Market Update: National Customs Brokers & Forwarders Association of America, Inc.
This is quoted from the NCBFAA Advisory dated August 5, 2021:
NCBFAA Asks Members to Voice Supply Chain Breakdown Impacts to FMC
NCBFAA members-customs brokers, freight forwarders and NVOCCs-are reporting serious and persistent problems in the supply chain, including:
Increased ocean freight rates, some of which quoted as high as $25,000 per container recently for example, which result in importers and exporters struggling to maintain a profit on their international shipments.
- Lack of containership availability extended from a couple days to a couple months with no guarantee of space. Contract obligations are ignored, while carriers appear to be auctioning space to large BCOs. Sadly, perishable cargoes booked for export remain on docks in favor of the more lucrative return of empty containers to Asia. The process of obtaining rates and bookings has also increased from a few minutes to hours to obtain the best rates available.
- Door containers being abandoned at the port of discharge, with no credit to BCOs for the inland freight charges already paid to the carriers.
- Port and airport congestion at an all-time high with cargo sitting on piers for weeks vs. days, adding expense to BCOs. Not only is cargo delayed, but demurrage and detention accrue by the thousands of dollars, even when the cargo is not available for pick up. It is not uncommon to receive a status message in August from an ocean carrier stating, “The container arrived in port on 5-10, was discharged on 5-25 and is still sitting in the port.”
- Exponential air cargo growth from e-commerce sales during the pandemic, putting a severe strain on available passenger and freighter flight capacity. Importers pay a premium to have their cargo shipped by plane when there is not movement on the water, and to have air cargo spend more than 48 hours on the ground has a ripple effect that is felt all the way to the retail store.
- Airports experiencing delays to lack of enough ground handlers to handle cargo and resulting in delays when a BCO has paid a premium for fast delivery. Some NCBFAA members report in some airports air cargo pallet breakdowns have taken up to 28 days.
- Railyards in the Midwest experiencing container overflows and railroads issuing notices to temporary halt accepting these shipments, resulting in further backups at the nation’s seaports.
- Severe driver shortages, forcing trucking rates to increase into the thousands of dollars rather than hundreds of dollars for even the shortest ocean container hauls and reducing truck service availability for BCOs.
- Major truck congestion at airport terminals, with wait-times for trucks up to 10 hours to get a dock assignment, and then wait again at the dock for cargo to be located and loaded can add 3-4 hours. While there are many procedural changes and automation solutions that can be implemented to mitigate this congestion, airport cargo handlers exploit the cargo owners by charging storage fees for cargo they cannot locate or do not have ready for the truck when it arrives.
NCBFAA members are undoubtedly working longer hours and struggling every day to provide our clients optimal logistics services, with the hope the situation improves soon.
Due to this supply chain crisis, NCBFAA is working closely with both the Federal Maritime Commission (FMC) and Maritime Administration (MarAd). We have met with each of the five FMC commissioners. Rich Roche and Melzie Wilson of our Transportation Committee recently engaged U.S. Transportation Secretary Pete Buttigieg and FMC Chairman Daniel Maffei, along with senior officials, and met separately with MarAd and the Commerce Department. During each of these meetings, we were asked about the supply chain impacts to the nation’s importers and exporters. While many associations have spoken on behalf of their members, NCBFAA continues to receive requests for additional details from our customers experiencing negative financial impacts.
President Biden’s recent Executive Order encourages the FMC to “vigorously enforce” the prohibition of unjust and unreasonable practices. Our Transportation Committee Vice Chair Rich Roche has prepared procedures found here, which members are encouraged to pass along to their clients to supply details that support the FMC investigations.
“Not only do we need the members of the NCBFAA to speak up, but the BCO’s voice must be heard. They ask us in every meeting we attend to provide specific examples,” NCBFAA Transportation Committee Chair Melzie Wilson said.
The FMC Bureau of Enforcement’s expedited investigation into carrier “Congestion Surcharges,” which was announced by the agency on Aug. 4, demonstrates that the FMC will take action to investigate questionable carrier practices that are brought to its attention by NVOCCs, freight forwarders, customs brokers and BCOs.
“Please support this effort by engaging the FMC with the documented cases,” NCBFAA President Jan Fields said. “We have raised the awareness to this issue, now we all must present those situations we have experienced to back us up.”
If you think you are experiencing these issues, please let the JORI Team know so we can help submit your concerns to the FMC.