Laufer Group International's Ocean Export team recently participated in the highly anticipated AgTC Annual meeting, held earlier this month in Tacoma, WA. Established in 1987, the Agriculture Transportation Coalition has emerged as the leading advocate for agricultural exporters in shaping US transportation policy, as highlighted by the Journal of Commerce. As a member of the AgTC, Laufer Group International supports and regularly attends AgTC events including the Annual Meeting.
This gathering serves as a platform for invaluable information and insightful exchanges, and our team is eager to share their top five key takeaways from this important event.
- Impact of the Pandemic
- FMC, D&D and OSRA Implementation
- Carrier Participation and Cooperation
- Panama Canal
- Market Overview and Outlook
- Impact of the Pandemic
Much has already been written and shared on the dramatic impact that the Global Pandemic has had on global shipping and especially US importers and exporters. Several US Export and Importers had the opportunity to share their personal experience during the conference.
Economic impact included not only capacity, increased rates but also increased costs from labor and labor inefficiencies caused by the chaos. One exporter shared that they had to increase their internal resources by over 200% over the past three years to with the challenges while at the same time handling less cargo. During this same period over 150% of their export bookings were rolled or split.
- FMC, D&D and OSRA Implementation
Detention and Demurrage (D&D) emerged as a recurring concern and a source of frustration for both exporters and importers. During the discussions, numerous examples were highlighted, particularly those that occurred during the pandemic, including the story of one shipper burdened with cumulative demurrage bills exceeding $15 million. The Federal Maritime Commission (FMC) was actively engaged in the meeting, advocating for the interests of shippers by emphasizing the need for carriers and terminals to adopt a fair and reasonable approach in applying D&D charges. Specifically, it was underscored that D&D fees should not be imposed when terminals are closed or during holidays due to the unavailability of equipment.
- Carrier Participation and Cooperation
Representatives from several prominent ocean carriers attended the meeting and, in some cases, addressed the membership directly. Despite the sense of strained carrier/shipper relations from earlier years, our team was struck by the positive outreach from the leadership at MSC and ONE. Both expressed their firm support for US exporters and were very open to answering questions from the audience.
- ILWU Negotiations and Panama Canal
Regular daily update on the status of the ILWU/PMA negotiations were provided daily through the four day meeting and as previously reported, positive news was finally advised on June 15th.
The status of the low water situation of the Panama Canal was also a prominent topic. As a result of extended draught, water levels at the canal are at historical lows. Typical vessel levels are 50 feet and now expected to be lowered to 43.5 feet or even more. The impact of this reduction would equate to a 40-50% reduction in cargo capacity on a ship. The consensus from presenters at the conference expect that importers TPEB trade would be most likely to be affected. Less so for exporters due to market dynamics of the trade and the fact that export vessels are typically sailing at less than 100% capacity.
- Market Overview and Outlook
Representatives from North and Southwest Coast ports shared that volumes are down including the Port of Seattle down 60-70% in volume. Much discussion centered on the shift of the volumes from West Coast Ports to the East Coast as well as to Gulf ports where many importers have been building new distribution centers.
Investments by railroads are also being made including new inland locations in OR, WA, and others.
The overall outlook for the upcoming peak season is that there may be a “hump but no peak”. Some expressed concern about the slack season following the October Golden Week holiday and the market could experience some additional capacity and service cuts at that time.
For over 70 years, Laufer Group International Ltd. has been helping customers improve the way they handle their logistics. To see how we can help, or for any questions, contact Marc Van Gorp, National Export Business Development Manager, or contact your local sales representative.