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- Mark Szakonyi
A special, off-the-record discussion and preview of TPM22 and the issues dominating today's containerized ocean shipping industry. By Reservation Only for Shippers.
With momentum on import volumes continuing into 2022, there will be little opportunity for supply chain bottlenecks to quickly resolve themselves, which means continuing upward pressure on spot and contract rates. As a historically disruptive 2021 neared a close, factors favoring continued strength in volumes were outnumbering factors suggesting an easing of demand in the trans–Pacific. Though big-box retailers leveraged their volumes to break through port bottlenecks and stock their shelves for the holidays, inventories overall remained very low. Meanwhile, consumers are flush with cash, employment is rising, economists see a low risk of recession, the stock market is at record highs, and a normal pre-COVID balance of spending between goods and services has yet to be restored. On the other side, falling consumer confidence and rising inflation eventually may temper demand, but as of late 2021, it hadn’t happened yet. Thus, the demand pressure on the supply chain will continue well into 2022, slamming hard into stubborn realities such as labor and chassis shortages that are proving resistant to easy fixes. Disruptions at origin and perhaps a post-holiday-shipping lull led to slightly easing trans–Pacific import spot rates, but continuing port congestion is tying up the vessel, container, and chassis capacity, a key reason for elevated ocean rates. Time will tell how much such a scenario will be in play by the time TPM begins in late February, but this panel will undoubtedly provide the context shippers and service providers need to guide them through the turmoil.
Early trans-Pacific service contract negotiations are shaping up to be markedly different than in prior years, and, generally not to the benefit of importers. Container lines are reluctant to expand minimum quantity commitments (MQCs) and want to reduce how much so-called free time they provide. Some carriers are simply dropping customers whose cargo they don’t want, or only agreeing to provide contracted cargo on specific lanes. That’s a challenging negotiating environment even when considering that many importers’ 2022 volume forecasts aren’t necessarily robust. This session will address what importers need to understand and do to cross the contracting finish line with some MQC certainty, and how they can improve the likelihood that their cargo allocation guarantees are met through the life of the contract.
US port congestion and global shipping disruption has galvanized the Federal Maritime Commission, launching investigations into unreasonable storage fees and congestion surcharges. FMC Chairman Daniel Maffei and his fellow commissioners are simultaneously sharpening their monitoring while working with the industry to forge commercial solutions. At the same time, Congress is considering legislation that, if passed in current form, would transform how the agency regulates container shipping. Following the chairman’s update on the FMC’s 2022 priorities, Maffei will discuss with JOC Executive Editor Mark Szakonyi how the agency is approaching a wide range of issues, including detention and demurrage, and congestion surcharges.
For the first time in more than two decades, Congress is considering legislation that would upend how the United States regulates container shipping. For the National Industrial Transportation League, National Retail Federation, and other supporters, behavior by the carriers and marine terminals over the last two years of disruption has shown the need for the Ocean Shipping Reform Act. If passed in current form, the legislation would pressure carriers to accept more export bookings and force carriers to certify that storage fees comply with federal regulations. Container lines, as represented by the World Shipping Council, along with terminal operators and stevedores warn shippers that any short-term benefits would be outweighed by long-term damage. The carriers argue that the legislation would only increase detention and demurrage and slow the supply chain. Getting past the rhetoric, the opposing sides will make their case in a constructive debate moderated by JOC Executive Editor Mark Szakonyi.
Ron Widdows’ warning to the virtual TPM21 Conference last March was scarily prescient: The supply chain story of 2021 would be all about volatility. Widdows, the former chairman of the World Shipping Council and now the CEO of FlexiVan Leasing, sees little signs of significant easing in 2022. New chassis equipment may not be delivered until late in the year, there are few signs that demand for Asia’s imports will slow dramatically, and the Asia-US shipping system is maxed out from end to end, meaning small disruptions quickly expand into larger ones. Known for a frankness that matches his prescience — both based on experience that stretches to 50 years this March, Widdows will sit down with JOC Executive Editor Mark Szakonyi to discuss how he sees 2022 playing out, and the implications for shippers.
Like many US importers, Mary McNelly, the senior director of global logistics and supply chain for Crocs, can’t get her goods into the country fast enough. But port delays, unfulfilled contracted ocean obligations, and a production crunch in a locked-down Vietnam somehow made 2021 even more chaotic. Yet, the shoes found their way to consumers’ feet. Crocs expects to end 2021 with between 62-65 percent higher revenue than 2020. Now, under still strong demand for the iconic footwear and trans–Pacific pressures easing only modestly, McNelly will share how Crocs is taking short- and long-term steps to prepare for and mitigate supply chain disruptions. After nearly two years of disruption, she stresses that logistics managers can still control their supply chain and there are levers to pull beyond just paying more.
As one of Canada’s largest importers, Canadian Tire faced a challenge shared by all major trans–Pacific BCOs over the past year: gaining access to and controlling capacity when traditional ocean carrier services were full to capacity and unable to fully support the company’s need to keep its 1,700 retail locations stocked with product. As 2022 begins, the company’s supply chain supporting imports of 100,000 TEU a year looks very different from just a year ago. Among other unconventional moves, it entered the vessel market as a charterer, securing multiple ships — including a breakbulk vessel that it successfully modified to safely move hundreds of loaded proprietary 53-foot containers from Asia. In August, it acquired a 25 percent stake in an inland container terminal 300 kilometers east of the port of Vancouver (Ashcroft Terminal Ltd.) operated by Singapore-based PSA Corp. It enabled container stacking at inland locations using reach stackers, expanding capacity. “It’s all about being creative and innovative and building resiliency,” said Gary Fast, Canadian Tire’s vice president of transportation. Gary will discuss how the company pivoted in the face of unprecedented challenges in this 45-minute one-on-one conversation at TPM.