service arrangements on trades out of India, either on a vessel or slot-sharing basis and it remains to be seen if and how those services will be repositioned.

Our commercial and operations teams work closely with our partners across India and the United States, processing air, ocean and sea/air shipments.

If you have any questions, rate requests or would like any further information on our capability in either country, please EMAIL our Chief Commercial Officer, Andy Smith.

New Silk Road will link the Gulf to Europe

Jun 27, 2024 | Exports, International Trade, Middle East, Project, Rail, Sea, Supply Chain, Turkey

Turkey, Qatar, and the UAE are joining with Iraq to develop a new land corridor – Development Road Project – which will connect the Gulf to Europe.

The Development Road Project is a multi-billion dollar land corridor that will stretch 750 miles from the Persian Gulf to the Mediterranean Sea, establishing a network with railways, roads, ports and cities, to significantly reduce travel time between Asia and Europe via Turkey.

Estimates for the costs of the Development Road Project range from $8 billion to $15 billion, and possibly up to $20 billion, which may be financed by the UAE, Qatar, or another country, with the entire project expected to be completed within five years, once the funding is secured.

In May 2023, Baghdad hosted a summit which brought together transport ministers and officials from the European Union, the World Bank, GCC, Iran, Turkey, Syria and Jordan to discuss the establishment of the Development Road initiative.

The Development Road, dubbed the “Iraqi Silk Road”, gained further attention during the G20 Summit in New Delhi last September, when the project was discussed as an alternative route to the Suez Canal, to aid faster and more efficient trade between Asia and Europe.

The project is expected to turn Iraq into a transit hub and compete with Egypt’s Suez Canal, strengthening Iraq’s geopolitical position in the region and the world, while supporting security and stability in the region.

In April 2024, a quadrilateral memorandum of understanding, regarding cooperation in the Development Road project was signed by the transportation ministers of Iraq, Turkey, Qatar and UAE, with railways and highways connecting to Iraq’s Great Faw Port, aimed to be the largest port in the Middle East.

The project is planned to be completed in three stages by 2028, 2033 and 2050 and will open Iraq to the world through Turkey. It will generate $4 billion annually and create at least 100,000 jobs.

We will keep you advised and updated as this initiative proceeds, sharing any important developments and seeking market opportunities as they materialise.

If you have any questions or concerns about the ‘new Silk Road’, or would like to discuss the potential implications and benefits of this initiative, please EMAIL our Chief Commercial Officer, Andy Smith.