Month: March 2020

Steve Blust said he doesn’t have a crystal ball and can’t predict when U.S. supply chain flows will return to normal in a post-coronavirus world.

“I’m still trying to buy one on Amazon,” joked Blust, president of the Containerization & Intermodal Institute (CII) and the International Institute of Container Lessors (IICL) and a former chairman of the Federal Maritime Commission (FMC). 

Blust turned serious just as quickly as he tossed out a supply chain joke.

“While I do not have a crystal ball to foresee when the adverse impact on our lives and businesses from COVID-19 will diminish, I am optimistic that social and economic recoveries will proceed as expeditiously as possible as a result of the great efforts by individuals and organizations that are working together within their communities and industries in meeting the challenges that we face today and in the future,” he told American Shipper.

As president of CII, a nonprofit headquartered in Cranford, New Jersey, that promotes international trade and the intermodal container transportation community, and IICL, a Washington-based trade association for the marine container leasing and chassis provider industry, Blust has been on many calls about the coronavirus pandemic over the past several weeks.

“There are a number of group calls that are going on within the industry and public-private approaches that have been quite informative and helpful, and people are really utilizing those to make a difference. They really have been extremely useful and productive,” he said.

Blust provided as an example a call with the Department of Homeland Security’s Cybersecurity & Infrastructure Security Agency during which a first responder said his organization was not on a priority list for face masks.

“This was early on, like March 4. He raised the issue and one of the parties on the phone was from Health and Human Services and says thanks, they’ve got it noted. The next day FEMA had a conference call with the NBEOC, the National Business Emergency Operations Center. The HHS official was speaking and she said, ‘We’ve added first responders to the priority list for the face masks,’” Blust said. “It wasn’t just a nod, ‘Yeah, you need them.’ It was an immediate action.

“It was gratifying to see something like that carried through and that people responded immediately to it to make sure that those individuals stayed safe as well. It’s people working together to try and keep us as safe as possible,” he said. 

Blust has seen this banding together before, namely after Hurricane Katrina in 2005, while he was chairman of the FMC.

“Some of the things I saw were really heartwarming,” he said, giving Mississippi River pilots as an example. “I used to listen in on their calls. They would have daily phone calls to walk through getting ships in and out of the ports after they had lost all the navigation buoys. They would work to get ships that were in trouble moving. There was a cruise ship stuck in New Orleans that needed fresh water. One person identified a possible source of fresh water in a barge and they were able to get it moved down, get it on the ship and get the ship moving, rather than having all the people stranded there.”

Blust has been heartened to see people come together now to fight the spread of COVID-19. “Priorities have changed,” he said.

“You’re seeing today people who are willing to dedicate themselves to helping other people. That seems to be a common thread all of the way through any of these issues that arise — people working together to find ways to minimize the impact for the greater good,” he said. 

There are containers on the horizon.

“Things are starting to pick up again in Asia. The containers are moving again out of the container depots so there’s a demand over there. Manufacturing of containers has resumed. I don’t know if it’s back to normal, but it has resumed. It is starting to come back on that side and ships are loading,” Blust said.

“People are starting to look a little farther ahead now,” he said. “Of course the big question is, as the cargo starts to move again, will the virus have moved on to make room for the relief to come in after?. We don’t know what the virus is thinking, so it’s really hard to tell. That level of uncertainty is something everybody’s trying to get a little more clarity on so they can see a path to more normalcy.”

It is a certainty that as manufacturing ramps up in China, exports will pick up again.

“Now you’ve got the issues of when will the Western countries — U.S. and Europe — be ready to receive the cargo,” Blust said. “The ports at one point were extremely full with the equipment from prior voyages being returned to the ports after they were used to move the cargo to their destinations. Apparently some of the ocean carriers have come in and swept empties off the marine terminals and opened up some room so that the loaded ships coming in from Asia and other places will have room to actually work.”

Reducing the effects of supply chain disruption again depends on people dedicated to the cause, according to Blust.

“The chassis folks are working with the motor carriers and the ocean carriers to try and minimize the impact of this disruption, and the leasing companies are doing the same thing. It takes a lot of working with partners for all of us to get through this. I think that’s one of the strong suits of the maritime industry. Over the years, over the decades, the maritime industry has faced a lot of challenges and a variety of challenges,” he said.

With global supply chains rattled by the unforeseen coronavirus pandemic, “force majeure” may become the word du jour among global freight forwarders in the coming weeks as more of these firms seek flexibility with their existing service contracts.

CEVA Logistics (OTCMKTS: CVLGF) and DHL Global Forwarding (OTCMKTS: DPSGY) have both announced force majeure actions to their carriers and logistics services customers.

By declaring force majeure, CEVA said it “reserves the right to modify all or part of its services, to change its working procedures and any previously agreed rates and prices, to levy surcharges, or otherwise to take any measures necessary to adjust its business operations and its obligations to its customers, suppliers and other stakeholders, in response to the prevailing circumstances.”

CEVA further stated that action applies to all its services, including air and ocean freight, trucking and rail transport, customs brokerage, and contract logistics.

“With almost all elements of the air and ocean supply chain on certain trade lanes currently being impossible to predict or control, DHL Global Forwarding decided to declare ‘Force Majeure’ and to reserve the right to modify its services to the prevailing circumstances consequent to the virus,” the company said in an emailed statement. “We will continuously review this position as the situation is very fluid for the industry at the moment.”

The freight transportation industry has invoked temporary force majeure over the years, often during regional incidents of natural disaster or “acts of God.” They are typically added to avoid liability for natural and unavoidable catastrophes. However, rarely have forwarders taken these measures for their services on a global scale.

“COVID-19 likely will cause many contracting parties to consider declaring that a force majeure event has occurred when performance has become impossible or significantly more difficult,” Mark Klapow, a partner with law firm Crowell & Moring in Washington, told American Shipper.

“The specific facts, exact wording on the force majeure clause, and the governing law and applicable statutes will matter a great deal in determining whether nonperformance is legally excused in part or in whole, and the resultant obligations on both the parties,” he said.

Klapow explained that any business facing a force majeure notice should understand the risks and the company’s obligations.

“The starting point is going to be the contract language itself, including the force majeure clause and the remedies and termination provisions,” he said. “That legal regime is overlaid with statutory and common law doctrines like impossibility, impracticability, frustration of purpose, etc., that can vary somewhat by jurisdiction.”

Other global forwarders contacted by American Shipper have not yet invoked force majeure but say the action is not off the table.

Lance Malesh, chief commercial officer of BDP International, said his company is closely monitoring the situation with its air and ocean carriers.

“The reason that we have not invoked force majeure at this time is because of the fluidity of the situation,” he said. “We are committed to servicing our customers in as effective and efficient manner as possible during this unprecedented event.”

DSV Panalpina (OTCMKTS: DSDVY) also has not yet invoked force majeure for its logistics services.

“At DSV Panalpina we focus on finding the best possible solution for our customers through mutual bilateral discussions,” the company’s chief spokesman, Christian Krogslund, said in an email statement.

“It is our experience so far that all parties acknowledge that it is an extraordinary situation and that the usual agreements in many cases no longer are in force,” he added.

“We are adapting our response on a daily basis,” Kuehne + Nagel (OTCMKTS: KHNGY) said in a statement on Friday. “Our focus is on protecting the health and safety of our employees and ensuring our customers’ operations continue as smoothly as possible during this difficult period.”

The duration of the force majeure generally lasts as long as the period of the disruption. “Once that disruption has ceased, the contracted provisions may be restored for the remaining duration of the contract, unless the contract provides otherwise,” Klapow said.

Bernard Simon will step down as chief executive officer of Dachser on Jan. 1 and will join the logistics provider’s supervisory board as chairman. Burkhard Eling, who joined the Dachser executive board as chief financial officer in 2013, will become the new CEO of the family-owned German company.

Michael Schilling, the chief operating officer of Road Logistics, also will join the supervisory board in 2021.

“At the end of 2020, Michael Schilling and I will pass on our responsibility on the executive board to the next generation of management,” Simon said. “This joint move, which has been in the planning for a long time, will create new impetus for the company’s future.”

He continued, “The coronavirus crisis is certainly a great challenge for the entire management team, but it does not call our long-term strategy into question. What’s important now is to pass the company on to a new generation, starting at the top. We are convinced that we can steer Dachser well through the coming months. By keeping our own network stable and the supply chains running, we will continue to serve our customers with reliability and quality.”

Also on Jan. 1, Alexander Tonn will join Dachser’s executive board as COO of Road Logistics. Tonn, who has been with the company for more than 20 years, has been responsible for the international development of contract logistics as well as the German logistics business.

Stefan Hohm will assume responsibility as chief development officer for the new IT and development executive unit. Hohm, who has been with the company for 27 years, most recently has been responsible for research and development work as well as the solutions business.

The management team will be rounded out by Edoardo Podestà, who has been a member of the Dachser executive board since October 2019 as COO of Air & Sea Logistics.

Port of Long Beach

The Long Beach Board of Harbor Commissioners has hired Kenneth W. Duncan as managing director of commercial operations at California’s Port of Long Beach.

Duncan will lead a bureau consisting of the port’s business development, tenant services and operations, and security services divisions. He was selected after a competitive process to replace Noel Hacegaba, who was promoted to deputy executive director of administration and operations.

Most recently Duncan was vice president of lifestyle and apparel sales for North America for A.P. Moller-Maersk. He previously spent more than 13 years in various positions with Maersk Line, the world’s largest ocean carrier.

“Ken has vast experience and insight into the complex global supply chain,” said Port of Long Beach Executive Director Mario Cordero. “He’s worked everywhere from the executive suite to global and regional sales right down to the terminals where equipment is dispatched to move goods to stores. His skills will be valuable to us as we continue to improve our infrastructure and strengthen what is already the best customer service in the Americas.”

Duncan will begin his new job at the Port of Long Beach on April 27.

Blue Ridge

Supply chain planning and price optimization tool provider Blue Ridge has named Maarten Baltussen general manager of Europe.

Baltussen will lead Blue Ridge’s efforts to help retailers, wholesalers, distributors and manufacturers across Europe solve challenges around shifting customer preferences and volatility with suppliers.

“Maarten will expand our strong presence in the Nordic region into the rest of the European continent, where we continue to see increasing demand for supply chain planning solutions,” said Blue Ridge Chief Executive Officer Jim Byrnes. “Maarten will be responsible for driving all activities in the region, including initiatives with our partner Inventory Investments AS, using both direct and indirect channels.”

Before joining Atlanta-headquartered Blue Ridge, Baltussen was the chief revenue officer at supply chain optimization provider ICRON. His 24 years of professional experience includes supply chain planning at Blue Yonder, SAP and Infor. He also founded Intellogic, and the company grew under his leadership, focusing on business intelligence dashboards for the logistics vertical.

A.P. Møller-Mærsk has confirmed that crew members have been evacuated from the Gjertrud Maersk and hospitalized in Ningbo, China, with suspected cases of the coronavirus.

Christian Kjærgaard-Winther, Maersk senior press officer in Denmark, said in an email to American Shipper that “a number of our seafarers” on the container ship were suspected of having COVID-19 on Wednesday and were evacuated from the ship on Thursday and taken ashore for medical care.

If confirmed, these would be the first reported cases of the coronavirus on board a container ship. Maersk is the world’s largest ocean shipping company. 

“We are still awaiting the official report from authorities as well as the hospital,” Kjærgaard-Winther said. “As per our established protocols, the seafarers were isolated on the vessel when symptoms appeared and we are providing medical treatment based on input from our medical advisers.”

He said Maersk was working with government and port authorities in Ningbo.

The Danish-flagged Gjertrud has a capacity of 9,074 twenty-foot equivalent units.

“The vessel was awaiting phasing into our network and currently idle at the quayside in Ningbo, China,” Kjærgaard-Winther said. “Extra precaution measures will be taken for crew replacement and sanitations will be implemented.”

The Gjertrud reportedly arrived at Ningbo from Hong Kong. 

In a coronavirus update posted Thursday, Vincent Clerc, CEO of Maersk Ocean and Logistics, said measures taken by governments and companies to mitigate the crisis will result in an economic slowdown and that conversations with customers “confirm our expectation of lower volume demand in the coming weeks.”

Clerc said, “We are actively preparing our network to match a reduced demand level. We believe that it is our responsibility to rightsize in order to protect our cost position, both to be able to weather these storms but importantly also to ensure that you have a partner who cares for the integrity of your supply chain as we look to lifting the world out of this crisis.”

The Port of Virginia said it is rapidly processing import containers of COVID-19 test kits and protective gear for frontline medical personnel through a newly instituted critical cargo initiative.

“We moved our first import load of test kits on Monday and our operations team worked closely with the ocean carrier and the cargo owner to make sure we moved that container first,” said John F. Reinhart, CEO and executive director of the Virginia Port Authority, in a statement. “Three more containers are set to arrive later this week and we are working with the ocean carriers to identify additional priority cargo.

“This cargo is vital and getting it to the people that need it the most as quickly and efficiently as possible is a priority for the Port of Virginia team,” Reinhart said.

The vessel COSCO Philippines arrived at Virginia International Gateway early Monday morning. Port officials said the container with the test kits was offloaded just before 9 a.m., and a truck carrying the container left the terminal barely two hours later bound for a pharmaceutical company in Indianapolis.

Port of Virginia spokesman Joe Harris said in an email to American Shipper that the test kits in the container were made in Europe and the box was loaded onto the ship at the Port of Rotterdam.

Monday’s move was the port’s first as part of its COVID-19 critical cargo initiative, which identifies import cargo needed in the effort to fight the coronavirus and allocates equipment and personnel needed to get the container moving to its destination as fast as possible. The cargo includes personal protective equipment (PPE) for the medical industry, coronavirus test kits, hand sanitizer and raw materials going into PPE production.

The port said it is committed to:

• Prioritizing COVID-19 critical import shipments at Norfolk International Terminals and Virginia International Gateway.

• Prepositioning these containers in the stacks to enable urgent pickup.
• Working with designated motor carriers to secure and confirm truck reservations within the port’s TRS system.

• Collaborating with the International Longshoremen’s Association (ILA) to coordinate plans for any containers requiring urgent discharge from the vessel.
• Considering on a case-by-case basis any delivery scenarios occurring outside normal operating hours.

Reinhart said the success of the critical cargo initiative will require significant collaboration among ocean carriers, the ILA and the port’s operations team to identify the cargo and its location on ships well before arrival

“Everyone understands the importance of this cargo to those who really need it,” Reinhart said. “More is on the way and as it arrives, it will receive priority treatment and expedited delivery.”

Harris told American Shipper that three containers carrying these critical goods are expected to arrive Friday. Those boxes also are destined for the pharmaceutical company in Indianapolis.

The International Maritime Organization (IMO) has issued a reminder that seafarers are essential to the movement of goods by water, even as ships’ crews around the world are being prohibited from going ashore in the global effort to fight the spread of the coronavirus.

In a marine safety information bulletin issued March 16, the U.S. Coast Guard said crewmembers must stay on board if they or the vessels they are on have been in the following countries within the previous 14 days: China, Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Iran, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, Switzerland and the United Kingdom.

Commercial vessels that have been to those countries or have crewmembers who have been to those countries within the previous 14 days and are not sick are permitted to enter the United States and conduct normal operations, “provided that crewmembers remain aboard the vessel except to conduct specific activities directly related to vessel cargo or provisioning operations.”

U.S. regulations also require the master of a ship destined for a U.S. port to report to the Centers for Disease Control and Prevention any sick crewmembers 15 days prior to arrival.

John Wolfe, chief executive officer of the Northwest Seaport Alliance (NWSA), was asked during a conference call Monday about regulations pertaining to the crews of foreign vessels docked at the ports of Seattle and Tacoma.

“Nothing’s changed,” Wolfe said. “We’re following the guidelines of the federal government and the U.S. Coast Guard, and those protocols have not changed.” 

What has changed is the issuance last week of the Department of Homeland Security’s Cybersecurity & Infrastructure Security Agency (CISA) list of Essential Critical Infrastructure Workers during the coronavirus crisis. On that list are “maritime transportation workers — port workers, mariners and equipment operators.”

IMO Secretary-General Kitack Lim stressed that the flow of goods should not be curtailed during the global pandemic.

“The ability for shipping services and seafarers to deliver vital goods, including medical supplies and foodstuffs, will be central to responding to, and eventually overcoming, this pandemic. It is, therefore, crucially important that the flow of commerce by sea should not be unnecessarily disrupted,” he said.

“Defeating the coronavirus must be the first priority, but global trade, in a safe, secure and environmentally friendly manner, must be able to continue too,” he continued. “We must also remember the hundreds of thousands of seafarers on ships. They are, unwittingly, on the front line of this global calamity. Their professionalism ensures that the goods we all need are delivered — safely and with minimal impact on our precious environment.”

The secretary-general urged a “practical and pragmatic approach … to issues like crew changeovers, resupply, repairs, survey and certification and licensing of seafarers.”

The Republic of the Marshall Islands (RMI), which has one of the world’s largest maritime registries with more than 4,700 vessels and nearly 100,000 seafarers serving on its flagged vessels, on Tuesday endorsed the IMO letter and encouraged “countries to recognize and protect seafarers as key transport workers amid restrictions around the COVID-19 pandemic.”

RMI said little attention has been paid to the seafarers who keep global shipping moving.

“Many countries have imposed travel bans and restrictions on crew changes in an effort to contain the spread of COVID-19. The unforeseen consequence of these travel bans is the prevention of the change of ships’ crews either to join a ship or for crews to be relieved and return home to their families,” it said.

RMI contended, “The ability to plan and carry out a crew change is essential to maintain the continuity of shipping and the supply of essentials.”

International Registries Inc. administers the Republic of the Marshall Islands flag and provides registry-related services for the shipping and financial services industries. Its global network of offices includes U.S. locations in Long Beach, California; Washington; Fort Lauderdale, Florida; Baltimore/Annapolis; New York City; and Houston.

RMI urged governments around the world “to recognize the contribution of seafarers towards keeping vital supply chains open and to devise plans to allow them to board a designated ship and to be repatriated at the end of their contracts.”

The European Commission on March 24 published a final rule extending its existing block exemption regulation that allows for vessel-sharing among ocean container carriers for another four years.

The commission said its recent evaluation of the block exemption concluded that vessel-sharing among carriers is “still fit for purpose,” if these individual arrangements do not exceed 30% of market share.

“More specifically, the commission has found that the Consortia Block Exemption Regulation results in efficiencies for carriers that can better use vessels’ capacity and offer more connections,” the European Commission said in a statement.

“The exemption only applies in consortia with a market share not exceeding 30% and whose members are free to price independently,” the commission added. “In that context, those efficiencies result in lower prices and better quality for consumers.”

The commission said its evaluation of both carrier and shipper costs per TEU has shown a 30% decrease overall, while “quality of service has remained stable.”

The Washington, D.C.-based World Shipping Council, whose carrier members account for more than 90% of the international container trade, applauded the European Commission’s decision.

“Vessel-sharing is the backbone of the global liner shipping network,” said John Butler, the World Shipping Council’s president and CEO, in a statement. “We should not underestimate the value of this tool for smaller carriers and lower volume trade lanes where demand might not otherwise support as many competitors.”

The Consortia Block Exemption Regulation was adopted by the European Union in 2009 and extended unchanged by the commission in 2014 for five years, expiring April 25, 2020. The latest extension of the regulation is valid through April 25, 2024.

During its latest evaluation of the block exemption regulation for vessel-sharing arrangements, which started in September 2018, the commission said it “included a wide consultation of stakeholders in the maritime liner shipping supply chain” and found no detrimental effects in the market for its continuation.

However, many container shipper groups, such as the European Shippers’ Council, Global Shippers Alliance and Global Shippers Forum, disagreed with the commission’s conclusion that the EU block exemption for vessel-sharing arrangements benefits shippers and want it terminated.