Weekly Roundup – April 25, 2024

Welcome back to the weekly roundup, where we provide concise summaries of the most important supply chain and logistics stories of the week. Covering breaking news, emerging threats, and changing market dynamics, it contains all the news you need to maintain a competitive advantage.

Ocean carriers seek clarity on D&D billing to truckers under new FMC rules

The World Shipping Council (WSC) has filed a petition with the District of Columbia Court of Appeals to clarify the US Federal Maritime Commission’s (FMC’s) rulemaking on detention and demurrage billing for port truckers. WSC argues that the FMC’s rule has introduced an internal contradiction, leading to confusion and uncertainty for ocean carriers and industry participants. The FMC’s rule, effective May 28, aims to ensure that invoices for detention and demurrage go directly to the shipper or receiver who contracted for the container, not to intermediaries like port truckers. However, WSC contends that the rule is unclear on whether ocean carriers can bill truckers directly. WSC had requested a correction from the FMC, which was not done, prompting the petition to ensure regulatory clarity. The rule’s goal is to prevent situations where marine terminals lock out truckers who cannot pay detention and demurrage fees.

Port of Baltimore on Track to Fully Reopen By End of May

The timeline to fully reopen the main shipping channel into the Port of Baltimore remains on track following the collapse of the Francis Scott Key Bridge due to a collision with the Dali container ship on March 26. Temporary channels have been established to allow vessel traffic, aiding in cleanup efforts. The U.S. Army Corps of Engineers anticipates complete reopening by the end of May. The U.S. Department of Transportation confirmed this schedule during a meeting with the National Economic Council and East Coast port leaders on April 19. Despite the closure, the Biden administration reports minimal supply chain disruptions, citing initiatives like the Freight Logistics Optimizations Works (FLOW) project launched in 2022 to monitor and manage container volume and port capacities along the East Coast, ensuring balanced traffic distribution.

HMM sees opportunities in Hapag-Lloyd’s exit from THE Alliance

HMM CEO Kim Kyung-Bae sees Hapag-Lloyd’s exit from THE Alliance as a significant opportunity for South Korea’s flagship carrier to expand. Following Hapag-Lloyd’s departure to form the Gemini Cooperation with Maersk Line, THE Alliance will continue with ONE, HMM, and Yang Ming as its remaining members. Kim mentioned plans to engage external consultants to develop a mid- to long-term strategy for business expansion. HMM remains open to collaboration with local operators if opportunities arise, although most South Korean container carriers focus on intra-Asia routes. South Korea’s Ministry of Oceans and Fisheries aims to grow the locally owned container shipping fleet to 2 million TEU by 2030, with HMM planning to increase its fleet to 1.5 million TEU by then. Analysts suggest that while SM Line could be a potential partner for HMM due to its long-haul routes, its fleet size may not fully compensate for Hapag-Lloyd’s departure, potentially impacting THE Alliance’s competitiveness on major trade routes.

US intermodal picking up steam as trucking woes continue

The US intermodal traffic market is experiencing a resurgence after a period of slow growth, with Union Pacific (UP) opening a new Chicago-Southern California route to target intermodal traffic that would typically move by truck, boasting shorter transit times and reduced drayage costs. UP is also introducing on-dock rail service at the port of Houston to capitalize on rising container traffic. Intermodal volumes in the US have increased by 9% compared to the same period last year, and Mexico is also seeing similar growth, driven by nearshoring and disruptions in cross-border trucking. Rail carriers anticipate capturing more freight from trucking due to improved network efficiency and service reliability, with industry analysts expecting railroads to gain significant market share from trucking as trucking rates are expected to rise due to unsustainable contract rates and overcapacity in the trucking sector.

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