Category: Freight Forwarding

The coronavirus pandemic’s global spread earlier this year put the brakes on many U.S. industrial project cargoes, but truckloads of behemoth wind turbine components continue to roll across the nation’s highways.

“Our wind turbine component load count for this year is up 36%,” said Gene Lemke, vice president of projects for St. Cloud, Minnesota-based Anderson Trucking Service (ATS), in a telephone interview with American Shipper. “It’s been a huge bright spot during these difficult times.”

Family-owned ATS, which got its start in 1955 hauling Minnesota-quarried granite slabs on flatbed trucks, began transporting wind turbine components nearly 20 years ago. The company estimates that today its equipment handles 30% of the total U.S. wind turbine market share.

“When we’re humming in wind, we’ll typically have 300-plus trucks on the road at one time between transporting all the turbine nacelles, hubs, towers and blade pieces,” Lemke said.

The U.S. wind energy sector anticipated a banner year in 2020 for construction of wind farms –  combinations of giant wind turbines spread across thousands of acres of open spaces –  which was stimulated by a significant federal production tax credit. The electric power generated by these wind farms is fed into utility power grids.

According to the Washington, D.C.-based American Wind Energy Association (AWEA), the U.S. wind industry installed more than 1,800 megawatts of new wind power capacity during the first quarter of 2020. That is more than double the capacity installed during the first quarter of last year, the association said.

Eleven new wind projects totaling 1,821 megawatts became operational during the first quarter, which power an estimated 560,000 American homes, AWEA said.

Also, during the first quarter, wind farm developers started construction on 4,124 megawatts of wind projects, bringing the total construction activity across the U.S. for 2020 to 24,690 megawatts. After several years of prospecting and preparing the sites, typical wind farm construction in this country generally takes six to nine months.

Logistics for wind farms

Lemke said most wind farm construction is presently concentrated in the “central corridor” of the country, running from North Dakota to Texas.

AWEA noted that Texas led the country in the first quarter of 2020 with 540 megawatts of new wind turbines installed, followed by Iowa, Illinois and South Dakota. “We have our fingers in a lot of them,” he said.

The U.S. supply chain of wind turbine components is both domestic and international. In recent years, most turbine manufacturers headquartered in Europe and Asia have set up parts production in the U.S. However, ample volumes of turbine components still arrive by ship at break bulk ports, such as Corpus Christi, Texas, and Vancouver, Washington.

The individual turbine components have also continued to increase in size and weight as the rated electric output of the machines has quadrupled to more than 4 megawatts in the past two decades. For example, one of Denmark’s Vestas 4.2-megawatt wind turbines has individual wind blades measuring 243 feet in length.

Transportation equipment, which is specifically tailored to moving these massive blades and tower sections, has subsequently evolved with the wind power sector, Lemke said.

ATS is no stranger to this demand. Around 2003, when it began to encounter turbines with tower sections 197-feet long and 15-feet in diameter and a turbine original equipment manufacturer’s requirement to move two, 127-foot blades per load, the company worked with trailer manufacturer Trail King to build a version of the “Schnabel” trailer. This multi-axle trailer suspends and locks components in place for transport. Its low profile allows these loads to safely transit under most U.S. highway overpasses.

The trailer equipment is also rugged enough to safely transport these outsized pieces along windy, dirt roads to remote wind farm installation sites.

Lemke said today it requires nine to 12 trucks to transport individual pieces of one turbine to a wind farm.

ATS also moves its specialized wind turbine trailers throughout the U.S., including transportation of some of this equipment last year from the U.S. West Coast to Hawaii onboard a Pasha vessel to erect a new wind farm on the island of O’ahu, Lemke said.

With nearly 60,000 wind turbines operating across 41 states and two U.S. territories, wind energy is now the largest provider of renewable energy in the country, supplying more than 7% of the nation’s electricity in 2019 or enough to power 32 million American homes, AWEA said.

According to AWEA’s 2019 Wind Powers America Annual Report, the U.S. wind energy sector supported a record 120,000 American jobs, 530 domestic factories, and $1.6 billion a year in revenue for states and communities supporting wind farms.

Wheeling through 2020

However, the association is concerned that COVID-19 is now “posing significant challenges” to the industry, resulting in slowdowns of domestic and international wind turbine manufacturing and wind farm construction due to social distancing measures required by public health officials.

AWEA’s current analysis suggests that COVID-19 is putting about 25 gigawatts of planned wind projects, valued at $35 billion, and more than 35,000 American jobs at risk.

“The industry will continue working with Congress and other renewable energy leaders to address the challenges of COVID-19 and to ensure projects have the flexibility to continue development,” the association said in an April 29 statement.

While COVID-19 may slow down wind energy’s growth during the second half of 2020, Lemke believes that turbine manufacturers and wind farm developers in the U.S. will continue to do their utmost to fulfill their slated projects to benefit from this year’s production tax credits.

“For us, the wind industry is going pretty strong,” Lemke said. “There is nothing to suggest that our role in this process will slow down anytime soon.”

The Women’s International Shipping and Trade Association (WISTA) announced Monday that seafarers in some countries can get free membership in national chapters.

Membership in WISTA Norway, United Kingdom, Singapore, Brazil or Argentina gives seafarers from or working in those countries access to the largest network of female managers in the shipping industry as well as online programming.

WISTA Norway is credited with the idea of offering free memberships.

“While most of the world is on lockdown, there is a group of people — the seafarers out on the oceans — working hard to deliver energy to markets and food to homes. Due to border closures and stringent disembarking restrictions, a majority of the seafarers have been on board for longer than their regular working period. This project is an appreciation for all that they do and a connection to the greater community,” said WISTA Norway President Pia Meling.

Meling also is the vice president of Massterly, touted as the first company established to operate autonomous vessels. At WISTA’s annual international conference last fall, Meling explained the company was not launched to eliminate human jobs.

“Our purpose is not to take the jobs of the seafarers on oceangoing ships. It is actually to contribute environmentally friendly and cost-efficient and sustained maritime logistics that can enable transportation of ships at sea,” Meling said at the conference, held in the Cayman Islands.

WISTA events around the world now are being staged virtually due to the pandemic. This makes meetings and workshops accessible to seafarers who may be at sea for months at a time.

“Each of us can benefit from learning, sharing and furthering our capabilities during this challenging time. As the leading voice for women in the industry, we want seafarers to know that their views, input and hands-on perspectives are welcome and we encourage them to share their stories,” Meling said.

WISTA International President Despina Panayiotou Theodosiou said the organization of more than 3,500 members around the world “embraces seafarers as a key component of our membership. I hope this project expands the number of seafarers who view WISTA as an important part of their professional development and network.”

Theodosiou, the chief executive officer of Cyrpus-headquartered Tototheo Maritime Ltd., promotes the eradication of gender bias in the maritime industry.

“Prejudice and discrimination keep the doors of opportunity closed,” she said at the international conference. “We the WISTA members have an opportunity to inspire everyone — and I mean everyone — to be an agent of change.”

With 51 national associations, WISTA works with global maritime and governmental bodies to support professional development, opportunities and networking for female managers in the maritime industry.

Seafarers from or working in Norway, the U.K., Singapore, Brazil or Argentina may obtain free membership through Aug. 31 by contacting their national WISTA associations.

Steep reductions in containership sailings over the next several months due to the ongoing coronavirus pandemic have many U.S. marine terminal operators wondering how they are going to afford their annual lease payments to port authorities.

The country’s nearly 100 large and small container terminals are on some of the priciest industrial property. According to industry experts, terminal operators in the Port of New York and New Jersey annually spend about $90,000 per acre as port authority tenants, while that number jumps to about $100,000 per acre per year for those operating in the California ports of Los Angeles and Long Beach.

These operations are also significant employers. The Alexandria, Virginia-based National Association of Waterfront Employers (NAWE) estimates that the nation’s marine terminal operators generate more than 40 million man-hours annually, and each has between 300 and 1,000 additional direct employees on the payroll.

Lease amounts are generally predicated on annual average container throughput of the marine terminals. In recent years, container volumes within the U.S. ports have remained sustainable, allowing terminal operators to pay their leases and invest in new equipment and longshore workforce development.

Some analysts now predict the hundreds of blank sailings that container carriers expect in the months ahead will cause collective losses of $23 billion, or more than 20% compared to 2019, by this year’s end for U.S. marine terminal operators.

“The global pandemic has given [marine terminal operators] a one-two punch this year,” said NAWE President Lauren Brand in an email to American Shipper. “Blank sailings resulted in reduced volumes, activating minimum throughput guarantee clauses in land-lease agreements, which raise immediate expenses during a dramatic reduction in income.”

In addition, she said COVID-19 safety measures to protect waterfront employees have further increased overhead costs for marine terminal operators.

Marine terminal interests have pointed out this concern to the U.S. Federal Maritime Commission (FMC) through the agency’s recently launched Fact Finding 29 Supply Chain Innovation Teams. These teams allow industry representatives to identify pandemic-related pain points in container shipping to the FMC.

On Friday, FMC Commissioners Carl Bentzel and Louis Sola sent a letter to the leadership of the Senate Commerce and House Transportation and Infrastructure committees asking them to address this “financial gaps” anticipated by the nation’s marine terminals during the pandemic.

“We have specific concerns about the abilities of the United States marine terminal operators to continue operating considering their leases and other contractual commitments to local port authorities,” the commissioners wrote.

“It is our understanding that marine terminal operators have tried to engage with their port authority landlords to discuss the financial impacts of drastic reductions of cargo on lease economics,” they said. “To date, however, little progress has been made to help adjust lease payments considering market conditions.”

In a telephone interview with American Shipper, Bentzel said the marine terminal operators will probably sustain current container volume losses if they only last another month or two. However, if those losses continue for another three to four months, he warned that many terminal operators will not be able to cover their lease payments this year.

Marine terminal operations have been deemed vital industries to keep open during the COVID-19 pandemic. However, unlike the domestic airlines, no financial aid has been set aside for these entities.

“It should be in the national interest to protect their continued existence and prosperity both to support the industrial base and to ensure that strategic assets continue to operate,” Bentzel and Sola told Capitol Hill lawmakers.

“We understand that there may be impediments that will preclude or limit the ability of terminals to use existing relief funds,” the commissioners said, but urged lawmakers to “consider a means to help alleviate and bridge the financial gaps that could jeopardize continued healthy operation of our domestic marine terminal industry and of our maritime transportation system.”

NAWE’s Brand suggests Congress establish a grant reimbursement program for marine terminal operators and stevedoring firms to cover the expense of protecting workers against COVID-19’s spread.

“A short-term grant program for the coming 12 months will give them a chance to provide a safer workplace, while they stay on the front lines of moving cargoes,” she said.

This is no ordinary year for American shippers and freight forwarders that are attempting to finalize their annual ocean service contracts with the container carriers.

The uncertainty of how much cargo will be available from the shippers and the amount of capacity offered by the carriers for the next contract season, which generally starts in May, remains anyone’s guess in the face of the ongoing coronavirus pandemic.

“The biggest obstacle we face in service contract negotiations this year is the great unknown about how much volume will move,” said Rich Roche, vice president of international transportation at Mohawk Global Logistics in Syracuse, New York, who also serves as the NVOCC (non-vessel-operating common carriers) subcommittee chair for Washington, D.C.-based National Customs Brokers and Forwarders Association of America (NCBFAA). “Few cargo owners can give confident forecasts right now.”

“How long this global reduction in demand, and thus carrier reductions in service will last, is unknown,” Peter Friedmann, executive director of the Agriculture Transportation Coalition, which is also based in Washington, D.C., and represents numerous agricultural and forest product exporters, told American Shipper in an interview.

“Thus, it is very difficult for carriers to make service/sailing commitments, and without those commitments, shippers and NVOCCs are cautious about making volume commitments with a particular carrier,” he said.

Remote negotiations

Interactions that typically occur during ocean service contract negotiations – face-to-face meetings and office conference calls – were disrupted this spring as negotiators among shippers, forwarders and ocean carriers scrambled to set up home offices in March and early April due to the emergency COVID-19 social distancing restrictions.

“We experienced some limited delays in response to timing as the carrier corporate account and trade/pricing management teams shifted to ‘work remote’ setups,” said a logistics executive for a U.S. equipment manufacturer, who requested anonymity because they did not have corporate permission to speak publicly about its service contract negotiations.

Carmen Gerace, chief transportation officer for Philadelphia-based forwarder-NVOCC BDP Transport, said the back-and-forth between the ocean carrier representatives and his team via email to finalize service contracts was more laborious this year. He also lamented “the lack of face-to-face communication to discuss and negotiate with an individual” during the pandemic.

“Contract negotiations are a little tougher without all the face-to-face meetings, but in some ways the meeting platforms make us a bit more efficient by eliminating travel,” Mohawk Logistics’ Roche said.

Forwarder-affiliated NVOCCs often enter service contracts for container space with ocean carriers and retail it back to shippers on a spot market basis. Neutral ocean freight consolidators, which enter service contracts for capacity with ocean carriers, sell their services to other forwarders on a spot-rate basis.

Negotiating points

Due to the unknowns caused by COVID-19, some shippers and forwarders have considered extending their current carrier contracts by 30 days, 60 days, or through the end of the year, to even rolling them over altogether. “That works for incumbents already in a contract, but new bids have to be treated separately,” Roche said.

This year’s service contract negotiations might allow shippers to zero-in on certain ongoing service and fee concerns with the ocean carriers, such as container availability and demurrage and detention fee assessments, said Friedmann of the Agriculture Transportation Coalition.

The U.S. Federal Maritime Commission (FMC) on April 28 announced that it has finalized its long-awaited guidance on how it will assess whether ocean carriers’ and marine terminal operators’ demurrage and detention practices are reasonable.

“With the entire U.S. international export and import economy demanding that the FMC issue its rule establishing demurrage and detention guidelines, will ocean carriers be willing to accept the detention/demurrage contract terms sought by shippers?” Friedmann said.

“As these charges, as well as ‘earliest return date’ (ERD) charges, have over the past few years often matched the actual freight charges, this is a major cost to shippers and revenue for carriers,” he said. “With COVID-19 constraining volumes for both shippers and carriers, and thus hurting the bottom line, detention and demurrage, and ERD, will be difficult, but critical negotiations.”

To assist its members, the Agriculture Transportation Coalition drafted language which could be inserted into service contracts to protect exporters and importers from unfair demurrage and detention charges by the carriers.

“Some of our members report that they have proposed some of those provisions (without sharing which provisions they are selecting) and have had some success in gaining their inclusion,” Friedmann said.

The logistics executive for the U.S. equipment manufacturer noted the surprising drop in bunker surcharges while the global ocean carrier industry implements the International Maritime Organization January 1, 2020 mandate to power ships with new 0.5% sulfur bunker fuel.

Shipping industry analysts last year estimated that the implementation of the IMO 2020 low-sulfur fuel mandate could cost the container shipping industry another $10 billion to $20 billion on top of its usual annual fuel bill, which the shippers have been expected to absorb through increased bunker surcharges from the ocean carriers.

The unexpected change in container volumes due to the COVID-19 disruption during the first quarter of 2020 “is driving a significant amount of internal dialogue as we review annual fuel cost impact forecasts that may change significantly from original estimates established in 2019,” the logistics executive said.

Roche said, so far, the ocean carriers have managed their capacity well enough to prevent ocean container rates from significantly falling. “But with so many void sailings to navigate through, service consistency has suffered quite a bit,” he added. “It’s hard to put the contract to work when there’s no ship to load that week.”

Service contract filing relief

Shippers and forwarders, with whom American Shipper spoke in recent days, also praised the FMC’s April 27 order temporarily allowing service contracts to be filed up to 30 days after they take effect to provide relief to shippers and container carriers impacted by the coronavirus pandemic. The order will remain in effect through December 31, 2020.

Under the Shipping Act, service contracts reached between ocean carriers and shippers must be filed within 30 days to the FMC for monitoring competition of U.S. container shipping.

The relief measure was identified by the Fact Finding 29 Supply Chain Innovation Teams, which include more than 50 industry representatives who hold regular telephone meetings with FMC Commissioner Rebecca Dye to identify pain points in container shipping due to the COVID-19 pandemic.

“We applaud the FMC’s initiative at this time in the interest of keeping freight moving,” Roche said. “The benefit will be felt more in relieving some of the administrative burden of [service contract] filing.”

The U.S. equipment manufacturer’s logistics executive interviewed by American Shipper also called the FMC order “a positive development” toward reducing service contract filing burdens during the COVID-19 pandemic. “This is especially relevant within a contract period when critical lanes must be agreed to and added with relatively short notice,” the executive said.

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%.