Month: April 2020

DSV Panalpina (CPH: DSV) estimated the coronavirus pandemic negatively impacted first-quarter earnings before interest and taxes (EBIT) by about 250 million Danish kroner ($36.6 million) and said it was taking steps to reduce annual costs by DKK 1.4 billion ($205 million).

“When this year started, we were really looking forward to demonstrating the strength of the DSV Panalpina combination,” said Group CEO Jens Bjørn Andersen in the interim financial report for Q1 released Thursday. “The COVID-19 crisis has obviously changed the agenda for everybody and hit our markets in a severe way, but we have been able to continue the integration as planned.

“All things considered, we have delivered satisfactory results in Q1 2020 and our asset-light business model has shown its strength,” Andersen said.

DSV completed its $5 billion acquisition of Panalpina in August. The combination of the two companies created one of the world’s largest transportation and logistics behemoths.

Combined, DSV Panalpina Q1 2020 revenue was DKK 27.3 billion ($4 billion), up from DKK 19.9 billion ($2.9 billion) in the same period last year, an increase of 36.6%, primarily because of the acquisition. Gross profit increased from DKK 5.1 billion ($747 million) to DKK 6.6 billion ($967 million), a 30.6% increase. EBIT was DKK 1.56 billion ($228 million), up from DKK 1.45 billion ($212 million) year-over-year, a 7.6% increase.

The company said the Panalpina acquisition drove strong growth in the Air & Sea business. Q1 EBIT in that unit was up 12.9% year-over-year, from DKK 998 million ($146 million) to DKK 1.1 billion ($161 million).

COVID-19 significantly impacted the Road unit in March, management said. EBIT was down 12.8% year-over-year, from DKK 298 million ($43.6 million) in 2019 to DKK 259 million ($37.9 million) this year.

Management also attributed 12.6% revenue growth in the Solutions business to the Panalpina acquisition. 

“Similar to the Road division, the COVID-19 impact came in March, with a sharp decline in order lines. Automotive and fashion were the worst-hit industries,” the company said.

A Solutions EBIT decrease of 17.2% — from DKK 193 million ($28.2 million) to DKK 159 million ($23.3 million) — was caused by one-off costs related to specific customer contracts and distribution center startup costs, DSV Panalpina said.

Andersen said effects from the coronavirus pandemic are being felt in the second quarter as well.

“The crisis will have a significant impact on activity levels in the coming months and we are taking the necessary steps to adapt while supporting the supply chains of our customers and ensuring the safety and health of our employees,” he said. 

Reportedly 3,000 employees worldwide are being let go as part of the cost-saving initiatives. Denmark-headquartered DSV Panalpina has about 60,000 employees in more than 80 countries. 

Some cost savings previously were achieved with the relocation of Panalpina’s headquarters in Switzerland to Denmark, and DSV has a good track record of successfully integrating major acquisitions. It has acquired DFDS Dan Transport Group, Frans Maas, ABX and UTi Worldwide since 2000. 

According to the web presentation Thursday, Panalpina operations have been integrated with DSV’s in more than 30 countries, representing about 70% of Panalpina volume. The company said in October it was suspending acquisitions for 12 to 18 months to focus on the integration of Panalpina.

In mid-March, DSV Panalpina withdrew its financial outlook for 2020 and suspended its share buyback program.

“As a result of the global outbreak of COVID-19, supply chains and the global transport and logistics markets are currently seeing a substantial negative impact and we are unable to accurately assess the magnitude of this impact,” the company said in Thursday’s Q1 results release.

A global association representing the freight forwarding industry warned in a Wednesday position paper that the coronavirus pandemic’s severe impact on supply chains means the imbalance of container equipment to keep cargo moving is at a “tipping point.”

The International Federation of Freight Forwarders Associations (known by its French acronym FIATA) called container imbalances a “perennial issue in the supply chain” in most years, blaming the phenomenon on ocean carriers driving toward fewer, larger ships, which discombobulates container management at the marine terminals.

The ocean carriers’ use of blank sailings to accommodate Chinese New Year factory closures has also thrown global container traffic into temporary periods of imbalances around the world during normal years.

“The Chinese New Year 2020 period took place in the context of a general increase in blank sailings and an oversupply of capacity,” FIATA said. “The lack of container export shipments during the extended Chinese New Year period in China amid the COVID-19 outbreak further exacerbated this problem.”

FIATA said a key impact of the COVID-19-induced container imbalance has been “severe implications on destination backhaul (export) space and equipment, due to the significant shortage of sailings and containers shipped.”

The Switzerland-based association expects the problem to worsen in the months ahead, despite China’s factories returning to business. Many importers and factories in other parts of the world, such as North America and Europe, are still uncertain when their businesses will recover.

FIATA warned the container imbalance will continue to be felt immediately after the world’s markets begin to “reinvigorate the supply chain” once the pandemic subsides.

“As backhaul (export) demand increases, for example, the current high levels of blank sailings may mean there is not sufficient vessel space or container equipment for backhaul (export) containers, and as such imbalances in containers and available vessels will continue to be present,” FIATA said.

The World Customs Organization’s Private Sector Consultative Group on April 13 told customs authorities that current restrictions placed on containers of nonessential goods have already reduced access to containers for exporters with essential goods.

“If this continues, sooner or later, it will result in a halt in all container trade due to non-availability of empty containers,” industry representatives of the consultative group warned the Brussels-based global customs body. “This is a very real and major concern.”

In the interim, FIATA Director General Stephane Graber said forwarders should use their extensive logistics “know-how and experience” to help shippers and carriers facilitate container traffic through COVID-19-induced supply chain bottlenecks.

“FIATA is enhancing its service to all its members to overcome this unprecedented crisis together and support the reconstruction of trade, which will closely see the integration of the industry worldwide,” he said in a statement.

The association’s position paper, “Container imbalances and COVID-19: Freight forwarders’ role in finding solutions to the problems of today,” said the industry has the ability now to help shippers avoid paying costly demurrage and detention charges to ocean carriers and marine terminal operators.

Demurrage pertains to the time an import container sits in a container terminal, with carriers responsible for collecting penalties on behalf of the marine terminals. Detention relates to shippers holding containers for too long outside the marine terminals.

“Unloading a container for conventional warehousing may require extra handling but even then, the overall charges will be lower, and the commercial benefit will increase with the number of days storage is required,” FIATA said. “The message is clear: leaving goods in the container is the most expensive commercial option for storing goods.”

FIATA also said forwarders should use their logistics experience and information technology to keep refrigerated containers quickly moving through marine terminals, since most of these facilities have limited reefer plugs.

In addition, the association warned the COVID-19 pandemic will place some importers in the financial position of abandoning their cargoes at the piers. “In such instances, the international freight forwarder will by necessity manage the procedure and find practical solutions,” FIATA said.

Agriculture is often defined in terms of domestic production, but the seeds for most of these products – unbeknownst to many consumers – spend considerable time during their lifecycle shuttling around the world.

Today’s seed producer may originate a new plant seed in a U.S. greenhouse, ship it overseas for further research, testing and multiplication, and then back to the U.S. multiple times over a period of years before it is ready to be used for commercial planting.

“All types of seeds move globally at some stage in their development,” Andrew LaVigne, president and CEO of the Alexandria, Virginia-based American Seed Trade Association (ASTA), explained in a recent telephone interview with American Shipper. “Seed producers are constantly improving the germination and quality of their seed through this method.”

Founded in 1883, ASTA today represents more than 700 companies involved in seed production, plant breeding and related industries across North America.

Seed producers are highly integrated shippers, meaning that they are not only moving test seeds globally, but also transporting large volumes of seeds across continents to meet different planting seasons.

For example, between 10% and 25% of corn and soybean seed planted each spring in the U.S. Midwest originates in South America and is shipped northbound at the conclusion of the region’s autumn crop harvests.

“It’s risk management,” LaVigne said. “Depending on the crop year, corn and soybean seed companies may not be able to produce all the seed necessary due to the weather to fully plant the following year and must rely on supplemental imported seed.”

American seed producers have weathered the effects of droughts and flooding before, but the coronavirus pandemic’s global impact on freight transportation services has challenged these companies and their customers like nothing before.

“As we head into the spring planting season in the midst of a global pandemic, America’s seed companies are working hard to make sure farmers, ranchers and homeowners have access to the quality seed they need to ensure a successful year,” LaVigne said in a March 25 statement.

“U.S. seed companies have put into place the necessary practices to comply with COVID-19 recommendations from the U.S. Centers for Disease Control and Prevention and other agencies as they continue to deliver seed during this challenging time,” he added.

LaVigne said the biggest challenge for American seed producers this spring has been the upheaval in available air cargo capacity due to the coronavirus. Many seed shipments move around the world in the bellies of passenger planes.

While ocean container transport is also used, seed delivery often becomes a “just-in-time” event. For example, when the seed arrives in U.S. ports for springtime planting, it must pass regulatory inspection and then be routed through processing centers over a period of two to three weeks before its delivery to a farmer’s fields.

Seed producers must also contend with the weather. “Mother Nature often gives us very small windows to plant,” LaVigne said.

With international passenger services largely on hold, some airlines have turned their airplanes into de facto freighters to move cargoes such as seed.

American Airlines (NASDAQ: AAL) airlifted 290 tons of soybean seed in the bellies of its Boeing 777-300 passenger planes operating as freighters between Buenos Aires, Argentina, and Miami during the past several weeks, including individual record flights of 115,349 pounds of this cargo on April 16 and 118,000 pounds on April 26.

The airline’s last scheduled flight of soybean seed from Argentina for the season is expected to arrive in Miami on May 3, Lorena Sandoval, American’s director of cargo sales for Mexico, the Caribbean and Latin America, told American Shipper.

After the soybean seed shipments end, Sandoval expects American’s airplanes from Buenos Aires to the U.S. will be filled with Chilean salmon and Argentine beef shipments. She said the flights from the U.S. to the South American country are expected to carry shipments of computers, laptops and mobile telephones, as well as medical equipment and pharmaceuticals.

The U.S. Federal Maritime Commission (FMC) said it has finalized new guidance on how it will assess whether ocean carriers’ and marine terminal operators’ demurrage and detention practices are reasonable.

The final rule, “Docket No. 19-05, Interpretive Rule on Demurrage and Detention under the Shipping Act,” will take effect after publication in the Federal Register, which is expected soon. Meanwhile, the text of the final rule is available on the FMC’s website.

“Under the new interpretive rule, the commission will consider the extent to which detention and demurrage charges and policies serve their primary purpose of incentivizing the movement of cargo and promoting freight fluidity,” the FMC said in a statement on Tuesday.

The rule also provides guidance on how the commission may apply that principle in the context of cargo availability (and notice of that availability) and empty container return.

Other reasonableness factors the FMC will consider include the clarity of ocean carrier and marine terminal operator policies and terminology for assessing demurrage and detention fees.

The FMC said the final rule also includes two provisions that were not part of the initial proposed rule published in September. The provisions include a clarification that the FMC’s guidance covers government cargo inspections and does not prevent the agency from considering additional factors, arguments and evidence outside those specifically listed.

In March, the FMC promised numerous trade groups, whose shipper and drayage provider members were anxious about coronavirus-induced disruptions at the nation’s container terminals, that the interpretative rule would be finalized shortly.

Demurrage pertains to the time an import container sits in a container terminal, with carriers responsible for collecting penalties on behalf of the marine terminals. Detention relates to shippers holding containers for too long outside the marine terminals.

For years, shippers have complained to the FMC about the unfair imposition of these fees whenever container equipment cannot be returned or picked up during the free period for reasons out of their control. The daily fees reportedly range from $150 to $350 per container.

The FMC initiated its container availability rulemaking process last fall, after the commission unanimously approved Commissioner Rebecca Dye’s container availability recommendations on Sept. 6. The proposed rule received over 100 comments, which were mostly positive.

For many American agricultural product and machinery exporters, the standard 20-foot ocean container is the right size for their shipments. However, depending on where the cargo is located in the U.S., this equipment is becoming increasingly difficult to come by.

“There is a simple reason our members who ship both refrigerated and dry cargoes from all parts of the U.S. prefer 20-footers,” said Peter Friedmann, executive director of the Washington, D.C.-based Agriculture Transportation Coalition. “They can carry more cargo than the 40-footers.”

He explained that since agriculture and forest products, as well as machinery, are heavy, it is important for the exporters of these goods to minimize the weight of the actual container to increase content and remain in line with rail and truck gross weight limits.

“Usually ag and forest products do not need the extra space afforded by a 40-foot or 45-foot container,” Friedmann said. “The 40-foot length adds the weight of an additional 20 feet of steel, plus more weight from required dunnage to hold the cargo in place. Thus, often the 40-footer actually can carry less cargo than a 20-footer in order to comply with weight restrictions imposed by railroads and the federal and state highway authorities.”

Many Midwest shippers find 20-foot boxes to be sparse and more expensive to obtain than 40-foot containers.

“The biggest problem with 20-footers is location,” Robert Sappio, CEO of Woodcliff Lake, New Jersey-based SeaCube Container Leasing and former liner carrier executive, told American Shipper in a telephone interview. “The boxes don’t naturally go to these places.”

Ocean carriers prefer to keep their containers closer to the gateway seaports as much as possible by transloading their content to truck trailers for inland distribution. The majority of containers that are railed to the interior for handling are 40-foot-high cubes, Sappio said.

“Intermodal service from the port area into the U.S. heartland is available, but volume is determined by the importers and where they want the cargo to end up,” said Andrew Hwang, manager of business development and international marketing at the Port of Oakland. “The vast majority of import 20-footers into Oakland tend to stay in California.”

California’s agricultural product exporters have no difficulty obtaining access to 20-foot containers, Hwang said.

“For the most part we are fortunate in that most of our shipments are from coastal ports directly,” said Hayden Swofford, a longtime advisory board member of the Agriculture Transportation Coalition and executive director of the Pacific Northwest Asia Shippers Association in Washington state. “The result is we have not had a big issue with equipment.”

Those empty 20-foot boxes that are shipped to the Midwest by rail must be sourced by shippers from large rail hubs, such as Chicago and Kansas City, Missouri, and then often transported hundreds of miles by truck to where they are loaded. The shipper is then responsible for trucking the loaded container back to a rail hub for the return trip to the outbound seaport.

“Shipping companies want to provide these containers to the U.S. heartland, but they obviously don’t want to move them for free,” Sappio said.

Steven Blust, executive director of the Washington-based Institute of International Container Lessors, said the size of the world’s 20-foot container fleet has remained relatively unchanged in recent years.

In 2019, the world container fleet consisted of 44 million TEUs. While that number includes all sizes of containers, Blust noted an estimated third of those are 20-foot boxes. “There hasn’t been a drop-off of 20-footers globally,” he said.

However, in recent weeks, ocean container carriers have announced several hundred canceled sailings over the next several months due to the diminished international freight traffic caused by the pandemic, further straining 20-foot container availability in the heartland, as well as driving up freight rates for this equipment.

“If you’re relying on these containers for your outbound shipping, you can definitely see the storm clouds on the horizon,” Mike Steenhoek, executive director of the Ankeny, Iowa-based Soy Transportation Coalition, told American Shipper. “With the ongoing cancellation of sailings, it’s going to become next to impossible to get these containers.”

The standard 20-foot container has been a staple of the ocean shipping industry since the inception of containerization in the late 1950s when it was introduced by Malcom McLean’s ocean carrier Sea-Land Service. Today, however, the 40-foot high cube container is the one most predominantly used by shippers in the East-West trades.

The Port of Antwerp will test Rombit digital bracelets to ensure social distancing and allow contact tracing to prevent the spread of COVID-19.

The Belgian port is the first to test the Romware Covid Radius. 

The device is worn like a watch. It vibrates when wearers come within about 10 feet of each other. The vibration gets stronger and a warning light flashes the closer employees get. If a wearer becomes infected with the coronavirus, the device can identify which colleagues that person came in contact with so they can be alerted to get tested.

Port of Antwerp CEO Jacques Vandermeiren said in a statement that it will begin trial use of the bracelets soon.

“Innovation and digital transformation are crucial in times of crisis such as these. It is essential to keep the port operational and to ensure that our employees can work safely,” Vandermeiren said.

Rombit says in a how-it-works tutorial that an infected employee is asked to provide consent for his or her logged contact data to be retrieved for the past 14 days. Covid Radius only logs events of insufficient physical distancing with another wearable. The company-designated health and safety adviser receives a list of the wearable IDs that have had an event — come within about 5 feet — with the infected person. A video is available here.

Rombit says it hopes to have 25,000 devices available in the coming weeks and that it has been contacted by about 500 companies in nearly 100 countries.

Antwerp-based Rombit was founded in 2012 with the mission of making ports and industrial companies more efficient and safe. The Romware Covid Radius wristband features added functions to the Romware ONE safety bracelet. 

Rombit CEO John Baekelmans said the company is “making huge efforts to get the modified bracelet onto the mass market in large quantities so that we can contribute toward getting the economy safely restarted.”

Europe’s second-largest seaport, the Port of Antwerp accounts, directly and indirectly, for about 143,000 jobs.

Port officials said the impact of the coronavirus was fairly limited in the first quarter of the year but is expected to be felt more in the second quarter with canceled sailings, shutdowns of vehicle manufacturing plants and changes in consumer behavior. 

The port in fact handled 4% more freight in the first quarter of 2020 than in the same period in 2019. Container volume in particular made up for a decline in conventional breakbulk and vehicles. 

“With growth of 9.5% in [twenty-foot equivalent units] and 9.4% in tonnage, the container trade remains by far the largest segment in the Port of Antwerp. There was a noticeable increase in the amount of pharmaceuticals and e-commerce goods, and there was higher demand for long-life foodstuffs. With the exception of a slight decline in goods from the Far East, down 2.2%, all trading regions experienced strong growth,” the port said in its Q1 earnings release.

Roll-on/roll-off tonnage was down 20.3% year-over-year in the first quarter and conventional breakbulk was down 27.8%.

With roughly one million people infected with COVID-19 in the U.S., the importance of social distancing cannot be overstated. However, this is easier said than done within the freight industry. Being frontline responders to the crisis, the trucking community cannot afford to stay at home in quarantine. This puts them at severe risk of contracting the virus, as social isolation for a majority of logistics workers remains inadequate. 

This has led to complications; numerous truckers have been infected with the virus, prompting the Federal Motor Carrier Safety Administration to lift regulations that stipulated a maximum of 11 hours of working during a 14-hour workday. This has been done primarily to offset the issue of driver shortage, shedding light on the perils of working during a full-blown pandemic.

For social distancing to work within the freight industry, it would require fewer in-person interactions. For supply chains to not transmit the virus would mean fewer shipment exchanges along the supply chain, because reducing contact nodes would directly help mitigate the risk of infection. 

There are a myriad of solutions floating around that can potentially reduce human interaction at logistics workplaces. Autonomous driving technology is one of them, reducing the number of human drivers needed to move a shipment, while concurrently reducing interaction possibilities.

However, unlike the usual auto players that work on automotive-related problem sets, the autonomous driving segment has seen the advent of several non-traditional players like Google, IBM, Apple, Uber and even Amazon, which have all invested heavily in making autonomous vehicles a reality. 

At the current stage of technology development, self-driving long-haul trucks can be used to automate the middle mile. Highway transit is one of the easiest legs to automate, as the traffic is less chaotic and also more homogeneous. 

This is already a reality. TuSimple, an autonomous driving technology company, has partnered with UPS to have autonomous vehicles haul freight for the freight forwarder. TuSimple, which has been transporting parcels for UPS over the last year between Phoenix and Tucson, Arizona, expanded the program this March to include a new route that connects Phoenix with El Paso, Texas. 

Another possibility for autonomous trucks in the long-haul market is the concept of truck platooning. Platooning happens when a human-driven truck is followed by a few autonomous trucks, with the autonomous trucks imitating the driving maneuvers of the lead truck. Apart from reducing the number of truckers required to move freight, platooning also increases fuel efficiency. Trucks following one another spaced out in equal intervals help them dramatically reduce wind resistance, thereby decreasing fuel consumption.

The last-mile can also be automated by using self-driving delivery vans. Though this would likely involve technology that is more sophisticated than autonomous trucks on highways, it can be put to use in certain regions where there is a shortage of labor or even regions that are under quarantine. 

For example, Chinese autonomous delivery robot manufacturer Neolix partnered with autonomous vehicle platform Apollo to deliver food and medical supplies in Beijing during the COVID-19 outbreak. 

Autonomous vehicles can also be used to ferry people to healthcare facilities like hospitals and pharmacies, without them getting in proximity with other people along the way. Companies like Waymo and Cruise that are working on autonomous driving cars can offer such services in the future, helping the country protect itself from harm. 

Hamburg Süd has hired Lasse Carøe Henningsen as chief financial officer. 

He will succeed Jakob Wegge-Larsen, who has been the CFO since December 2017 and will be returning to Maersk headquarters in Copenhagen, Denmark, at the end of June. Wegge-Larsen has been serving in a dual role since being named CFO of Maersk’s Ocean & Logistics division in February.

Henningsen will join Hamburg Süd on June 1 and will be part of the management board.

Since 2018, he has been the CFO and a member of the executive board of Christiania Shipping A/S, a Copenhagen-based carrier that specializes in transporting chemicals. He previously was the head of accounting at Maersk Tankers. 

Hamburg Süd said that in addition to his extensive experience in the shipping industry, “Henningsen is a proven financial expert who has spent many years of his career working for the internationally renowned consulting and auditing firms EY and PwC as well as Pandora A/S, a publicly traded jewelry and design company.”

Trailer Bridge

Trailer Bridge, an asset-owned logistics company that transports cargo across land, air, rail and sea throughout North America and the Caribbean, has named Alex Vohr as its vice president of government affairs.

Trailer Bridge, headquartered in Jacksonville, Florida, also announced it has opened offices in Portland, Oregon, and Denver and has acquired new containers and chassis to support its business growth.

Vohr, a former colonel in the U.S. Marine Corps, brings 30 years of leadership, strategic planning, operations, organizational development and management experience to Trailer Bridge.

In his new role, Vohr will oversee government affairs, support public policy work and aid Trailer Bridge in federal procurement programs.

Trailer Bridge also has added 300 53-foot containers and 297 chassis, bringing the company’s fleet to over 3,500 containers and more than 3,000 chassis supporting the ocean shipping business among the U.S. mainland, Puerto Rico, Dominican Republic and U.S. Virgin Islands.

The addition of offices in Oregon and Colorado brings the company’s locations to 17 across the United States and Caribbean.

JAXPORT

Frank Camp, JAXPORT’s director of cargo sales, has been selected to serve on the board of directors of the Florida Customs Brokers & Forwarders (FCBF) Association.

“Northeast Florida is a growing player in international trade and we are thrilled to welcome Frank to our team,” said Gabriel Rodriguez, president of the FCBF board. “His knowledge and experience throughout the supply chain will be a valuable resource for our members as we work to elevate this dynamic industry and grow global trade opportunities throughout the state.”

Camp joined JAXPORT in 2014 and is responsible for attracting new containerized cargo business, growing relationships with freight forwarders and non-vessel operating common carriers and building relationships with business development organizations.

CSafe Global

CSafe Global, a Dayton, Ohio-based provider of temperature-controlled container solutions for the transport of pharmaceuticals, said it has expanded its life science sales team in the Asia-Pacific region to support a growing customer base.

“As of this month, we have sales directors in every major area in the region to serve local pharmaceutical and life science companies,” said Scott Garchar, CSafe Global’s senior director of life sciences for Asia. “The region has a robust market and building an exceptional team of people who understand both the industry and the culture in each country is key to providing the service level CSafe is known for.”

The newest additions to the team are Ram Nair and Kuwahara Fuminari. 

Nair brings 17 years of experience in life science lab research, sales and marketing and was most recently the commercial director for Thermo Fisher Scientific’s laboratory chemicals division for the Asia-Pacific region. In his new role as director of life science sales in Southwest Asia, he will support India, Malaysia, Thailand, the Philippines, Mongolia and Sri Lanka.

Fuminari has been in the biotechnology and cold chain space for 20 years. He joins CSafe after four years as the national business development manager for World Courier. Fuminari will support CSafe customers in Japan as the director of life science sales there.

Imagine the Empire State Building laid on its side. The newly christened HMM Algeciras is more than 60 feet longer than the New York City landmark is tall. A walk around the world’s largest container ship would be about half a mile.

A naming ceremony was held Thursday for the HMM Algeciras, which has a capacity of 24,000 twenty-foot equivalent units (TEUs), at a Daewoo Shipbuilding & Marine Engineering (DSME) shipyard in Geoje, Korea. The Algeciras is scheduled to depart from Qingdao, China, on its maiden voyage Monday.

First Lady Kim Jung-sook served as godmother of the container ship and cut the ropes to officially christen  the Algeciras, named for the Spanish port city, during the ceremony, which was attended by such dignitaries as South Korea President Moon Jae-in as well as HMM President and CEO Bae Jae-hoon.

The HMM Algeciras is the first of 12 massive 24,000-TEU vessels scheduled to be delivered through September.

HMM signed a contract for 20 eco-friendly megaships with three shipyards — DSME, Hyundai Heavy Industries (HHI) and Samsung Heavy Industries (SHI) — in September 2018.

Of the 24,000-TEU ships ordered, DSME will build seven and SHI five. HHI will construct eight 16,000-TEU container ships that will be delivered beginning in the second quarter of 2021.

All 20 container ships are being equipped with scrubbers to meet the International Maritime Organization regulation that requires vessels to burn fuel with less than 0.5% sulfur or have exhaust-cleaning systems.

HMM said an optimized hull design and highly efficient engine also are expected to improve energy efficiency and reduce carbon emissions.

The South Korean ocean shipping line announced in November that it was joining the Getting to Zero Coalition and had committed to reducing carbon emissions from its ships by 70% from 2008 levels by 2030 and to reach carbon neutrality by 2050.

“It is very meaningful that HMM takes delivery of the most technologically advanced container ship in this difficult time,” President Moon said, referring during Thursday’s ceremony to the coronavirus pandemic that has affected ocean trade globally.  

HMM officially became part of THE Alliance with Hapag-Lloyd, Yang Ming and Ocean Network Express on April 1. HMM announced last July that it would make the move from the 2M alliance with Maersk and MSC.

“HMM will strive to expand its presence in the global shipping industry based on optimized fleet management and new cooperation with THE Alliance,” said Bae, who was named CEO in March 2019, about a month after former leader C.K. Yoo delivered a “farewell message” to staff.

HMM said in an email to American Shipper at the time that Yoo, who had served as CEO since late 2016, made “his own decision” to resign. But The Wall Street Journal reported he “offered to resign after months of being under pressure from its top creditor to quit over failures in its turnaround.”

In October, HMM, saddled with nearly $3.5 billion of debt, announced plans to issue a $562 million convertible bond. An equities analyst at that time said the South Korean shipping line had a “horrible balance sheet.”

The HMM Algeciras will be deployed on one of The Alliance’s Asia-North Europe trade lanes, with a port rotation that begins in Qingdao. The megaship will visit the Asian ports of Busan, Ningbo, Shanghai and Yantian before transiting the Suez Canal to call at European ports in Rotterdam, the Netherlands; Hamburg, Germany; Antwerp, Belgium; and London. The Algeciras will then sail to Singapore via the Suez Canal.

The Algeciras will sail under the flag of Panama. It is approximately 1,310 feet  in length, with a beam of about 200 feet  and depth of more than 108 feet.

Three years ago, Gebrüder Weiss bet on contract logistics service offerings to small and mid-sized consumer products importers as its way forward in the U.S. market, and that calculated move is now paying off.

The family-owned Austrian company, with 500 years of freight transportation experience on the European continent and overseas, prefers to pick logistics niches where it can stand out. Since 2003, Gebrüder Weiss had operated in the U.S. through a 50/50 joint venture, and in 2017 set up its own operations in the country.

“We realized if we just based our business model on ocean and air freight rates, which are largely commoditized, our margins would suffer,” Mark McCullough, CEO of Gebrüder Weiss USA, told American Shipper in a telephone interview on Wednesday, April 22, from his home office in Chicago.

McCullough, who has 25 years of industry experience, said most shippers today have access to indices and benchmarks to make informative transportation decisions. “We realized that our focus should be on adding value to the supply chain, namely end-to-end solutions to importers,” he said.

The company’s American management also believed customer service should not be commoditized. “We do things differently than your big box forwarders,” McCullough said. “We don’t run an assembly line of people – one person controls the customer’s shipment from A to Z.”

Based in Chicago, Gebrüder Weiss USA grew its contract logistics services by leasing warehouse space throughout the country, including in Atlanta, Chicago and Los Angeles. These facilities allow the third-party logistics provider (3PL) to receive import containers, deconsolidate them, and inventory the goods until the importer directs their delivery to the retailer.

McCullough said Gebrüder Weiss USA’s contract logistics services on the West Coast have been particularly attractive to importers of beauty products, home goods and cookware, which are sourced throughout Asia.

On April 21, the company announced the opening of a new warehouse location in California’s Inland Empire, which will offer customers another 100,000 square feet of space in addition to its 50,000-square-foot facility in Torrance, which McCullough said is at capacity.

While the coronavirus pandemic has turned global supply chains of many shippers’ upside down, McCullough said the opening of the new Southern California warehouse in Jurupa Valley could not be timelier for its contract logistics service offerings.

The new warehouse is expected to be in full operation by the end of this week, including a starting staff of about 20 workers equipped with personal protective gear and offering “contactless delivery” of shipments to truckers. Two importers have already contracted with Gebrüder Weiss for space in the new facility.

“Many of Gebrüder Weiss’ customers are already starting to look closely at nearshoring supply chains and increasing safety stock levels of critical materials and products,” McCullough said.

Despite the COVID-19 pandemic’s supply chain impacts, McCullough does not anticipate nearshoring by shippers to mean a wholesale return of manufacturing to the U.S. or Mexico from Asia.

“While you may see some of that, we expect that more shippers will shift from just-in-time supply chains to just-in-case supply chains,” he said. “This means keeping a portion of shelf-stable products in inventory in markets to better respond when portions of the global supply chain collapse.”

He also sees more U.S. importers considering increased storage of certain products –  from two months of inventory instead of two weeks.

“We’re pushing the margins of storage again, and perhaps it will swing away from this once the coronavirus passes, but for now I believe this supply chain strategy will stay with companies for a long time,” McCullough said.

Gebrüder Weiss is maintaining its original U.S. growth strategy and is expected to add warehouse capacity in the Chicago area before the end of the year, he said.