Re-Tweeting Value Vs. Cost

The container shipping news of the week, from the Tweet Deck of Peter Tirschwell, who follows up with commentary and analysis as he tours Asia.

13 Jun @PeterTirschwell

Large transpac carrier says price as a priority for BCOs in dealing with carriers has shot way up since 2009 based on an internal survey.

This has been a big issue for carriers at the high end of the spectrum. The price premium retailers used to be willing to pay for various elements of service and quality has withered under the weight of their own challenges in adjusting to a more subdued consumer and price pressure from Internet retailers and their lower cost base. It confirms that in down economies, shipping is even more about cost and less about value.

13 Jun @PeterTirschwell

Get ready for drumbeat of ill-informed criticism that US won’t meet July 12 deadline to screen shipping containers.

“We’re not just missing the boat; we could be missing the bomb.’’ This quote from Rep. Edward Markey, D-Mass., as reported by the Boston Globe on June 12, sums up the extremist viewpoint on the threat posed by import containers that emerged after September 11. As the Globe itself continued, in a statement reflecting the pervasive ignorance on this issue: “Only about 5 percent of all cargo containers headed to the United States are screened, according to the government’s own estimate, with some shipments getting only a cursory paperwork review.” The fact as any importer knows having gone through C-TPAT, the 24-Hour Rule and ISF is that Customs’ scrutiny of import containers is far from “cursory.” The law Markey refers to, the 2006 Safe Port Act, mandates 100 percent electronic scanning of all incoming marine containers at the port of origin by July 2012. The Department of Homeland Security, which has already announced it won’t meet the deadline, says it “has concluded that 100 percent scanning of incoming maritime cargo is neither the most efficient nor cost-effective approach to securing our global supply chain.’’ The EU said the policy “cannot be the way forward based on the costs involved and uncertain benefit for security.”

13 Jun @PeterTirschwell

Signals out of June 27-29 ILA-USMX talks will be a tipping point on whether BCOs pull the trigger on contingency plans.

The first question the CEO of a large Asia-based carrier asked me last week was where the ILA-USMX negotiations are likely to go. I told him we thought things had calmed down after March’s TPM ocean shipping conference, when ILA President Harold Daggett warned shippers of a possible strike. But the recent slowdown at New York-New Jersey and Daggett accusing his management counterpart of “personal attacks” and telling his members to “prepare themselves for any action we may have to take” has left the situation wholly unpredictable. With some 25 years of labor peace on the East Coast waterfront under the former ILA leadership, there is no recent precedent for such fireworks, making it virtually impossible to predict the outcome. The next juncture will be face-to-face negotiations next week. With the peak season soon to arrive, the rhetoric that emerges will be a big factor in whether BCOs’ decide to pull the trigger on West Coast rerouting plans that many began discussing with carriers after TPM. As one large shipper recently said, “All we’re doing now is watching and waiting to see if we need to pull the switch” to divert shipments through the West Coast.

12 Jun @PeterTirschwell

Some carriers, especially those with a big book of BCO business, have little sympathy for NVOs who are now screaming about paying high rates.

As my colleague Bill Mongelluzzo reported, rates of $500 to $800 per container above contract rates in the trans-Pacific are squeezing NVOCCs who don’t have access to the lower rates, leading Stephen Aldridge of Encompass Global Logistics to call it a “life or death situation.” The rare situation is bringing to the surface old tensions between some carriers and NVOs, with carriers unsympathetic to NVOs who they have watched earn profits year after year by putting cargo on their ships even as carriers have suffered huge losses.

13 Jun @PeterTirschwell

If the peak season is strong as forecast, that will lend further support to an already-strong transpac rate environment.

11 Jun @PeterTirschwell

Jeffries’ Leung calls 14% jump in transpac spot rates (to) $2,658 a “positive surprise” tied to implementation of peak season surcharge.

Signs point to a robust trans-Pacific market. As the JOC reported last week, container imports will increase gradually during the summer and rise sharply in September and October, according to the Global Port Tracker published by the National Retail Federation and Hackett Associates. Implementation of aggressive $600 peak-season surcharges by carriers was seen in last week’s spot rates, and the stock market may be noticing. With Asia-Europe rates weakening, the trans-Pacific is a bastion of strength for the carriers at the moment.

Peter Tirschwell is senior vice president of strategy at UBM Global Trade. Contact him at, and follow him on Twitter at

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