Category: Freight Forwarding

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.

Under authority of the White House, Customs and Border Protection (CBP) will allow U.S. importers of certain goods to defer their payments of duties, taxes and fees for the next 90 days, starting April 20.

The temporary duty deferment was included in an executive order signed by President Trump on Friday, April 17, to help American businesses cope with the economic fallout from the COVID-19 pandemic.

“This payment flexibility will be available only for importers with a significant financial hardship and will apply to payments for goods imported in March and April,” CBP said in a press release on Sunday, April 19.

However, the deferment will not apply to imports currently subject to U.S. anti-dumping and countervailing duties or tariffs resulting from the Section 201, 232 and 301 trade remedies. Those duties must still be paid on time by importers, the agency said.

The nation’s customs brokers are expected to work with their importer clients in the coming days to determine which imports qualify for duty deferment.

“For those that are then able to benefit from the 90-day suspension, we will have to dot our ‘i’s’ and cross our ‘t’s’ to ensure that we schedule payments accordingly within the allotted time frames,” Grabriel Rodriguez, president of Doral, Florida-based A Customs Brokerage and an officer with the Florida Customs Brokers and Forwarders Association, told American Shipper.

“This moratorium will be a little bit of a burden administratively due to the conditions under which it is being applied and their short-term timeframe, but we know it is going to be a great financial benefit to our importers.”

“This is a big deal for everyone,” said Amy Magnus, president of the Washington, D.C.-based National Customs Brokers and Forwarders Association of America (NCBFAA). “As a broker, we will have to figure out how to push out the duty payments 90 days for those entries that can be delayed.”

Magnus, who also serves as director of customs affairs and compliance for Saint Albans, Vermont-based A.N. Deringer, said the deferment does not absolve qualifying importers from ultimately paying those duties.

CBP said it is still processing duties, taxes and fees on imports during the national health crisis, adding that it will not return deposits of estimated duties, taxes and fees that have already been paid.

The agency enforces about 500 U.S. trade laws and regulations on behalf of 49 government agencies and remains the second-largest source of revenue for the U.S. government behind income taxes.

CBP collected a total of $80.7 billion in duties, taxes and fees on imports during fiscal year 2019, which ended September 30.

Ground handlers sometimes misplace airfreight as it rapidly moves between airplanes and trucks that drop off and pick up. Individual shipments are often small and piled on pallets in nondescript cardboard boxes.

The lack of visibility into air cargo inventory, and where it can be found in a facility, causes costly delays and frustration for both airlines and freight forwarders. By some estimates, manual verification of this cargo adds 2 to 3 cents per kilogram in handling costs.

Technological solutions often promise more than they can deliver, are too expensive or are difficult to fully implement because of the rough-and-tumble logistics environment.

Atlanta-based Cargocast believes it has developed a product that overcomes these obstacles to airfreight visibility through radio frequency identification (RFID) technology. “We’re using the hands-free visibility data to automate as much of the process as possible,” said CEO Dan Diephouse.

Diephouse, who previously ran product strategy at software firm MuleSoft, launched the company two years ago with Mike Morey, former director of cargo for Air Canada.

The company, which received an investment from Tiger Global Management, incubated its cargo visibility technology at an IT laboratory in Atlanta, taking into consideration other technologies that have been applied to airfreight in recent years with varying degrees of success.

Cargocast’s research found that bar codes are labor-intensive due to their manual scanning requirement. Newer tracking technologies, such as Bluetooth low-energy (BLE) are still too expensive when it comes to tagging individual pieces of cargo, while robotics and vision cannot handle the ad-hoc nature of accepting and loading airfreight.  

RFID technology has matured in terms of its cost effectiveness and efficiency over the past decade, Diephouse said. In 2010, RFID tags cost 30 cents apiece and had a 90% accuracy rate. Today, the tags cost about 10 cents each and have 99%-plus accuracy.

“We’ve developed proprietary processes and technology that leverage the latest advances in RFID to achieve levels of accuracy that were never before possible,” Diephouse said.

The shipper or forwarder applies the RFID tags to cargo on the front end. When the cargo arrives at the ground handler’s facility, detectors positioned at the dock doors read the tags. An overhead digital screen shows warehouse workers where the cargo is within the facility.

Morey said real-time cargo monitoring is essential inside an airfreight-handling facility, where cargo retrieval and delivery to flights are often done within several hours. Ground handlers cannot afford to fumble around for cargo. “These facilities are for throughput, not storage,” he said.

The system provides accurate piece counts, which is essential for compliance with customs manifests, Morey added.

Diephouse said Cargocast’s first customers include a European ground handler and a “top-five” forwarder, which he declined to name since they are in “phase one” of integrating the technology into their networks.

The benefit of Cargocast’s RFID software is that it can be integrated with most existing warehouse IT. “It’s completely packaged for the supply chain,” Diephouse said.

He estimates that a medium-size ground handler could save as much as $1 million a year in labor costs by managing its freight flows with Cargocast.

Besides ground handlers and airfreight forwarders, Cargocast executives say their hands-free visibility technology is suitable for trucking companies with cross-dock operations and other third-party logistics services providers.

Diephouse admits that Cargocast’s launch in late January was ill-timed with the supply chain upheaval caused by the COVID-19 pandemic. However, he believes that the company’s technology will become even more important to the airfreight sector.

“When things come back, quality control and enforcement will be more stringent in air cargo than in the past,” Morey said.

After being left out of a recent multibillion-dollar federal aid package for the domestic airlines, airfreight forwarders are now asking the U.S. government for aid to be set aside for their industry in the next economic stimulus legislation.

Specifically, the Airforwarders Association is requesting $1 billion in cash grants be available for the country’s estimated 3,500 air forwarders and their 6,500 trucking partners to help them stay in business through the economic downturn caused by the COVID-19 pandemic.

In addition, the association seeks $1 billion in zero-interest loans available for small and mid-sized air forwarders and related trucking businesses.

“Since forwarders are equally dependent on airline services and provide vital logistics services both ongoing and during the future recovery, we have approached Congress with a proposal designed to keep our industry viable,” Brandon Fried, executive director of the Airforwarders Association, told American Shipper.

The current wording in the airline carveout of the $2.2 trillion stimulus, which was signed by President Trump earlier this month, includes provisions for airline “contractors,” such as ground handlers and caterers, but not for forwarders, since they are viewed as “customers.”

This designation frustrates the forwarder industry, which views itself an integral part of the air cargo transportation process. Without the forwarders operating as the logistics linchpin between shippers and airlines, industry experts say, carriers would not have cargo to load on their airplanes.

“Pallet loads of goods ranging from manufacturing components to finished goods do not move themselves,” Fried said. “It’s a complicated process that requires expertise both in the physical movement but also dealing with myriad government regulations.”

Beating back layoffs

The Airforwarders Association recently polled its members earlier this month and 65% of the responding firms said layoffs are either imminent or underway. The survey also found that the respondents’ revenues are already down 50% or more.

“The sudden reduction in the number of flights due to the pandemic, along with the severe downturn in the economy, have had a negative impact on many air freight forwarders,” said Michelle Halkerston, president and CEO of Chicago-based Hassett Express, who also serves as the Airforwarder Association’s chairman. “It’s a good business decision to help keep these companies healthy, so they can support the shipping needs of many industries as businesses and people get back to work.”

“Many air freight forwarders are financially hurting as their sales have fallen off a cliff because clients have pulled back,” Richard Fisher, executive vice president of BTX Global Logistics in Boston, told American Shipper. “That has happened because their clients have either cancelled or postponed orders.

“We keep asking our clients, ‘when do you see a positive change and ramp-up of orders?’” he added. “The simple answer is no one knows. We need help.”

Fisher said when his firm recently requested air transport service for personal protective equipment (PPE) from China, the all-cargo airlines that are still operating quote astronomical rates.

“To make matters worse, many of the cargo carriers are stipulating payment before the shipment is boarded on their aircraft,” he said. “The impact on cash flow is disastrous.”

The Airforwarders Association appreciated the recent economic stimulus legislation’s $350 billion Small-Business Paycheck Protection Program. According to news reports, the funding for this program is now tapped, but the association hopes the Congress will extend the program in the next stimulus bill. 

Even with the proposed re-opening of certain economic regions of the country in mid-May, most forwarders say the federal aid for the industry is still important since the air cargo market will likely be clawing its way back throughout the rest of the year.

“A common experience among most freight forwarders is that we are working even harder to get less volume moved right now,” Halkerston said. “I don’t see that work stopping in May.”

Ocean freight consolidators are riding a wave of less-than-containerloads (LCL) in recent months as the coronavirus pandemic leaves more freight forwarders beaching full containers.

Also known as neutral non-vessel-operating common carriers (NVOCCs), these logistics services providers resell container space to forwarding companies with cargo volumes from shippers which are too small to fill an entire 20-foot or 40-foot container on their own. While a consolidated container may include a multitude of forwarder cargoes, it is generally grouped according to destination.

LCL service is also attractive to forwarders who want to avoid subjecting their shippers to more costly airfreight transport for cargo that is not necessarily urgent.

“We have definitely seen a rise in LCL requests,” said Michael Troy II, chief development officer of Red Bank, New Jersey-based Troy Container Line, in an interview with American Shipper. “Many shippers that normally move cargo through FCL and air services are now looking to alternative solutions to meet deadlines and move cargo in these times.”

Klaus Jepsen, group CEO of Hoboken, New Jersey-based Shipco Transport, told American Shipper that his NVOCC is receiving increased interest in LCL service from forwarders.

“We are basing it on the fact that there is pressure on air cargo capacity due to the cancellation of pretty much all commercial passenger flights offering cargo capacity and since what cargo freighter capacity is available has become very expensive,” Jepsen said.

“We also sense that our customers — the freight forwarders and their customers, the BCOs [beneficial cargo owners] — are placing smaller orders to ship them at higher frequency,” albeit with an ocean container service, he said.

Troy said his NVOCC has witnessed an increase in requests for volume shipments, which would normally ship in a 20-foot or 40-foot container and are now being priced through an LCL alternative if the cargo needs to move the same week.

“We are working with our clients and vendors to be able to accommodate these shipments and provide sailing schedule opportunities that our freight forwarding clients are not able to access otherwise,” Troy said.

Another option

ECU Worldwide, one of the largest neutral NVOCCs, has experienced COVID-19’s ripple effect on ocean cargo volume shift since the pandemic’s emergence in China in December.

“When China first extended their New Year celebration, volumes were already being affected as cargo departures from China were the first to drop off,” said Tim Tudor, CEO of ECU Worldwide.

“Throughout February, other countries actually saw volumes increase, somewhat offsetting the shortfall from China. So, we have seen this ebb and flow of cargo drop-offs and increases as the virus spread throughout the world.”

In recent weeks, ocean container carriers have announced a couple hundred canceled sailings over the next several months due to the diminished international freight traffic caused by the pandemic. Canceled sailings are used by these carriers to avoid a free fall in freight rates and reduce undue operations costs.

At the same time, the ocean carriers have announced incremental rate increases of $50 to $80 per TEU about every two weeks since mid-March, which industry experts say are sticking.

“I can see rates going up for 20-foot containers and driving more traffic to LCL,” said Joseph Saggese, executive managing director of the North Atlantic Alliance Association (NAAA), a forwarder-based shippers association.

The increased rates for 20-foot containers reduces their profitability for forwarders and pushes shipments of that size into 40-foot boxes in the form of LCL, Saggese said.

NVOCCs are immune neither to the impact of canceled sailings nor to rate increases, but are highly adept at finding reasonably priced space across liner services for their consolidated boxes.

“Our team works daily to find a recovery option in the weeks where our traditional schedule is not available from the carriers,” Troy said. “We are able to leverage our relationships across the industry, so we have contingency plans in place if the first option is not available.”

Troy Container Lines, for example, ordinarily books its LCL containers with the same carriers on a weekly basis. “We usually book our LCL freight up to six weeks ahead of time to give our carrier partners a clear indication of what volume we are expecting during certain times,” Troy said.

New LCL services

Both Troy and Shipco have announced new direct, weekly LCL services in recent weeks from the U.S. to various overseas destinations.

“We have successfully launched new services to Switzerland and Qatar since mid-March, and we are focused on continuing to grow to meet the demands of our client base,” Troy said.

Jepsen said Shipco has worked with its WorldWide Alliance partners to offer more direct services to destinations that previously passed through transshipment hubs. The NVOCC has also reduced cutoff times at origin and improved availability time at destinations, as well as promoting port pairs where Shipco offers two, three and four weekly departures as opposed to one.

“We are responding to the need for a faster service for freight that no longer can pay for airfreight by introducing express LCL services to and from the U.S.,” Jepsen said.

In late March, ECU Worldwide, one of the world’s largest neutral NVOCCs, started an LCL express service, XLERATE, in partnership with ocean carrier Matson Navigation from Shanghai to nine container freight stations (CFS) throughout the U.S. via the Port of Los Angeles.

“Since our XLERATE product is a CFS-to-CFS service, this allows our freight forwarding customers to avoid the requirement of clearing cargo in Los Angeles and arranging an expensive LTL [less-than-truckload] delivery from Los Angeles to the door of their customers located in the central and eastern part of the U.S.,” said Spencer Strader, ECU Worldwide’s director of U.S. imports.

“Given COVID-19’s impact on many importers’ warehouse receiving operations, having the final mile in local hands builds flexibility in cases where the normal delivery process has changed due to reduced hours at receiving locations,” he said.

Riding out the pandemic

“Time will tell if volumes will rebound when business starts getting back to normal,” said Vince Argenzio, ECU Worldwide’s U.S. CEO. “The expectation is that it will be a slow return and losses experienced in the early part of the year won’t be made up.”

He added, “There are definitely companies feeling the pain. Those that were quick to act and take measures to reduce their exposure will make it through these difficult times.”

Jepsen said in times of global economic downturn it is not uncommon for smaller ocean freight consolidators to discontinue services. Some large forwarders with their own NVOCC services may be compelled to co-load with others.

“It is hard to predict how or if the market will rebound,” he said. “Everything we do is tied to the economy, and if global trade drops by 5, 10 or 15%, then no doubt this will be felt by the NVOCCs as well.”

“I think being a large, global company will insulate us more than being isolated in a single country or region,” ECU Worldwide’s Tudor said.

The American Logistics Aid Network (ALAN) has released a free-to-use, online tool that shows supply chain managers and transportation providers a country-wide map of where COVID-19 is impacting roads, airports and seaports.

“During disasters like this, few things are more important than accurate visibility to the situation on the ground,” said ALAN Executive Director Kathy Fulton in a statement. “Now, rather than numerous entities across the country working overtime to collect and analyze the same critical pieces of information, this dashboard will serve as a single, unified source.”

Started in 2005 after Hurricane Katrina, ALAN is an industry-led voluntary organization that provides free logistics assistance to disaster relief organizations. The Lakeland, Florida-based network has provided humanitarian supply chain services in response to numerous natural disasters, including hurricanes, wildfires, floods and tornadoes over the years.

The newly launched ALAN Supply Chain Intelligence Center incorporates the online platform developed by Austin, Texas-based Riskpulse, a supply chain risk analytics firm. Riskpulse is used by numerous food shippers, consumer packaged goods manufacturers, automakers and retailers for their operations planning.

Fulton said ALAN has established a team of industry volunteers to add the latest COVID-19-related state and local transportation closure and waiver information daily to the Supply Chain Intelligence Center.

ALAN expects the tool to remain important to aid logisticians after the COVID-19 pandemic subsides. “It will pave the way for better and faster response during all future crises – expediting the delivery of medical supplies, food, and hydration,” Fulton said.

The TT Club estimates that the international maritime industry incurs losses of about $6 billion each year because of incorrectly packed or documented cargo.

“That includes damage to the cargo and delays, environmental cleanup, injuries and ship damage. The point is that $6 billion is totally unnecessary. If people followed things correctly, then that $6 billion would be saved to the entire industry,” said Peregrine Storrs-Fox, the TT Club’s risk management director.

The TT Club, with a global network that includes offices in London, Hong Kong, Sydney and New Jersey, provides insurance and related risk-management services to the international transportation and logistics industry. It has been working with the Global Shippers Forum, International Cargo Handling Coordination Association (ICHCA), World Shipping Council and Container Owners Association to push for thorough adoption of the Code of Practice for Packing of Cargo Transport Units (CTU Code), issued in 2014.

The CTU Code, which applies to packing and transport operations throughout the supply chain, was jointly developed by the International Maritime Organization (IMO), International Labor Organization (ILO) and United Nations Economic Commission for Europe (UNECE).

“From the TT Club’s perspective, one of the frustrations despite putting out advice around lots of different cargo issues over decades now, we still find that somewhere around two-thirds of cargo damage-related claims are coming because of some sort of poor practice in terms of packing — load distribution or securing of the cargo — but also documentary things around classification, declaration of cargo, how that’s documented, how the information is passed correctly through the system between different stakeholders by way of data transfer,” Storrs-Fox said.

In the five-plus years since the CTU Code was adopted, “we haven’t actually seen a significant improvement in the incident statistics. Certainly wherever we go, we see that a lot of people are not aware of the CTU Code at all,” said London-based Storrs-Fox.

Raising awareness

Storrs-Fox said the TT Club, with the Global Shippers Forum, ICHCA, World Shipping Council and Container Owners Association, have built a cargo integrity campaign that begins with promoting awareness of the CTU Code itself.

The TT Club defines cargo integrity as the “adoption of best practices in all aspects of cargo care through the entire intermodal supply chain.”

On its website, the TT Club said cargo integrity includes:

Selection of a suitable unit for the intended commodity and journey.

• Ensuring that the unit positioned for packing is sound and free from previous cargo residues.

• Prevention of contamination by plants, plant products, insects or other animals.

• Proper packing of cargo within a unit, including load distribution, and effective blocking, bracing and securing.

• Correct classification, packaging, marking/placarding, documentation and declaration of packed goods, particularly those that are regulated (i.e., dangerous or waste).

• Complete and transparent transmittal of all data regarding contents, enabling appropriate safe handling through the intermodal supply chain.

• Effective methods of stowing and securing of units for transport in land, sea or air modes.

The TT Club said while the CTU Code provides “the framework for achieving cargo integrity,” further guidance is needed. 

“TT Club statistics indicate that as much as 66% of incidents related to cargo damage in the intermodal supply chain can be attributed in part to poor practice in the overall packing process, including not just load distribution and cargo securing but also the workflow from classification and documentation through to declaration and effective data transfer,” it said on its website.

Germany’s Federal Bureau of Maritime Casualty Investigation (BSU) said in February that misdeclared coconut charcoal was the most likely source of the blaze on the Yantian Express, which caught fire in the Atlantic Ocean on Jan. 3, 2019.

International Union of Marine Insurance (IUMI) Secretary-General Lars Lange told American Shipper last month that vessel fire safety “needs regulation and it needs a level playing field. Safety shouldn’t be left to individual business entities. Safety should be dealt with at a regulatory level, and that would mean in this case the IMO.”

The IUMI issued a report in October titled “Containership fires: It is time to take action.” It said that 2019 had an alarming number of container ship fires, including the Yantian Express and APL Vancouver, which suffered from a fire while en route from Shekou, China, to Singapore.

The IMO’s Maritime Safety Committee was to meet in London May 13-22. That meeting has been postponed because of the coronavirus. Storrs-Fox hopes the Subcommittee on Carriage of Cargoes and Containers (CCC) will still meet Sept. 14-18 and take up issues relating to the CTU Code.

Misdeclaration of cargo

The TT Club also wants to bring attention to cargo inspection efforts and has partnered in initiating work to update the IMO’s Circular 1442, with ultimate aims including “to bring in standardization so there can be consistency of inspections and valid sampling globally.”

Circular 1442 currently infers a bias toward declared shipments subject to the International Maritime Dangerous Goods Code (IMDG), and the proposals to the CCC subcommittee sought to ensure broader application as well as references to the CTU Code that had been approved subsequently, according to Storrs-Fox.

Storrs-Fox noted that “a number of shipping lines have cargo screening activities looking for non- or misdeclared cargo. Again, that’s an area that this group is monitoring and seeing how we can support those initiatives.”

Intentional misdeclaration of cargo can be difficult to prove, he said. “Evidentially it’s not always easy to pinpoint who is responsible, and even if you can identify the culpable party, they aren’t necessarily going to be in a jurisdiction where you can take enforcement.”

Storrs-Fox referred to a civil case following a 2012 explosion and fire aboard the MSC Flaminia that killed three crew members and destroyed thousands of containers.

“Six years later the culpable parties were legally identified and they happened to be, in accordance with that judgment, U.S. domiciled or partially domiciled in the U.S., which eases enforcement,” he said. 

A U.S. federal judge in September 2018 found the manufacturer of a chemical being transported aboard the Flaminia as well as the non-vessel owning common carrier liable for the explosion and fire.

Prosecutory action varies from country to country, Storrs-Fox said. “Trying to get standardized regulatory enforcement is not very easy.”

Storrs-Fox said it is “obviously very difficult” to determine whether cargo is intentionally misdeclared, and referred to statistics Hapag-Lloyd put out about five years ago related to its cargo patrol activities.

“It would appear that somewhere around 4% of the cargo flagged as problematic was more likely than not to have been deliberately misdeclared. It’s difficult to extrapolate quite how many that means in overall terms. I did a back-of-the-packet calculation a couple of years ago. That might equate to something around 150,000 containers per year being more likely than not misdeclared and particularly dangerous. That’s out of about 180 million laden containers moved per year,” he said.

Storrs-Fox said he has heard “anecdotal stories of plenty of instances where shippers provided false documentation, false images, those sorts of things. It’s definitely out there, it’s definitely happening, although it isn’t always going to be deliberate. There will be some who fail to declare accurately out of ignorance as well.” 

Dangerous goods stowage

Shipping lines have taken educational steps. The CINS Organization made up of 16 operators, for example, issued safety considerations for dangerous goods stowage in September 2018. That guidance came in the wake of a March 2018 fire aboard the Maersk Honam that killed five crew members.

The State of Maritime Safety 2020, published last week by Safety at Sea magazine, said data shows “a small but steady decline in ship incidents between 2015-2019 for casualties and total losses, while the world fleet continues to grow. The vessel numbers of the world fleet grew by 8.5% between 2015 and 2019, but casualty figures remained largely constant, with the number of vessels that were involved in casualties vacillating between 1.19-1.41% of the world fleet.”

Storrs-Fox said it’s difficult to determine if the number of cargo-related ship fire incidents is decreasing.

“It would seem 2019 perhaps was a particularly poor experience and 2020 may be a better experience. I’m always wary of this because it depends on what becomes publicly known. Obviously when you’ve got a Yantian Express or something like that, you’ve got a major incident that everyone gets to know about,” he said.

Change is needed

“Another incident in August 2019, involving the APL Le Havre, was actually relatively minor. Reportedly it involved charcoal on deck that went on fire. The crew was able to respond and put the fire out. It impacted half a dozen containers or something like that. To my mind, that is not a major incident, such as the Yantian Express. But it does show that there are a number of lesser incidents that are happening,” Storrs-Fox said.

“The frequency of these lesser ones I hear about, either through interactions with shipping lines or through other networks, is much more concerning,” he said. “It’s what might be called the near misses, the APL Le Havre-type incident where the crew is able to respond and resolve things successfully. I’m concerned much more about each of those because they have the capability of becoming another major incident.”

Certain commodities cause greater concern, Storrs-Fox said.

“Take charcoal, for example, which is regularly coming up as a problem cargo. Now charcoal is produced in some European countries — Germany or Spain or the U.K., for example. It’s produced in South Africa. It’s also produced in Indonesia, Vietnam and China. Most of the incidents we’ve seen have been much more of Asian origin than they have been of origin elsewhere. But it isn’t always easy to identify that successfully because of the way the trade actually works. There are times when goods are moved from one place to another place for reshipment so that they can be bagged as being produced in that intermediate place, so the whole trade is complex,” he said.

“There is a perception that China is the origin of a lot of problems and I think we need to put that in context. China is or has been a kind of production house for the world. They produce an awful lot. Therefore the fact that lots of shipments seem to be more involved in shipments that cause problems may actually statistically not be the issue. China may even be better than some of the other countries,” Storrs-Fox said.

He pointed to a survey last year of 500 containers by the National Cargo Bureau. “There were actually quite a lot of problems from non-Chinese-initiated shipments.” 

If stay-at-home restrictions ease with the passing of the coronavirus pandemic and the CCC and IMO Maritime Safety Committee are able to meet this year, changes to Circular 1442 could be approved by the end of 2020.

“Ordinarily it would be concluded in September and signed off in December this year. You’re talking within 18 months having a substantial change,” Storrs-Fox said. “The pace of change through the global industry and international regulatory environment can be frustrating. For example, IMO, as a UN agency, has 160-odd countries and 40-odd NGOs meeting and proposing and discussing. To gain consensus and acceptance and then adoption is always going to be something quite tricky.”