President Biden in Southern California Wednesday for meetings with port, labor and stakeholders.
While seemingly the sole focus of media and public attention for the sheer number of ships at anchor in San Pedro Bay, shippers with diverse supply chains know it’s not just one port or one mode of transport. Sea, air, rail and truck are all experiencing unprecedented demands on the companies and workers across all these modalities.
On Wednesday, President Biden is in Los Angeles, meeting with industry to hear their recommendations for how to unclog vital arteries like the ports of Los Angeles and Long Beach. LA and Long Beach are not alone in their situation, as stories are now appearing documenting backlogs in Savannah and New York, while trucking has been affected in Vancouver, Canada.
The cocktail of increased costs, slower transit times, understaffing, COVID-related overseas factory closures and social-distancing safety protocols have led asset-owning companies to make decisions to strengthen both their bottom lines and impose punitive fees for demurrage, detention and storage to incentivize cargo to remain in motion.
These fees have caught the eye of regulators such as the Federal Maritime Commission and Surface Transportation Board and these agencies are forcing ocean carriers and railroads to open their books and defend both the imposition of these charges and their inconsistent application to shippers.
While shippers fight to retrieve containers buried on terminals and at intermodal yards, many have turned to air freight as a means to fill gaps in supply chains. Unfortunately, at airports like O’Hare and Los Angeles, this influx of freight, even at a time when international passenger flights numbers remain low, have driven airlines and ground handlers to try to improve fluidity by reducing free time to only 24 – 48 hours.
This week, leading ground handlers met with the trade community at an industry meeting in Chicago. The trade cited two problems with this extremely short free time. First, because there is no forward-looking guidance as to when cargo will be made available, truckers cannot be dispatched until an indeterminate period of time after cargo arrival and availability. Second, the shortage in trucking power, coupled with long lines and DOT limitations on driver hours means it takes longer to identify and schedule a trucker to pick up freight.
Alba Wheels-Up has a positive reputation in the markets where we do business and makes every effort to work closely with ports, carriers, terminals and airlines to get cargo out of their custody when available to deliver to our customers. Despite having processes in place to prevent the payment of demurrage, detention or storage, market conditions, carrier and terminal policies have created situations where sometimes demurrage and storage are unavoidable.
The topic of demurrage and detention is so important to Alba, we are presenting a webinar exclusively available to our customers featuring Peter Friedmann on October 26th at 11 AM PT. During this client-only session, Peter will be providing his professional overview of the current transpacific market conditions, his opinion on carrier behavior to date and what we can expect in future.
We do not believe that the intervention by regulators will bring about an immediate change to the demurrage, detention and storage situation. Only a concerted effort across supply chains to increase velocity, add to the workforce and more data-sharing and flexibility will improve the situation in the near term.
