JOC.com, an online industry publication, recently prepared an article outlining 2016 shipping changes affecting the industry. We’re sharing the outline and have added industry information to help you prepare for the New Year.
Specifically, we are watching new container weight and ACE mandate guidelines coupled with implementation. As with any new regulation, there may be problems for importers who aren’t informed and prepared. As it pertains to shipping costs in 2016, the best opportunities could be the lower container pricing realized by larger vessels moving through the expanded Panama Canal opening in April creating opportunity to ship to U.S. East Coast and Gulf Coast ports. A slowing mergers and acquisitions climate also could be cost beneficial.
Read on for more information about these topics:
1) Container weight mandate
Industry experts believe approximately 20% of containers at any given time are mis-declared, and upwards of two-thirds of all cargo claims may be attributed to mis-declaration and poor container packing. From 2006 to 2011 alone, an estimated $12.8 million dollars in losses stemmed from mis-declaration of cargo weight.
This is why the Maritime Safety Committee approved amendments to SOLAS, mandating the verification of container weight prior to shipping. Effective July 1, 2016, containers must have verified weight documents if they are to be loaded onto a ship. It’s believed too few shippers and government agencies are ready for the major rules, and details are murky. There are options to meet the regulations:
- The first is to weigh a container on a truck as it passes over a weigh station, subtracting the weight of the truck, chassis and fuel to determine the weight of the loaded container.
- The second is to weigh each item going into a container and add the sum of all the goods loaded to the tare weight of the container.
The necessary documentation must be provided to the terminal and carrier along with the container, or it will not be loaded on the ship.
2) Electronic logging devices for U.S. trucks
Since 1938, truck drivers have been allowed to use paper and pencil to keep track of their hours on the road. On Nov. 17, the White House Office of Management and Budget signed off on a new U.S. mandate requiring electronic logging for truckers to track their driving time; its final date is uncertain. The mandate is expected to reduce trucking capacity in the short term because smaller operators will have a harder time skirting hours-of-service rules. In the longer term, the information they provide may allow for trucking firms to better utilize their assets.
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3) U.S. Customs’ Automated Commercial Environment
Like electronic logging, this government mandate for U.S. Customs and Border Protection’s Automated Commercial Environment also has been pushed back beyond its original date of implementation. ACE is a “single window” that allows shippers to file the array of documents various government agencies require for importing and exporting goods in a single, online portal. The CBP is encouraging ACE for electronic entry and corresponding entry summary findings for certain entry types starting now. Beginning Feb. 28, 2016 ACE must be used and ACS will no longer be available. ACE is expected to lower costs and save time for shippers.
For more information CLICK HERE.
4) Waves of consolidation
Merger and acquisition activity has been rampant in the transportation sector, affecting logistics services providers, trucking firms and ocean carriers. These mergers appear to have slowed in the third quarter as companies stepped back to evaluate the market after a rush to consolidation over the past year, according to a November Wall Street Journal article. Consulting firm PwC U.S. tracked 44 deals worth a cumulative $28.8 billion in the third quarter, down from 63 deals worth $39.4 billion in the second, while the average size of an M&A deal in the industry rose slightly to $656 million.
Consolidation in the maritime industry seems to have forced overcapacity, causing weak rates. Mergers being floated include Neptune Orient Lines, the parent company of APL, with either CMA CGM or Maersk Line, and the tie-up of Cosco and China Shipping Container Lines.
5) Expanded Panama Canal impact
The $5 billion expansion project was announced in 2007 and is due to open in April 2016. It will roughly triple the size of ships that are able to travel the waterway from 5,000, 20-foot-equivalent units to 14,000 TEUs, boosting available capacity. The economies of scale that carriers will gain may be passed on to shippers through lower rates, potentially spurring the latter to shift more cargo from the West Coast to the East Coast. The Panama Canal Authority has released a video showing the canal expansion project is now 95 percent complete and final electro-mechanical installations are underway.
If you have questions about these topics or think you’re company’s freight forwarding could be impacted,
please contact your Cargo Services representative or
contact us now for more information by calling 800-645-0386.