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US imports hit three year low in February
US imports from Asia fell 31.1% YoY in February to 1.09 million TEU. This is the lowest level since the pandemic began in March 2020. February was the sixth consecutive month with YoY declines in Asian imports. For comparison, March 2020 imports were 869,091 TEU.
According to retailers, monthly imports will continue to decline on a YoY basis. The decline will likely last until at least July. However, the declines should slowly grow smaller in the coming months. Retailers are preparing for the peak shipping season in August by reducing their inventory overhang.
Spot rates are declining alongside decreasing volumes. Therefore, retailers are gaining greater leverage as 2023-24 service contract negotiations with carriers intensify. Spot rates from Asia to the West Coast are roughly $1,100 per FEU. Industry analysts say carriers will be hard-pressed to keep contract rates above $2,000 per FEU.
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FMC querying carriers, terminals on free time billing practices
The FMC is asking terminal operators and container carriers to confirm whether they are charging shippers demurrage and detention fees when port facilities are closed. This signals that the FMC is likely to mandate that parties billing D&D refrain from doing so when a terminal is inaccessible.
The announcement cited a December 2022 decision by the FMC requiring Evergreen to refund $510 to a trucking company. The trucker was charged for a container when the Port of Savannah was closed over Memorial Day weekend. The FMC said this case was a precedent for “unjust and unreasonable” fees.
FMC Chairman Daniel Maffei recently said that billed and collected detention and demurrage began declining in Q1 2022. He also said that the rate of waived charges began to increase in Q2 2022.
He stated, “We believe that data will continue to show reductions in billed and collected charges. Nonetheless, continued progress must be made in changing what I believe has become a practice of using demurrage and detention as a revenue center as opposed to strictly an incentive to pick up cargo and return equipment.”
Maersk recently announced that it would refrain from assessing excess free time fees when customers are not able to pick up or return containers due to those locations being closed. Other carriers have yet to decide whether they will amend their billing practices.
The FMC also said a May 2020 rule on D&D gives them the authority to determine if fees have been charged in an unjust or unreasonable manner, or if they are “serving their intended primary purpose as financial incentives to promote freight fluidity.” The FMC has until mid-June to issue new rulemaking on detention and demurrage. This is a requirement per the passage of OSRA-22 last June.
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About O’Neill Logistics
O’Neill Logistics is a leading third party logistics provider. We operate in California, Savannah, New Jersey. We service many verticals including Garments, Fashion Accessories, Footwear, Furniture, Home Goods, & Electronics. Additionally, we offer omni-channel distribution and all value-added services. Lastly, we focus on retail “drop shipment” fulfillment and item-level fulfillment services with same-day service offerings.
O’Neill Logistics has over 2 million square feet of state-of-the-art facilities. Additionally, we offer dray services to support the warehouses and provide distribution to retailers and wholesalers. Our reliable 3PL platform combines sophisticated technology with robust, flexible processing designs and speed-to-market gateway models.
Lastly, we aim to simplify your supply chain. We deliver exceptional service and can optimize your operational performance. Therefore, we aim to build, protect and foster strong business partnerships.
Please reach out to us if you have any questions or need assistance with your logistics solutions!