Tuesday, August 26, 2008

Shippers Face Multiple Challenges

Life isn’t easy these days if you’re a shipper. Shortages of vessel space and equipment, service changes by the carriers and multiple increases in freight rates and surcharges over the past year have combined to make the job even more challenging than it was.

“You’re just going nuts taking all these rates,” said Ron Bailey, manager of Brewster Lines, a non-vessel-operating common carrier that serves UniGroup Worldwide UTS. Its parent company, UniGroup, owns United Van Lines and Mayflower Transit.

Bailey said he has had up to 14 increases in freight rates and surcharges from one carrier in a single week.

The surcharges include bunker adjustment factors, emergency bunker adjustment factors, currency adjustment factors, inland fuel surcharges, terminal handling charges, container service charges, chassis usage charges, hazardous cargo charges, documentation fees, Panama Canal transit fees, port terminal security charges, low-sulfur fuel charges and Alameda Corridor surcharges.

Once Brewster gives customers a price quote, it has to keep that quote, Bailey said, though his costs may rise because of increases in freight rates and surcharges. And if a shipment misses a scheduled sailing because the carrier has overbooked, there can be a snowball effect. Besides the delay while the container waits for another sailing, there are the increased chances for missing paperwork and Customs holds.

Brewster has to eat additional delivery, storage and packing costs that might flow from the missed sailing. As for its customers moving overseas, they may have to stay at a hotel, buy new clothes and either buy or rent furniture and a car, and eat out, while they wait for their shipment to arrive. That does not make for happy customers.

“We must do all we can to make certain we have a means of getting a shipment from Point A to Point B,” Bailey said. Like other shippers, he admits to double booking some shipments with different carriers in the hope that one of them will have equipment and service in place.

Service cutbacks and route changes by the carriers have made it harder to find carriers at some ports, Bailey said, citing Charleston and Savannah as examples. “If you’re shipping out of Atlanta, and you have to go to Charleston instead of Savannah, it will cost you more,” he said.

Equipment shortages at inland cities are another problem, Bailey said, citing Phoenix as an example. He has sometimes had to wait three or four weeks to get a container there. Those shortages have been exacerbated by the elimination of inland depots by some carriers.

Carrier mergers and vessel-sharing alliances have also reduced the options for shippers, he said, citing Maersk Line’s acquisition of P&O Nedlloyd and the possibility that Neptune Orient Lines, which owns APL, will buy Hapag-Lloyd.

Four or five carriers may share space on the same vessel, but that does not mean that each of them will be able to handle cargo to and from each port where the vessel calls, he said.

Bailey said some carriers will not accept household goods shipments to certain destinations such as India. That’s because the lines have been burned when people file false commodity declarations. The shippers might declare that the cargo is household goods when it was actually junk tires or old computers. It was cheaper for them to ship the goods overseas rather than to dispose of them legally in the U.S., he said.

As a result, Brewster will not accept any household goods that are packed by the owner. Instead, it will send its own truck to the home to pick up the goods and take them to Brewster’s warehouse where they will be packed into marine containers.

Source : Shipping Diggest - William Armbruster - August 25, 2008