Maritime chaos intensifies with empty shipping containers piling up in depots and “ghost ships” being dispatched to retrieve them.
The world’s fourth largest container shipping company, CMA CGM, refuses to take more empty containers from its Auckland depot because it has too many. Instead, the company is asking importers and others to return their containers to Northport or Tauranga.
Another container shipping company, Mediterranean Shipping Company, the second largest in the world, charges customers high fees for returning empty containers to the Auckland depots for which they were originally intended.
The president of the Federation of Customs Brokers and Freight Forwarders, Chris Edwards, said relations between shipping companies and other players in the supply chain were breaking down as the former began to collect fees.
Chris McKeen / Stuff
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“What has changed over the past 12 to 15 months is that lines are being drawn between some of the shipping lines and customers,” Edwards said.
The latest development in empty container charges means additional costs for importers who are responsible for getting these empty containers to the correct depot, so that they can be “taken” out of the country.
When an importer or someone else brings something into the country in a shipping container, they take responsibility for transporting it once it is unloaded from a ship.
If a container is in the wrong port when an importer is done with it, then he or she has to pay significant penalties.
Edwards says the stacking of empty containers is so bad that shipping companies send out “ghost ships” and fill them with empty containers just to relieve the pressure on quickly filling depots.
Still, the financial incentives are there to keep shipping companies out of the country as many empty containers as possible.
Which led to another set of problems for exporters.
In recent months, exporters have encountered considerable difficulties in getting shipping companies to transport their export products.
Demand for empty containers is high overseas, which means that low-value agricultural product containers are less valuable for shipping companies to transport than empty containers.
Infometrics senior economist Brad Olsen says this could be the reason for the drop in merchandise exports in the first quarter of this year.
Vespucci Maritime Managing Director Lars Jensen, whose company is well known for its work analyzing trends and data in the container shipping industry, says the global empty container shortage is facing the problem much more. extensive port congestion.
“There are a series of bottlenecks in the supply chain that influence each other. Not only is there a shortage of containers, the ships’ sailing schedules are completely disrupted – much worse than ever before, ”Jensen said.
Sea Intelligence chief executive Alan Murphy previously provided data showing that the reliability of shipping schedules in New Zealand fell to an all-time low of 6% in April. Edwards says data from the Federation of Customs Brokers and Freight Forwarders puts that figure at 14%.
Jensen says 10 percent of the world’s shipping capacity has been cut due to port congestion issues.
Shipping companies deal with these congestion problems by loading fewer containers on their ships.
“The fewer containers you load, the faster you can handle the ship,” Jensen explains.
“Solving the problem of ships and solving the problem of empty containers then becomes two opposing priorities. “
CNA CGM has told its customers that they will now have to ship their containers to Northport or the ports of Tauranga, or face penalties for holding the containers too long.
Mediterranean Shipping has told its customers that it wants them to drop off empty containers in Tauranga or be charged a fee of $ 1,000 per container for empty containers they drop off in Auckland. This applies to containers shipped via Australia which were originally intended for unloading in Auckland but redirected to Tauranga.
To put these charges into context, before the pandemic, $ 1,000 was roughly the cost of shipping a container across the ocean from New Zealand to Asia.
Which means importers have to pay significant costs anyway. Either they pay extra freight charges to get the containers to Northport or the port of Tauranga, or they pay a high “detention fee” for keeping them too long.
Edwards says it is unfair to say that the people who imported these goods are responsible for the additional cost of transporting them to another port.
He argues that it is the responsibility of shipping companies like CNA CGM to ensure that they have sufficient space to store containers where they initially agreed to transport them, or to compensate importers and others. if a container needs to be shipped from another country. Harbor.
All of this adds up to a set of shipping problems: A Covid-19 outbreak in southern China is seriously hampering global shipping, reliability of shipping schedules is the worst it has ever been, less than ships visit, while tech companies stock up on bases like power adapters fearing future shortages to come.
Edwards says the moves to get people to take their empty shipping containers to Northport are a sign the port is now a “semi-permanent” option for shipping companies thanks to congestion at Auckland’s ports.
“The upcoming Auckland ports won’t be this year I’m sure, it might be next year.
“So until that happens [CMA CGM] will say ‘hey, look, we can’t come to Auckland and be anchored for days, so Northport is our option’.
Edwards says he has taken cases to litigation court on behalf of clients and notes that others are considering further legal actions against shipping companies.
“You don’t want to take legal action against a shipping company. We kind of have to work together, don’t we? We are all part of the same supply chain.
International shipping companies are reacting very differently to the situation.
Profits in the shipping industry are skyrocketing globally after a decade of bankruptcies and mergers driven by low profitability and overcapacity.
Edwards says some lines place a lot of value on their long-term contracts. They realize that demand can change quickly and remain loyal to customers for the long term in the hope that this will be reciprocated when things change.
Other shipping companies see it as a wasteland for importers and exporters who have had it too well for too long.
“Some shipping companies see this period, where tariffs are reaching incredible historic highs, as revenge for the many years when importers and exporters had such low tariffs.
“It’s a personal opinion, but that’s how I felt when talking to some shipping companies.
“The feedback is almost ‘well you’ve had it so well for 10 years, now it’s our turn.”