From: David Hickmott
[DHickmott@uli-atl.com]
Sent: Thursday, February 04, 2010
4:50 PM
To: David Hickmott
Cc: David Hickmott; David Hickmott
Subject: Update #4: Ocean Carrier Space: Asia/USA market
Dear Valued Unique Customer,
Further to our updates 1 – 3,
it becomes ever more apparent on day to day basis that the market space
situation with all carriers ex China to all major trade lanes has become more
and more difficult during the course of January 2010. The situation is
expected to deteriorate until the long holidays break for Chinese New Year
starts in the middle of February.
Given the current market
situation, we are getting regular inquiries from customers with regard to space
situation. Being an international logistics company of repute, ULI is
obligated to provide pertinent facts to our valuable customers as reference so
that the current space crisis in China as well as Asia may be better
comprehend.
Past events in 2008, 2009
leading to present:
I)
All shipping lines have all suffered from poor financial result
in 2009 as a result of global economy downturn triggered by the financial
tsunami. The decline in shipping volume and falling freight rates in 2008 and
2009 brought a total operating losses of over USD 10 billions for the carriers
in 2009.
II)
As effort to restore profitability, carriers began to tighten up
measures on capacity management. The current idled capacity of major carriers
has reached over 1.4M TEUs.
III)
Winter suspension program between December 2009 and March 2010
and ad hoc voyages cancellation by various carriers have further reduced the
active capacity in the market since December 2009.
IV)
Inventory replenishment after seasonal holidays’ sales in USA
and Europe, compound with cargo surge prior to Chinese New Year have driven up
space demand sharply in January 2010.
In light of the current space pressure,
carriers have successfully implemented OCRS (Operational Cost Recovery Program)
/ ERC or other such names at the level of USD 400 per 40’ with effect on 15th
January 2010 for Transpacific Eastbound traffic. For Asia Europe trade, rates
are being increased by carriers under General Rate Increase, Rate Restoration,
Peak Season Surcharge, etc. at the level of USD200-300 per TEU in a bi-weekly
basis.
Carriers have received strict
directives from their principals to prioritize loading for high revenue cargo
in light of the limited capacity. BCOs and Importers Associations, who have low
contract rates and refused to take increase, have all been experiencing
bookings shut out by the carriers since December 2009. Many of the BCO’s and
Importers Association customers have also contacted the NVO market for the
space. However, ULI continues to prioritize our own customers cargo at
top of the list due to loyal support over the many years.
As earlier indicated many
carriers have offered higher spot rates with additional premium on top of the
announced ORCS / GRI as trade off for space availability. Most carriers have
implemented this spot market rate and/or additional surcharge (Emergency
Equipment Surcharge) into the contract rates with effect on February 1, 2010.
Realistically, the reduced capacity available in the market at this time simply
cannot accommodate the existing space demand. As a result, large amount of
containers are expected to be rolled over at origin ports by the carriers over
the Chinese New Year period. With some carriers already announced
cancellation of sailing in the first week of Chinese New Year, it is
anticipated that the space constraint will likely remain well after the Chinese
New Year holidays until all backlog is cleared.
Our Recommended Actions
During this difficult period,
it is recommended that the followings may be taken or being considered as
viable relief measure:
Ř Push
your suppliers to have products ready as early as possible enabling a wider
shipment window to minimize impact in case delay is encountered.
Ř Closely
coordinate with suppliers to provide accurate and advance booking forecast no
less than 2 weeks prior to cargo readiness in order to make early space
reservation with carriers.
Ř Make
sure that cargo is ready when supplier indicate. If/when bookings are
cancelled due to product not ready, this will significantly reduce ability of
getting space on future sailings.
Ř Be
prepared to accept higher premium or spot rate to procure additional space.
Rest assured ULI is doing our
utmost in negotiating with our contracted carriers and all relevant sources to
increase our space allocation as well as procuring additional space at premium
to safeguard the interests of our customers. Please contact your ULI
representative if you require related information as reference.
We appreciate your
understanding and business support. ULI will continue to update our customers
regarding the development of space situation with carriers. Let us work closely
and tackle this problem together.
Thank you for your kind
attention.
Thank
you for your support of Unique Logistics International. We appreciate and
value your business.
Discover
the "Unique" difference of logistics from Asia to USA trade!
Are
you Ready? ISF Enforcement will begin on January 26, 2010.
Best Regards
David Hickmott - Executive Vice President
ph#404-767-0500 (ext 306)
Mobile# 678-478-6604
Fax# 404-767-3319
From: David Hickmott
Sent: Thursday, January 28, 2010 5:55 PM
To: David Hickmott
Cc: David Hickmott; David Hickmott
Subject: FW: Update #3: Ocean Carrier Space: Asia/USA market
Dear Valued Unique Customer,
Further to the below messages,
the space situation on Asia is becoming worse for each day closer to the
Chinese New Year. It is not uncommon for carrier to accept
booking one day and then cancel the next day. In addition, 1 week roll
–over of confirmed bookings is becoming a regular practice as carriers have
more demand than available space.
Consistent with short supply and
high demand, the market rates are increasing regularly. With each carrier
having lost over $1 Billion in 2009, this space situation does present a higher
revenue opportunity. There are reports in market of shippers offering
$700-1000 more to obtain space. At the same time, several TSA carriers
have added a new surcharge with effect on February 1, 2010 of $240/20’, $300/40’,
$340/40H, and $6 w/m. Depending on the carrier, the name of the
surcharge varies. It is expected that many carriers will file the same
course of action with higher surcharge. This surcharge (Emergency
Equipment Surcharge) will likely be very short lived through the Chinese New
Year rush. In order to obtain cargo space from carrier, it will be
necessary to accept this charge. Once the Chinese New Year rush (before
and after) is over, the surcharge will likely disappear. ULI will
cancel this surcharge as soon as the carrier cancels.
ULI continues to monitor each
booking on daily basis with both our contract carriers as well as other
options. As the need to use alternative carrier or higher costs are
incurred, our sales team will be sure to update our customers accordingly.
Thank
you for your support of Unique Logistics International. We appreciate and
value your business.
Discover
the "Unique" difference of logistics from Asia to USA trade!
Are
you Ready? ISF Enforcement will begin on January 26, 2010.
Best Regards
David Hickmott - Executive Vice President
ph#404-767-0500 (ext 306)
Mobile# 678-478-6604
Fax# 404-767-3319
From: David Hickmott
Sent: Monday, January 25, 2010 6:34 PM
To: David Hickmott
Cc: David Hickmott; David Hickmott
Subject: Update #2: Ocean Carrier Space: Asia/USA market
Dear Valued Unique Customer,
Further to the below alert from December 28, 2009, the space
situation is getting worse by the day. The current space situation
for the Asia to USA trade has become extremely difficult, and is expected to
get worse as Chinese New Year approaches.
We have not seen the magnitude of this type of crisis since the
USWC strike in the Fall of 2002 or 1998 Shipping Season (where carriers
raised rates by $1500 within 2 weeks in order to secure space booking).
For the carriers, a perfect storm has been created by ocean carrier
decrease in capacity, increase in USA import volume, upcoming Chinese New
Year, record annual loss reporting for 2009, an increase in pricing ( Operation
Cost Recovery Surcharge), and possible further rate increases by
carrier/service route to secure space. The combination of
these factors have put all USA importers in a scramble to find space with
their ocean carriers.
Rest assured that Unique Logistics International is exhausting
our efforts daily to service our existing customers by utilizing our large
network of ocean carrier contacts. We are working very closely with these
contacts as well as our customer during this crisis. We
will advise any and all options in an effort to minimize
any supply chain impact. In some cases, it may be necessary to
utilize alternative carriers to secure the needed space. In using
alternative options, it is possible that there will be cost differences.
If this occurs, our sales will update you with the applicable rate by
alternative carrier for your approval.
We see this situation continuing beyond Chinese New Year and
possibly the end of the first quarter as carriers will be continuing to manage
container backlogs and maintain higher rate levels and surcharges
(OCRS/GRI). If any questions, please do not hesitate to contact your
account executive.
We appreciate your support of Unique Logistics
International. We appreciate and value your business.
Discover
the "Unique" difference of logistics from Asia to USA trade!
Are
you Ready? ISF Enforcement will begin on January 26, 2010.
Best Regards
David Hickmott - Executive Vice President
ph#404-767-0500 (ext 306)
Mobile# 678-478-6604
Fax# 404-767-3319
From: David Hickmott
Sent: Monday, December 28, 2009 3:40 PM
To: David Hickmott
Cc: David Hickmott; David Hickmott
Subject: Ocean Carrier Space: Asia/USA market
Dear Valued Unique Customer,
We hope that everyone had an enjoyable holiday. We are hopeful for a better 2010!
We wanted to take this opportunity to inform our customers of the potential delays and space problems that are existing in the market. For the past several weeks, the space from Asia – USA has been increasingly tight. As we approach the Chinese New Year, there is an expectation that this situation will worsen each week. Consistent with the reality faced by carriers of significant financial losses in 2009 and reduced services to limit cost, the ocean carriers are collectively being selective on which cargo they are accepting at origin as demand is exceeding supply on weekly basis. The ocean carriers have advised to expect 1-2 week delay for some shipments space as well as possible rollover and other potential problems on late gate request, RIPI (reverse inland point cargo via east coast), IPI rail cargo via west coast, overweight cargo, oversized cargo, and dangerous goods cargo.
With Chinese New Year approaching (February 14, 2010), we would strongly urge our customers to request all vendors to book 10-14 days in advance of cargo ready date. ULI has several ocean carrier options for various Asia-USA routes to utilize. With early notification to obtain space from primary carrier, this will give ULI opportunity to suggest alternative if primary not available for requested sailing.
As always, we appreciate your support and cooperation with Unique Logistics International.
We appreciate
and value your business.
Discover the
"Unique" difference of logistics from Asia to USA trade!
Best Regards
David Hickmott - Executive Vice President
ph#404-767-0500 (ext 306)
Mobile# 678-478-6604
Fax# 404-767-3319