by A1 WorldWide Logistics | Aug 23, 2023 | Freight Forwarding, Shipping Logistics, Supply Chain
Weeks of drought have resulted in congestion in the Panama Canal for carriers passing through. Many consider this backlog the “world’s worst traffic jam,” with over 125 ships currently waiting outside. The numbers reportedly reached a height of 200+ in the last few days. The Panama Canal is a significant shortcut in international trade for the Atlantic and Pacific oceans. Yearly, the Panama Canal generates nearly $2 billion in revenue and close to $800 million for Panama’s economy. Certain shippers save billions a year using the canal instead of taking a longer route. With the amount of importers and exporters that rely on the passageway, a drought significantly impacts cargo movement.
Canal Authority Responds to Drought by Placing Restrictions
Although different factors led to a traffic jam in the Panama Canal, the leading cause is a recent drought. The drought is due to a weather phenomenon called El Niño, which lower the rainfall for various locations. This year, in particular, Panama has seen a more substantial decrease in rain than usual. Along with El Niño, the rainy season in Panama has been less than average in the last few years. The issue is that the canal relies on rainwater to transport containerships between the two oceans. To combat the problem, canal authorities have recently placed restrictions on the number of ships that go through at a time.
Last week, the authorities lowered the range of daily containerships passing through to 32 from an average of 36 ships. Other restrictions include a reduction of the draft limit of the canal from 50ft to 44ft. The draft is the distance between a boat’s waterline and the deepest point of the ship. A vessel must reduce the number of containers on board to meet the limit. As a result, larger containerships and dry bulk carriers experience longer wait times. The factors mentioned combine to create a significant traffic jam in the canal. Along with affecting Panama’s economy, it substantially affects the global economy.
How Are Shippers Affected by the Congestion in the Panama Canal?
The importance of the Panama Canal is shown by the extensive number of supply chains that rely on it. With the number of ships stuck in the traffic jam, the main impact is shipping delays. This is especially true with the number of containerships still sailing to the canal. With the holiday season quickly approaching, this amount may soon grow. A consequence of the wait times is that the costs incurred are also rising for the shipper. Supply chain disruptions may reportedly increase prices for goods like imported groceries in the near future. Panama Canal authorities have already placed higher premiums for larger vessels that must pass through.
When disruptions like a canal backlog typically occur, shippers tend to look for alternative routes to move their cargo. This may lead to an increase in transport times and costs. Talking to a freight forwarder is an ideal way to protect your supply chain. They help by finding the best solutions for transporting your goods. Contact A1 Worldwide Logistics at 305-821-8995 to speak to a forwarder regarding the movement of your shipment internationally. Whether there is a backlog or other issues that may arise, we help you navigate the world of shipping.
by A1 WorldWide Logistics | Jul 18, 2023 | Freight Forwarding, Shipping Logistics, Supply Chain
A recent drought has led to the Panama Canal facing restrictions. The Panama Canal is an artificial passageway that connects cargo ships to the Atlantic and Pacific oceans. It is a crucial shortcut that cuts shipping journeys by thousands of miles. Since June 5th, limits have been placed on the canal due to recent climate changes causing a drought. While dryer weather tends to happen every five years in Panama, the span has reportedly sped to three years. The levels of dryness have also rose, with 2023 being the driest year on record since 1950. Panama’s national government has declared an environmental emergency due to minimal rainfall in the past months.
What are the Restrictions
Draft limits for carriers passing through the Panama Canal have recently been cut to a maximum of 44.5 feet (13.56m). Canal officials will also reduce the draft limit to 43.5 feet (13.26m) on June 25th. The standard draft maximum in the Panama Canal is 50 feet (15.24m). A boat draft is the vertical distance between the waterline and the deepest boat point. The canal’s restrictions are in place to determine how deep the vessel can float in the water. Boats meet the guidelines by transporting less weight, which is accomplished by shipping fewer containers. Neopanamax vessels, which were permitted entry at the creation of the third set of locks, are the only type affected by the rules.
The last severe drought in the Panama Canal was in 2019-2020. Climatologists forecast that the dry conditions will continue to grow with the El Nino weather pattern arriving soon. El Nino tends to bring drier and warmer climates Across most of Central America. When the phenomenon hit Panama in 2015, the ACP (Panama Canal Authority) reported a revenue loss of $40 million. The ACP has warned that if conditions worsen, they will lower the number of daily crossings. The current number is 35 vessels daily, which may drop to less than 32.
What Does The Panama Canal Facing Restrictions Mean For Supply Chains
The Panama Canal is a crucial global trade route and a significant passageway for supply chains requiring international shipping. It is an ideal shortcut in maritime container transportation and beings in over $2 billion yearly for Panama’s economy. With some of the largest carrier companies transporting through the canal, restrictions may significantly impact supply chains. In the past, the charges led shippers to look for other routes to ship their goods when dryer conditions occurred. Specific carriers have already started applying surcharges for containers entering the U.S. East Coast from Asia.
While the shipping world can be unpredictable, it should not stop you from growing your supply chain. Shippers should, however, be up to date with any changes or new regulations in the industry. The importer/exporter should also take precautions to prevent any mishaps. Having a freight forwarder coordinate the shipping process for you is the best way to ensure secure freight movement. A forwarder guides you through the entire transportation journey from start to finish while educating you along the way. Contact A1 Worldwide Logistics at 305-821-8995 to speak to our export freight forwarders regarding the movement of your cargo internationally or domestically.
by A1 WorldWide Logistics | Jun 13, 2023 | Freight Forwarding, Import and Export Experts, Shipping Logistics, Supply Chain
On Friday, June 2nd, terminals throughout various West Coast ports were shut down due to labor shortages. Workers in the ILWU (International Longshore and Warehouse Union) left their jobs due to failed contract negotiations. Over the past year, the ILWU and PMA (Pacific Maritime Association) have been in talks regarding contractual agreements like wages. Despite the progress made in the negotiations, a resolution has yet to be made. More than 20,000 workers from the ILWU have been working in numerous West Coast ports since July 2022. Terminals in Los Angeles, Long Beach Oakland, Seattle, Tacoma, and Hueneme ports have all reported disruptions from the walkouts.
The Latest Developments
The disruptions continued in the Port of Seattle with the shutdown of the entire seaport on June 10th. On June 9th, the second and third shifts experienced massive slowdowns as ILWU officials led operations to a pause. The Port Authority responded by sending the workers home; insufficient workers led to closure the next day. This port is one of the biggest movers of grain and produce in the U.S. Shipments from U.S. exporters are currently idle at the docks, with the ILWU declining to dispatch terminal workers. The ILWU made a contradictory statement: that the Port of Seattle and other ports are operating.
Union workers noted that they are not getting an adequate pay increase for the work they are putting in. Especially compared to the revenue the U.S. shipping industry made during the coronavirus pandemic. The ILWU said in a statement that they are negotiating for a contract that is “fair and equitable”. Business groups recently sent a letter to the Biden administration to appoint a mediator to address the current protests. Nearly 12% of the U.S.’s GDP (Gross Domestic Product) comes from West Coast ports. With the Port of Seattle being one of the biggest harbors in the U.S., International Shipping may soon feel the impact.
The Impact on Global Supply Chains
The Port of Seattle is a top U.S. agricultural exporter and, with the Port of Tacoma, makes up the NWSA. NWSA (Northwest Seaport Alliance) is North America’s 4th largest container gateway and 2nd largest refrigerated container gateway. With its extensive size, many supply chains are affected by a port shutdown. Add the disruptions of the other West Coast ports to the mix, and many cargo movers may soon be impacted. The supply chain congestions and bottlenecks felt during the coronavirus pandemic may return. Shippers have also moved their shipments to the East Coast and Gulf Ports to mitigate the slowdown.
As the pressures on the Port of Seattle and other West Coast ports persist, billions of cargo remain stagnant. With the peak and holiday season quickly approaching, the industry may feel the current disruptions sooner. Despite this, the movement of shipments is necessary for the success of an incredible number of supply chains. However, a shipper must be current with any occurrence in the freight movement industry. Contact A1 Worldwide Logistics at 305-821-8995 to help meet your supply chain goals. Whether it’s importing, exporting, warehousing, etc., we help you navigate the complex world of shipping.
Tambien hablamos español
Llame ya
305-425-9456
by A1 WorldWide Logistics | Jun 2, 2023 | Freight Forwarding, Import and Export Experts, Supply Chain, Transportation
This afternoon, several ports across the West Coast closed abruptly due to union workers walking off the job. The Port of Oakland experienced a closure on both the TraPac and its largest, the SSA terminal. The Ports of Los Angeles and Long Beach similarly had terminal shutdowns due to insufficient labor. Negotiations between the PMA (Pacific Maritime Association and the ILWU (International Longshore and Warehouse Union) have reached a boiling point. To show their frustrations over insufficient wage talks, ILWU workers have gone on strike, affecting port operations.
Other West Coast ports like the Ports of Tacoma and Seattle have also seen slowdowns or closures of terminals. The president of the ILWU, Willie Adams noted, “Any reports that negotiations have broken down are false”. However, a separate statement by the ILWU Local 13 division stated, “Southern California ILWU has taken it upon themselves to voice their displeasure with the ocean carriers’ and terminal operators’ position.” The Covid-19 shipping boom has been one of the catalysts that have led to current tensions. ILWU believes that workers have risked their lives to move cargo during the surge while employers have reaped the benefits. Negotiations also included health and safety concerns with the statement that 43 ILWU workers died from working from 2021 through 2022.
A similar 24-hour shutdown of the Ports of Los Angeles and Long Beach was experienced from April 6th to 7th. The closure was also because of limited ILWU port workers showing up due to inadequate contract negotiations. Since July 2022, more than 22,000 dock laborers have worked without a contract. During that year, the ILWU and PMA reached several “tentative agreements”; however, tensions remained. Both sides believe that a signed contract must be in place to stop protests and shipping slowdowns. Current shutdowns may continue to expand across the West Coast ports as the lack of sufficient labor increases.
What does this mean for shipping?
The Ports of Los Angeles, Long Beach, and Oakland are known as the largest ports in the U.S. With the extensive amount of freight that passes through the ports daily, a closure can have a huge impact. ILWU contract negotiations began over a year ago and previous shutdowns have gained attention from shippers in the past. While some shippers responded by moving their cargo to other ports when tensions arise, import volumes have remained high. The Covid-19 shipping surge increased the amount of cargo transported internationally and imported into the U.S. Since most of the goods imported to the U.S. come through the West Coast ports, congestion rose.
Shippers responded by moving their imports to East and Gulf Coast ports. West Coast ports have only recently recovered volume amounts. Current terminal closures may have a reverse effect and recreate the slowdowns felt during the pandemic. With the holiday and back-to-school seasons quickly approaching, shippers must be prepared for potential delays. Despite the current circumstances, West Coast port operators and directors are optimistic regarding a quick recovery. Port of Oakland director Bryan Brandes stated, “We are optimistic about a stronger second half of 2023 for the amount of cargo moving through Oakland,”
by A1 WorldWide Logistics | May 4, 2023 | Freight Forwarding, Supply Chain, Transportation
In shipping, words such as NVOCC and Freight Forwarders continuously pop up. For shippers beginning their exporting/importing journey, this could be the first time seeing these terms. While forwarders and NVOCC are commonly mistaken to be the same, they are different services. Knowing how they differ is ideal for choosing the best option to streamline your supply chain. This article will help you understand the difference between the two terminologies and describe the pros and cons of each. For a more in-depth explanation, contact A1 Worldwide Logistics at 305-425-9456. We have freight forwarding services with various means of conveyance for transporting cargo.
What are NVOCCs?
NVOCC, or Non-Vessel Operating Common Carrier, is an ocean carrier that moves cargo without owning a vessel. This is accomplished by paying steamship lines to lease container space, making them the “carrier.” The NVOCC then sells the space to shippers that want to ship their goods. Despite not operating a containership, NVOCC accomplishes all the functions and responsibilities that a regular carrier would. The two parties enter a contract where the NVOCC issues its own HBL (House Bill of Lading). Companies use this transporter type because of the personalized attention to customers compared to larger carriers.
Other functions of NVOCC can include:
- Negotiating contracts and freight rates with steamship lines for the exporter.
- Handling different transport documents that the shipper must give the carrier.
- Consolidation and Deconsolidation services for containers by the use of a third party.
- Transportation services from port to port or to the final destination.
What are Freight Forwarders?
Freight forwarders are supply chain specialists focusing on moving a shipper’s cargo. Forwarders are intermediaries between the cargo’s shipper and the good’s final destination. They are valuable players in logistics because of the number of services they offer. Although freight forwarders usually are not carriers, they coordinate with a network of transporters to move goods. The methods of conveyance can include vessels, planes, trucks, and rail. Since there are many steps in the shipping journey, they assist by taking the process off the shipper’s hands. Specific forwarders also offer customs clearance services for shipments entering a country.
Along with the services mentioned, freight forwarders also:
- Arrange the freight shipment from the origin facility to port-to-port and the final destination.
- Explain the different shipping costs and offer cargo insurance to protect the shipper.
- Provide short-term and long-term warehousing and other storage services.
- Constant updates on the status and location of shipments.
Which is Better?
While NVOCCs and freight forwarders both have their benefits, the answer depends on the shipment being made by the shipper. The most significant distinction is that NVOCCs are only for maritime shipping, while forwarders move cargo differently. If a business moves goods by the ocean, NVOCCs can provide personalized services and help shippers avoid the intermediary fee. This is because they are independent carriers instead of agents. Forwarders benefit from allowing different ways to transport goods. Businesses with international supply chains can take advantage of having their entire freight journey handled. Forwarders also have extra services not provided by NVOCCs, such as warehousing and customs clearance.
by A1 WorldWide Logistics | Mar 24, 2023 | Freight Forwarding, Shipping Logistics, Supply Chain
In international trade, freight forwarders are the intermediaries that handle the logistics of getting your goods to the final destination. Forwarders coordinate with carriers and warehouses to find the best routes for cargo transportation. When choosing a forwarder, the customer should be mindful of how much effort the forwarder is willing to put into having a solid and long-lasting relationship. When examining how much the forwarding agent values their bonds with customers, there are specific indicators to look for. Some of the qualities are the following:
Having Open Communication
One of the most significant parts of a relationship is the ability to communicate when needed. Regardless of the conveyance method of the shipment, the customer should be updated on the location when needed. Diligent freight forwarders have close contact with their customers and constantly provide updates on shipments. A1 Worldwide logistics ensures our clients have instant contact with us during shipping. We achieve this by having open lines of communication such as phone calls, emails, and our website.
Being Dependable
Customers must rely on their forwarder to keep any promises they guarantee. Dependability is a direct reflection of how a business runs and how it cares about its customers. It’s different for a company to say they provide the highest quality customer service and deliver on that promise. This is especially true in international shipping, where supply chain logistics constantly change.
Having Experience
Experience can indicate that a forwarder values customer relationships. This is because of the longevity involved in gaining experience. Forwarders with many clients have expertise from countless years of working with customers. A side effect is that the freight forwarder also learns the importance of customer relationships from working with many clients.
Dealing with Uncertainty
In forwarding, getting your goods to their endpoint may sometimes go differently than planned. Sometimes unpredictable events occur in the supply chain that interrupts the journey. For example, there could be an issue with manufacturing or warehouse placement. Shipping delays can also happen during the trip. A forwarder must be prepared for any circumstance and be able to explain the situation to the customer.
Taking the Extra Step
This means that the forwarder goes above and beyond to calibrate and communicate with the client during the cargo’s journey. It shows how the freight forwarder values the customer and their commitment to keeping the relationship. The extra step can also mean coordinating with the carrier for the client. This can entail that certain adjustments must be made to make the shipping process as effective as possible.
Keeping the Relationship
A forwarder’s key to keeping its clients is consistency and competence. The client must trust that they can depend on their freight forwarder to transport an item internationally. This trust comes from previous experiences where the forwarder demonstrated proficiency at their job. If you want a committed forwarder to building a long-lasting relationship, contact A1 Worldwide Logistics at 305-821-8995. A1WWL aims to provide the best customer service by being accountable and transparent in everything we do. We also assist with customs brokerage to ensure your shipment complies with government regulations when entering a country.
1035 NE 125th St Suite #320, North Miami, FL 33161.
a1worldwidelogistics.com
(305) 821-8995
Hours: 8AM - 5PM