Cold COMFORT – Industry expert suggests ‘Container Weight’ is an issue

w20130617_581636_51bf7444348dFollowing up on the unvelievable events which saw the MOL COMFORT split in two, see previous post “Container Ship Breaks in Half and Sinks“,  Michael Grey (former Editor of Lloyd’s List and Fairplay, currently the London Correspondent of BIMCO and holder of a British FG Master’s Certificate) writes “How on earth does a 5 year old 90,000 ton containership, built by one of Japan’s finest shipyards and operated by a tip-top liner company, come to be floating in two bits 19 miles apart? Was it the Weather, Welding,  or perhaps one of those 100 year waves the Met. Offices are warning us about are rather more frequent?”

He goes on to maintain that the smart money must surely be on the stresses induced by under-declared container weights, which shippers routinely refuse to take with any seriousness whatsoever.

Always supposing that there is a good run through the IMO, it has been suggested that it could be another three or four years before SOLAS Regulation VI/2, which provides for the “verification” of container weights, comes into effect. As the distinguished delegates undertake their deliberations on this matter, a huge picture of the after part of the MOL Comfort sitting forlornly in the Arabian Gulf might usefully be displayed on the Council Chamber screens to help focus their minds.

It is now more than six years since the emergency in the English Channel when the MSC Napoli nearly sank through an ingress of water.

It is worth underlining the views of the UK Marine Accident Investigation Branch, which painstakingly required all the boxes retrieved from the wreck to be weighed, and note its suggestion that overweight boxes contributed to the loss of that ship.

Wheels often grind slowly in marine safety mills, but there have surely been enough warnings about excessive container weights to wake everyone up. Feeders have been regularly rolling over, fortunately in shallow water or against the quay. This clearly expensive incident which has put 25 lives and more than 4000 containers at risk ought to clarify the issues.

But we shouldn’t bet on it.

Shippers’ organisations, which have been defending their flawed position on container weights for forty years or more will still be arguing about the responsibilities for verification until the bitter end. If the salvors manage to save this ship, let us hope that every one of those boxes retrieved is weighed, and compared with the manifested declaration.

Sources: article posted in gCaptain.com with original credit to the Clay Maitland blog

Hi-tech shippers switch from air to ocean

sea_freight_trackingCargo traditionally sent by air is increasingly switching to sea as shippers capitalise on the mode’s lower transport costs – a trend expected to continue over the coming years.

Lloyds List reports that several leading freight forwarders reported in their full-year results that certain cargo types — particularly hi-tech and telecoms — switched from air freight to sea freight last year.

DHL Global Forwarding CEO Roger Crook said the switch was the result of a price difference of 10 times between the two modes of transport. He said: “Obviously many companies are under cost pressure and looking to reduce total supply chain costs. Therefore, they are buying and moving by ocean freight, and particularly it is happening in the technology sector.”

Panalpina chief operating officer Karl Weyeneth said he expected the trend to continue. “There is a maximum shift you can achieve, depending on what industry you are talking about,” he said.

“But I believe that now supply chains are used to working with more ocean freight, this impact will stay for at least a couple of years, until the economy has really recovered, then it will start to shift back again.”

“We really see this as an important factor in our market for the next two to three years.”

Kuehne+Nagel (KN) chief executive Reinhard Lange said the decision on whether cargo was suitable to be switched from air to sea partly came down to the weight of the shipment. He said that if two products had the same market value, but one weighed less than the other, the overall cost impact of flying was less for the lighter cargo because air cargo costs were based on weight. He said this explained why hi-tech products had transferred to ocean freight while lighter products, such as pharmaceuticals, had, in the main, continued to utilise air freight.

The forwarders said the impact of the switch from air to ocean freight was partly to blame for a decline in air freight volumes last year, while container volumes continued to grow. In its full-year results, Panalpina saw air freight volumes decline 6% last year while ocean freight volumes grew by the same amount. Meanwhile, DHL Global Forwarding’s air freight volumes slipped 5.3% in 2012 with ocean freight increasing 4.3%, while KN saw its air freight volumes grow by 2% while ocean freight increased 6% year on year. Source: LloydsList

Air-to-sea cost differential narrows

Multimodal Freight

Just to keep them on their toes – the following will undoubtedly play a factor in many customs administration’s risk management and intel systems.

Air freight rates slipped in December as the trade returned to business-as-usual following the volume boost of earlier hi-tech product launches, according to Drewry’s new monthly report, Sea & Air Shipper Insight. Drewry’s recently launched East-West Air Freight Price Index, a weighted average of air freight rates across 21 east-west trades, fell by 1.4 points from November to reach 110.8 in December, bringing to an end four consecutive months of gains in the index. “The waning effect of new hi-tech product launches on traffic demand was the primary contributor to declining rates from Asia into North America and Europe,” said Simon Heaney, research manager at Drewry. “Drewry expects pricing on routes out of Asia to decline further, though the impact will be softened by an uptick in demand levels in advance of Chinese New Year.”

Evidence of a tentative recovery in air freight demand comes in the form of a 2% year-on-year rise (the first such increase in 16 months) in November of worldwide semiconductor sales, a traditional bellwether for air cargo. Air cargo demand could also see a temporary boost at the expense of the ocean market. With ocean currently facing capacity issues such as the looming threat of strike action at US ports and carriers cancelling voyages, some shippers, particularly those wanting to move higher-value goods, might well be tempted to shift some cargo to the air. Demand growth for air cargo has lagged behind ocean, which Drewry believes is due to a combination of shippers having access to better IT systems, leaner inventory strategies and greater faith in liner service reliability, which has been improving steadily in the last year or so.

Recent issues in the ocean sector are testing that faith, although of course shippers that do switch to air freight will have to pay a considerable premium. East-west air freight rates and comparable ocean rates have almost mirrored their ups and downs since May 2012, with air prices showing a steeper upswing since October. However, the fall in air freight pricing and a corresponding rise in container shipping rates in December sent Drewry’s east-west air freight price multiplier down 1.3 points to 11.8. The multiplier measures the relationship between the cost of shipping by air relative to sea. “Air cargo is not a viable Plan B for all shippers,” said Heaney, “but for those moving expensive goods it remains a justifiable alternative, particularly at a time when the reliability of the ocean supply chain is threatened.”  Source: Lloyds List

Foreign truckers will pay to use roads

Dare say the following will not go unnoticed by South African authorities. The bottom line in all of this is the question of effective enforcement.

News that the government intends to go ahead with plans to introduce a charging system for foreign truckers using UK roads has got the thumbs-up from the Road Haulage Association (RHA). “This is a happy day for road hauliers”, said RHA Chief Executive Geoff Dunning. “We have been campaigning for years to see a system introduced which will lessen the financial advantage currently enjoyed by our European neighbours.”

Foreign truck drivers will have to pay £10 a day to use British roads by 2015, under the new legislation. British truckers are used to paying special road charges of up to £13 a day on the continent, but their European counterparts pay nothing when they drive in the UK.

Announcing the plan, New Transport Secretary Patrick McLoughlin said: “These proposals will deliver a vital shot in the arm to the UK haulage industry. “It is simply not right that foreign lorries do not pay to use our roads, when our trucks invariably have to fork out when travelling to the continent.” It is estimated that 1.5m visits are made by foreign hauliers to the UK every year.

The new charge is expected to cost most drivers £1,000 a year. Dunning added: “This is not enough to give us a level playing field as regards the rest of Europe. But it is a good start and will help no end in beginning to prepare the ground.

“We are pleased that Mr McLoughlin has seen fit to bring forward this legislation so early in his tenure as Transport Minister; he is obviously very aware as to the important role played by UK hauliers in rebuilding the economy, increasing UK competitiveness and boosting growth.”

UK drivers will also have to pay the daily charge because of European laws, but it will be offset by a corresponding road tax cut. A bill setting out the plan will be published next month, with ministers expecting the new system to be introduced within the next two years. Source: Lloyds List