Ghost Ship: The Containers We Never See

Posted by David Petersen

11/18/2014

2014, the importation market has received a very high number of questions from our customers, relative to the status of the West Coast situation including the most recent development with a very significant Port Congestion Surcharge levied by carriers.

 We are seeing what is unprecedented in the US market, the implications will have profound effects upon all imports, and the situation only looks to become increasing worse.shipyard

For many months, the congestion at both the L.A. and Long Beach ports has crippled the normal flow of containers, in, as well as out. There are several reasons that account for this problem, including chassis availability and an unexpected surge in overall volume. This has now placed the industry into very long dwell times and significant additional charges for all customers.

 Shippers are all well aware of the standard free time offered by ports. During this congestion time period, free time is not being allowed, forcing shippers to now carry the additional cost burden of those charges, including many who have already seen very significant increases.

Labor negotiations between the PMA and ILWU continue along, but labor issues are now beginning to be demonstrated with slowdowns in Seattle, Portland and Oakland, with workers being sent home due to low productivity. The net effect for shippers will certainly result in higher costs.

November 17, 2014 carriers have imposed a Port Congestion Surcharge of $1000.00/40’ cargo arriving at all US West Coast ports.   This massive increase, based on an arrival date with virtually no advance notice is unheard in the U.S. market. The market is bracing for a very large negative impact for virtually all customers, which we expect to continue until the labor negotiations are concluded. Once concluded, the congestion issue is expected to remain for a yet undetermined amount of time.

During the 2002 labor action, which only lasted 10 days, the end result was months of related equipment shortages worldwide, again used for significantly increasing worldwide prices. The normal flow of containers back to the origin ports is vital to the ongoing business. It can be argued that the labor problems of 2002 were not nearly as significant, or costly, than the equipment imbalance surcharges associated with those shortages.

Today, international shipping is fully intertwined in the business model of most companies, as we enter 2015 we will keep you posted and hope that ongoing labor negotiations are concluded shortly.

UL ON ALERT!

MARKET ALERT….. It’s estimated that in excess of 85% of your customer applications are required to obtain some type of safety agency approval, such as UL/CSA. The cost to complete this process is well into the $10,000’s for even the most basic product approval, many times significantly more costly.

The normal process is for your costumer to design in very specific components that you supply. These components are manufactured by a particular company, using very specific materials, electrical ratings and assembled in a manner consistent with UL/CSA requirements. These various components are designed into the applications, which customers send through the safety agency process at great expense and time. The end result is a product your customers offer to the market with safety agency approvals, both for liability and marketing purposes.

Once approved by various safety agencies, no component, manufacturer, or material can be changed and still maintain the safety agency approval. Should any change be discovered, a product recall can be required by UL. The cost of this can fall back to the supply chain.

This market alert was just brought to the forefront as customers identified a material change within the plastic fan filter market. The fan accessory market has used UL 94V-0 as the product rating. This is the highest rating for issues related to flaming combustion and the exact one used by the manufacturers during the approval process. Current product has now been identified to have lowered that rating to 94V-2, causing all previously approved applications to be in violation of safety agency approvals and subject to possible recall. In addition, new applications that require 94V-0 will not accept the 94V-2 ratings. Continuing to sell/offer this new product under the same part made with the known UL changes, does not open up distributors/OEM to potential issues, given this information is known to the market.

GardTec only uses 94V-0 material for all plastic filter assemblies, so you can feel confident in the overall product quality.

Fan cords, while not part of this market alert, are covered under specific UL/CSA approval files. GardTec, as the actual manufacturer, maintains all safety agency files on site, open for customer review.

SC120-W5, SC60-W2, SC80-W2, SC92-W2, SC162-W5, CAB704, CAB700, CAB701, CAB702