Quick News : Sunday 6 Nov 2005

November 7, 2005 by SwizStick  
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It’s getting really tough to find trucks in Oklahoma due to trucks being tied up in the Gulf Coast for relief efforts – some truckers are even getting free diesel from the government :

“The most problematic thing is finding truck drivers down in New Orleans,” said Curtis Whalen, executive director of intermodal carriers conference with the American Trucking Associations. “Most of the truck drivers that are in the area are working with FEMA.”
In some cases, drivers are getting paid double to work for FEMA and some are even getting free diesel, Whalen said.
This comes as the trucking industry is facing a national driver shortage.
“We’re just not getting them,” Whalen said. “They’re being lured by higher pay.” At the Port of New Orleans, workers brought in from other parts of the country to work the port are sleeping on large docked ships. Truckers also are being recruited.

Barwil Agencies Sdn Bhd in Malaysia believes one way to cut costs for shipping lines is to reduce the turnaround time for vessels in the ports :

Loo said one key area identified as a major contributory factor in cost-cutting is the turnaround time for vessels.

In other words, reducing the amount of time a vessel stays at the port.
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“In the short as well as long term, we don’t want to talk about money to our principals. We’d like to show them that if they let us handle their vessels, they will spend less time in port (and thus reduce their costs as well),” said Loo.

For instance, he said Panamax-size vessels, which can load up to 63,000 tonnes of goods, can cost between US$20,000 and US$25,000 daily in terms of charter hire.

“Assuming that it’s US$24,000 per day and one hour is US$1,000 and if a vessel can save at least one hour at each of the port it embarks, that would accumulate towards huge savings for the liner,” he said.

“That’s the kind of attraction Malaysia ports should work towards to,” he stressed.

I’m a firm believer in this as well. The big news today is that container shipping prices are going to start falling in 2006 and 2007 as capacity increases through more vessels and ever larger container ships.
Those that know me well know that I do not subscribe to this theory, although I readily admit mine is a small minority opinion. As fleets continue to get larger with brand new vessels that are bigger than ever before, I believe we will begin to see port congestion as you have never seen before.
Most of these amazing new vessels, destined for the popular China/Asia – U.S. trade lane, that are supposed to bring all of this wonderful capacity are too large to go through the Panama Canal, which means these vessels will be docking at the already over-taxed West Coast ports of North America, mostly Los Angeles/Long Beach. This will only cause increased congestion as these ever larger vessels take more time and labor to unload than other smaller vessels.
While it is very possible that so called “oceanfreight” rates will go down, the laundry list of surcharges that container lines and ports charge the importer will more than offset any minor oceanfreight cost savings that these larger vessels supposedly will bring.
The key to saving money for container lines will be in convincing ports worldwide to decrease the turnaround time for ships in port, which honestly I just don’t see happening on a wide scale.

And just like that, here is an article with some supporting facts for my argument above, as the less congested Howland Hook Marine Terminal at Staten Island is attracting more attention from container lines looking to reduce congestion at nearby Port Newark :

“Transportation is the competitive edge and not a cost center. Shipping trade has increased and will continue to increase,” says Robert F. Sappio, senior vice president of transpacific trade at APL.

He adds that the pressure is on to find more and better port facilities, since “the investment in China today indicates that trade will expand.” The ships will be ready, but Sappio is not confident that the ports and canals, especially in the U.S., will be available.

There are, in addition, great seasonal pressures on the transportation system and, he says, “You can’t change Christmas.”

Sappio finds Howland Hook a good bet, since compared with the neighboring Port of Newark, Howland is able to make turnover times as short as 30 to 40 minutes–compared with two hours at Newark. That means that trucks wait and idle much less at Howland Hook, and the advantages of just-in-time logistic deliveries can be met with greater precision.
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This new breed of container ships that are more than 1,000 feet long and have 40-foot drafts demand deeper harbors and docking ports, which are currently lacking. Trade with Asia is bound to increase the demand for such facilities.

The increased width of the ships (to beyond 106 feet) makes passage through the Panama Canal impossible. “In four years, it will become a choke point,” according to Sappio.

At the same time, the infrastructure of existing ports will be taxed, as the number of containers carried on each ship increases by thousands, yet the onshore real estate used to handle them remains static. “Southern California ports’ capacity in next few years will become a question,” says Sappio.

Finally, an intermodal crisis is building, as the number of independent truckers has dropped from 168,000 in 2000 to 110,000 this year, while the U.S. rail system has not sped up and is highly congested.

Get the picture ? It’s not a pretty one.

Cargo ships collide in China

Australia’s new customs system still experiencing problems

“Deep-sea rates, meanwhile, have been on a downward slide”

P&O Takeover Talks