French ocean container carrier CMA CGM has “urgently” petitioned the U.S. Federal Maritime Commission (FMC) to temporarily exempt it from meeting certain tariff publication and service contract filing requirements while it continues to clean up its systems from a recent cyberattack.
The carrier asked the FMC to use its authority under the Shipping Act to institute the exemption for a period of 60 days, starting on Sept. 27, when it was struck by the ransomware attack.
CMA CGM said the cyberattack has impacted its ability to publish tariff rates and rules, as well as file service contracts and amendments, which is required under the Shipping Act, in a timely manner.
“Granting this petition will allow the CMA Group to apply service contract rates agreed upon with customers and tariff terms offered to customers for shipments received before filing or publication can be accomplished, rather than requiring customers to pay higher rates due to the CMA Group’s inability to conduct timely service contract filings or tariff publications,” the carrier said in its four-page petition.
CMA CGM cited that subsidiary APL has been unable to publish new rates and prevented from amending existing rules. APL, for example, could not revise its general rate increase effective data from Oct. 1 to Nov. 1 due to its lack of access to its tariff system.
CMA CGM and ANL use a third-party tariff publisher that was not subject to the cyberattack. However, the two operations are unable to access quotes that have been submitted to customers to convert them into tariff line items for current bookings.
“In the absence of relief, customers who book against their quotes will be invoiced at higher NOS rates because the quotes will not be converted to tariff line items prior to cargo receipt,” the carrier warned.
The FMC is considering CMA CGM’s petition and will accept public comments on the request through Thursday. Comments should be sent by email to secretary@fmc.gov.
“The CMA Group is leveraging currently functional systems to track its commitments to customers and minimize any negative impacts on customers from this cyberattack,” the carrier said in its petition. “The flexibility to publish and file those commitments as soon as practicable is crucial to reducing potential burdens on customers.”
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Freight transportation industry and shipper groups say they are preparing detailed responses to the U.S. Federal Maritime Commission (FMC) review of ocean carrier pricing practices.
The FMC, which announced the notice of inquiry on Wednesday, said it is seeking information from the container-shipping public on alleged attempts by ocean carriers to hold companies financially responsible for transportation services that they did not contract for and may not legally be required to pay.
The FMC said it received comments for its earlier Docket No. 19-05, Interpretative Rule on Detention and Demurrage under the Shipping Act, which raised concerns about these billing practices. The agency finalized the interpretative rule in April.
Specifically, the industry allegations point to ocean carriers defining “merchant” in their bills of lading to include persons or entities with no beneficial interest in the cargo and have not consented to be bound by the terms in the bill of lading, the agency said.
Entities being tied to merchant obligations in ocean carrier bills of lading may include non-vessel-operating common carriers, freight forwarders and truckers.
Separately, the FMC’s Bureau of Enforcement will seek specific billing information from certain ocean carriers serving U.S. international container trades.
“It’s encouraging that the FMC is taking its responsibility seriously when it comes to detention and demurrage charges,” said Peter Friedmann, executive director of the Washington-based Agriculture Transportation Coalition and an outspoken critic of how these charges are accessed by the ocean carriers against U.S. exporters.
The New York-New Jersey Foreign Freight Forwarders and Brokers Association has pointed out through the FMC’s interpretative rule on detention and demurrage practices that ocean carriers define the term ‘‘merchant’’ in their bill of lading too broadly, resulting in parties being billed for demurrage and detention ‘‘regardless of whether they are truly in control of the cargo when the charges were incurred.’’
Demurrage pertains to the time an import container sits at 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 Washington-based World Shipping Council, which represents 95% of the global container industry by volume, told American Shipper that it is reviewing the inquiry and will share its views through the FMC’s comment process.
Comments related to the inquiry must be submitted to the FMC by no later than Nov. 6.
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The autonomous vehicle (AV) niche is gaining momentum, with incumbent automakers and high-profile startups pushing pilot vehicles on public roads and testing their technology to improve self-driving capabilities. In the commercial context, the trucking mid-mile segment might become one of the early adopters of this technology as trucks can encounter less traffic when hauling freight across interstates and highways.
While this would mean that fleets in the mid-mile segment could considerably reduce their operational costs, it also could lead to the exodus of truck drivers.
“Though the technology will have to be perfected, if a truck can run without a human operator, then it theoretically could operate 24 hours a day, with the only downtime being for fuel. There would be no hours-of-service requirements and it’s also a lot safer,” said Justin King, senior vice president of product and innovation of North America trucking for Comdata. “There would be tremendous cost savings potentially, making this technology huge for the trucking industry.”
When autonomous technology becomes commercially viable, it would also impact fleet insurance rates as driverless vehicles are expected to be a lot safer on the road than human-driven vehicles. An Accenture report states that auto insurance premiums could fall by nearly $25 billion by 2035 — equivalent to 12.5% of the total market.
Though AVs will spin off a dedicated insurance segment, estimates show that the annual insurance revenue loss due to AVs will exceed the new segment’s gain.
While discussing the impact of self-driving vehicles, it is also crucial to look at the negation of the human element of trucking and the economic and regulatory challenges that can build up against such technology. For governments, regulating autonomous driving technology is tricky. While it promises safer roads and a drastic reduction in logistics costs, it could displace millions of truck drivers, a conundrum with which authorities struggle.
“Though there would be regulatory headwinds to AVs, I think this would go down in phases. Right now we’re in the testing phase, where there are clearly several models of autonomous trucks made by several companies that are being test-driven on roads. But they come with operators who are in the cab to take over when the vehicle does not do something right or is stuck in a situation,” said King.
Still, an AV learns in every mile it courses through — be it real life or simulation. King believes AVs will be able to drive on their own without intervention by the next decade.
For Comdata, the disruption caused by AVs from a fueling perspective is of interest. “The question is how do we enable the fuel transaction when the vehicle is driverless? Today, trucks pull up at the gas station and get fueled by someone, and there also is a physical plastic card swipe. But with AVs, we need to think about contactless and location-based payment,” said King.
Technology around contactless payment has been flourishing as well. Last year, German banking major Commerzbank announced a collaborative effort with Daimler Trucks on developing a blockchain-based payment solution that automates machine-to-machine (M2M) transactions. If proven successful, this technology can bridge the gap of manual fueling and fuel cards, allowing machines to interact seamlessly without hassle.
“We think the future is disruptive to what we see in the industry today. It’s not just the carriers and fuel card companies that are facing change. For instance, how are the truck stops going to adapt to AVs? We would not need as many truck stops in an autonomous driving world, which can completely change amenities and service models,” said King.
As technology disrupts practices, the industry must follow its cue and adapt to change. King contended that the industry stakeholders are brushing off the inevitable, not looking to change processes until disruption is upon them.
“Everything is happening so fast, and the future is going to be electric and autonomous. It is time the industry thinks of its future a lot more aggressively than it is at the moment,” he said.
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The U.S. Federal Maritime Commission (FMC) said it is seeking information from the container-shipping public on alleged attempts by ocean carriers to hold companies financially responsible for transportation services that they did not contract for and may not legally be required to pay.
The FMC said it received comments for its earlier Docket No. 19-05, Interpretative Rule on Detention and Demurrage under the Shipping Act, from industry groups such as the Agriculture Transportation Coalition and National Customs Brokers and Forwarders Association of America that raised concerns about these billing practices and initiated the notice of inquiry.
Specifically, allegations point to ocean carriers defining “merchant” in their bills of lading to include persons or entities with no beneficial interest in the cargo and that have not consented to be bound by the terms in the bill of lading.
Entities being tied to merchant obligations in ocean carrier bills of lading may include non-vessel-operating common carriers, freight forwarders and truckers.
Separately, the FMC’s Bureau of Enforcement will seek specific billing information from certain ocean carriers serving U.S. international container trades.
FMC Chairman Michael Khouri requested those in the ocean shipping industry share their experiences with bills of lading that contain the alleged merchant clauses.
“Without public comment and involvement, it is difficult for the commission to address alleged commercial abuse in this area,” he said in a statement.
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Germany’s SAL Heavy Lift Group, an ocean transporter of the world’s largest and heaviest shipments, has acquired a major stake in Intermarine, expanding its presence in the U.S. project cargo market.
Financial terms of the deal were not disclosed.
SAL has sought to expand its market presence in the Americas project cargo market. For more than three decades, Intermarine, with offices in Houston and New Orleans, has provided this specialized marine transport service between North and South America and in the Caribbean, in combination with a strong intra-South America network, SAL said.
SAL said Intermarine will continue to operate as an independent brand, with Richard Seeg as president and Chad Call as vice president and chief financial officer. SAL, however, will install shareholder Svend Andersen as CEO of Intermarine.
“I have invested in this venture as I see great prospects in bringing the Intermarine brand and business onwards under the helm and support by SAL Heavy Lift as a top brand in the heavy lift shipping industry,” Andersen said in a statement Monday.
Both carriers operate heavy lift ships of different sizes and capabilities.
With the acquisition of Intermarine, SAL said its customers will “benefit from more vessels being able to operate not only in and out of South America, but also into offsite river deltas, where SAL would otherwise have had limited access.”
As a subsidiary of SAL, Intermarine’s customers will have access to some of the world’s largest heavy-lift ships that operate in the Americas, Europe, Asia and Africa trades.
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North Dakota specialty soybean exporter Robert Sinner has lost his patience with ocean carriers that without sufficient notice change the earliest delivery return dates for containers arriving at the nation’s seaports and he wants something done about it.
Sinner, whose company SB&B Foods has shipped container loads of soybeans to high-end food processors in Asia for the past two decades, said the problem has gone from bad to worse during the past five years.
“It drives us crazy,” he told American Shipper in a telephone interview. “These constant disruptions are costly for us.”
Planning and preparing containerized soybean shipments from the Casselton, North Dakota, soybean processing facility starts six to eight weeks before the sailing date. The container handoffs between truckers, the closest rail ramp in Minneapolis, to the West Coast seaports requires precision on behalf of the company’s logistics team for the product to arrive on time to the customer in Asia.
A key component in this process for SB&B Foods is that its containers arrive at the marine terminal gate by the earliest return date (ERD) set by the ocean carriers based on their ship schedules. Due to the general lack of terminal space, containers must arrive a day or two before the ship reaches the dock.
Sinner understands that unforeseen circumstances on the high seas, such as storms, can cause ocean carriers to readjust their sailing schedules and thus their availability to receive containers at the marine terminals booked for specific sailings.
What angers Sinner, however, as well as severely disrupts his supply chain, is the ocean carriers’ failure to promptly notify him that the earliest return dates for his containers have changed. “Once our containers are on the rail, there’s nothing we can do to delay or stop them,” he said.
When containers are unable to enter the marine terminal due to a sailing schedule delay, container shippers like Sinner must scramble to find safe and secure sites nearby to hold their shipments. The longer the box sits, the hundreds of dollars in storage fees rack up and Sinner watches his profit on the shipment dwindle.
Costly, ongoing problem for all shippers
The coronavirus pandemic severely upset the ocean carriers’ schedules during the spring and summer, as they “blanked” sailings to recover costs from diminished container volumes from Asia. However, Sinner said the problem with earliest return dates has been going on for years.
That is why SB&B Foods, as well as scores of other American exporters of agricultural goods, forest products and lumber, have turned to the Washington-based Agriculture Transportation Coalition (AgTC) to right this situation with the ocean carrier industry.
The problem is happening to all American exporters, “no matter if they ship five or 200,000 containers a year,” AgTC Executive Director Peter Friedmann told American Shipper.
He said the inability of ocean carriers to keep shippers immediately informed about changes to sailing schedules and earliest return dates for containers leads to demurrage charges, additional truck and storage charges, rolled cargo and missed sailings.
This is happening “all at a time when trucking and storage costs are going through the roof,” he said.
Friedmann said shippers understand that ocean carriers run into problems and unforeseen events, such as weather and congestion, and must change their sailing schedules.
“Emergencies happen, but they’re supposed to be the exception and not the rule,” he said. “It appears instead that we’re in a state of constant emergency.”
Since the ocean carriers have contractual relationships with the shippers, either through service contracts or bills of lading at the individual shipment level, Friedmann said they should communicate directly and immediately with those customers and not depend on marine terminals and others to let the exporters know of ERD changes.
Finding an answer
AgTC, with assistance from TradeLanes, recently completed a detailed survey of its membership regarding the impacts that ERD disruptions have on their supply chains. More than 100 shippers answered the 25-question survey, which encouraged written responses.
The association has sorted through the survey results and will share them during an AgTC members-only virtual workshop Monday. “What I can tell you is that this is a huge and costly problem for shippers, forwarders and truckers all over the country,” Friedmann said.
American shippers point out that the airline industry has the technical capability to notify passengers via instant texts and emails whenever a flight is delayed and why, allowing them to adjust their travel schedules. “Is there some reason ocean carriers don’t or can’t do this? What will it take to get this information directly and timely from the carriers?” Friedmann asked.
Friedmann said the AgTC is weighing its options on how to correct this problem in the ocean container shipping industry. The association is even considering technology that can provide exporters and forwarders accurate, real-time guidance on ERD changes and when the terminals are able to accept containers.
The association urges key service providers in the ocean container supply chain to join its initiative.
“We believe port authorities, marine terminals and railroads should join us in pressing ocean carriers to provide timely schedule change notices,” Friedmann said. “Failure to receive this information is a cause of much of the congestion and disruption throughout the supply chain — from the marine terminals to cold storage facilities to rail ramps and thousands of miles inland.”
Sinner hopes that collective industry pressure will push the ocean carrier industry to fix the problem with earliest return date notifications for containers and allow his company to benefit from a more predictable export system.
Friedmann said for many shippers, if this communication breakdown from the ocean carriers continues to disrupt the flow of export and add costs, then foreign importers of American products will simply turn to other markets.
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CMA CGM announced Friday it has recruited a leader to execute its digitization and technology strategy.
Nicolas Sekkaki has served as the chairman and CEO of IBM France since 2015. The CMA CGM Group has hired him as its executive vice president of IT, digital and transformation.
CMA CGM said in the announcement that Sekkaki was brought on to accelerate the implementation of its “digital and technological ambitions.”
“Digitization is at the heart of the CMA CGM Group’s development strategy: a driver for growth, differentiation and performance,” CMA CGM said. “A number of initiatives have already been taken to give the group’s customers access to the world’s most innovative technologies in the fields of blockchain, artificial intelligence and internet of things.
“In order to accelerate the industry’s digital transformation, the CMA CGM Group is recruiting the world’s best experts in the sector,” it said.
In addition to Sekkaki, CMA CGM announced Friday that it had hired Padmaraja Dipankar to serve as the group’s chief digital officer.
Currently the vice president of intelligent operations and innovation at Accenture, Dipankar will be tasked with leading CMA CGM digital transformation projects and fostering partnerships with external companies.
CMA CGM employee Michel Foulon, “with his track record and extensive experience within the group,” will lead IT operations, the company said.
Friday’s announcement made no mention of IT problems caused this week by the ransomware attack reported Monday.
CMA CGM’s most recent statement on the attack was issued Wednesday, when the French container carrier said it suspected a data breach and was “doing everything possible to assess its potential volume and nature.”
“Ragnar Locker” informed CMA CGM on Monday that its data had been encrypted and sensitive private information stolen. The ransom demand read, “There is ONLY ONE possible way to get back your files — contact us via LIVE CHAT and pay for the special DECRYPTION KEY!”
Sekkaki joined IBM in 1991 and his career took him to New York, London and France, where he was appointed general manager of global technology services in 2006. He left IBM in 2010 to serve as SAP’s managing director in France and North Africa but returned in 2012 as vice president of the system and technology group. He was promoted to CEO of IBM France in 2015.
Dipankar joined WNS Global Services as its head of digital transformation and business process excellence in 2006. In 2012, he became vice president of intelligent operations and innovation for Accenture in Barcelona, Spain.
France-headquartered CMA CGM is the world’s fourth-largest container shipping line.
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Third-party logistics services provider (3PL) Geodis said it plans to hire up to 8,000 seasonal employees in the U.S. to handle an anticipated surge in freight volumes for the end-of-year holidays.
The company plans to spread the hiring across its 19 locations across the country.
Geodis said its need for the additional seasonal employees is largely due to the continued rise in online shopping during the coronavirus pandemic. The company cited a recent eMarketer report that forecasts e-commerce shipments will increase 18% to $709.78 billion this year.
John Grubor, who heads contract logistics for Geodis in the Americas, said the additional employees will help the company counter “a bevy of new challenges in logistics and supply chain heading into peak season, such as visibility of inventory, needing to constantly adjust fulfillment capacity and managing product returns efficiently.”
Geodis is particularly focused on hiring seasonal material handlers and forklift operators for its American facilities.
To promote safe and healthy work conditions, Geodis has implemented a series of measures and procedures such as temperature checks, enforced social distancing, frequent surface cleaning and use of technology for ongoing monitoring and reporting. Additionally, each employee will receive a safety kit and personal protective gear.
In recent years, the France-based 3PL has significantly expanded its network across the U.S. market.
Geodis announced that 15-year company veteran Mike Honious will take over as president and CEO of its Americas operation, effective Saturday. He succeeds Randy Tucker, who is retiring after serving five years as the company’s Americas president and CEO. Tucker is credited by Geodis for growing its presence in the U.S. market.
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While the coronavirus pandemic dented global trade flows this year, DHL Global Forwarding has not taken its eye off an effort to reduce pollution related to ocean container freight transportation.
The subsidiary of German courier giant Deutsche Post DHL Group (OTCMKTS: DPSGY) announced this week it will eliminate carbon emissions related to its customers’ international less-than-container load (LCL) ocean shipments starting Jan. 1.
DHL Global Forwarding said its zero-carbon-emission LCL service offering will be achieved by ensuring its ocean carriers use biofuels to power their containerships.
“Alternative fuels are a key lever to change the fuel mix in ocean freight and ultimately reduce CO2 emissions,” Kathrin Brost, global head of DHL Global Forwarding’s GoGreen Program, told American Shipper.
In recent years, the DHL operation has studied carbon emissions-free or neutral distribution activities in certain trade lanes and markets, such as Finland.
The forwarder’s customers also previously had the option to book cargo with a carbon-free shipping service via DHL’s online booking portal, MyDHLi Quote & Book.
The company said it is now ready to take its carbon-free shipping initiative global through its LCL business.
“Due to the corona[virus] pandemic, we are in unprecedented times and we want to make sure that climate protection and sustainability stay top of mind,” Brost said. “We have taken the decision to use LCL shipments as this enables us to address a broader range of shippers across different industries and sectors.”
DHL Global Forwarding said it will offer its carbon-free LCL service to shippers at no additional cost.
“By offering this service to customers at no extra cost, we not only want to address the current economic situation in the corona[virus] pandemic, but also further raise awareness of sustainable transport solutions and sensitize a wider range of customers to the issue,” Brost said.
“We also want to send a signal to our partners,” she added. “Only if we succeed together in increasing the demand for sustainable fuels, it will be possible to promote development and production in such a way that sustainable fuels become available at competitive prices.”
DHL Global Forwarding’s GoGreen team, based in Bonn, Germany, tracks which carriers purchase and use biofuels in their operations. “Our partners inject those fuels into ships at several bunkering events throughout the year. The whole process is audited at least once a year,” Brost said.
That information is then electronically shared with DHL Global Forwarding’s ocean freight specialists throughout the world.
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Uber is in talks with German automakers Daimler AG and BMW AG to acquire their ride-hailing joint venture FreeNow, as reported by Bloomberg. If this deal goes through, Uber can significantly improve its market share in Europe, as FreeNow operates in more than 100 European cities.
A FreeNow buyout would be another high-profile deal for Uber, following its agreement to acquire Middle East-based ride-hailing company Careem for $1.7 billion, finalized earlier this year.
This has been a major reversal of fortunes for Uber, following its regular ceding to foreign market competitors — including selling local operations to Didi Chuxing in China and Grab in Southeast Asia and merging Russian operations with local tech giant Yandex’s taxi service.
Hamburg, Germany-based FreeNow was founded in early 2019 as part of Your Now, a Daimler-BMW partnership in which the two companies roughly invested $1.14 billion across five promising segments within the mobility-as-a-service market. With Your Now, Daimler’s car2go and BMW’s DriveNow merged to offer the various mobility solutions under a single umbrella.
The five segments within Your Now are route navigation, real-time parking availability, electric vehicle charging, car sharing and cab hailing. The cab-hailing segment reportedly is the only venture that Uber is interested in at the moment. In June, Daimler valued its share of the Your Now operations at roughly $720 million.
The FreeNow venture has been profitable, while also integrating other ride-hailing companies in Europe like France-based Kapten, Greece-based Beat and Romania-based Clever Taxi within its platform.
With FreeNow, Uber can see a revival of its market ambitions outside North America, after a few exits across Asia and Russia. The company also is looking to sell off the remnants from those exits, mainly minority holdings within foreign ride-hailing operations, including stakes in Didi Chuxing, Grab and Yandex. Uber also shrunk its operations in the freight segment in Europe, merging Uber Freight Europe with German-based sennder earlier this month.
Running fleets of driverless cabs would eliminate Uber’s largest expense — paying cab drivers — and in 2018, CEO Dara Khosrowshahi made a bold statement that Uber would look to get driverless cars on the road by the end of that year. Not much has gone according to plan. Two years later, Uber’s self-driving vehicles have not transcended pilot tests and lag behind market leaders like Alphabet’s Waymo and GM’s Cruise.
Several issues have cropped up during Uber’s autonomous vehicle pilot tests, including sudden jerks and potentially dangerous movement — every one-third of a mile on average. In July, a company presentation showed that Uber was only 3.9% of the way on its road map to figuring out a way to test its vehicle’s readiness for tackling critical situations in the driving environment.
In other news, Uber won its appeal against having its operating license revoked in London on Monday. The court decided in favor of Uber, as it was satisfied with the process improvements the company had made, including its efforts to communicate with Transport for London (TfL), the city’s transport regulator.
The grant granted Uber an 18-month license extension, far shorter than the usual five-year extension period.
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