shippers balk at ocean carriers’
“emergency” surcharge
Container shipping lines, which lost an estimated $20 billion in 2009, are
desperately trying to boost revenue in a bid to stave off extinction. Yet some
shippers—battered by the economy themselves—strongly oppose one carrier group’s recent attempt to stem those losses.
On Jan. 15, the Transpacific Stabilization Agreement (TSA), a group of 15
ocean carriers in the Asia-to-North America trade, adopted a “voluntary
guideline Emergency Revenue Charge (ERC).” The plan calls for surcharges
of $320 per 20-foot container (TEU), $400 per standard 40-foot container
(FEU), $450 per high-cube FEU, and $505 per 45-foot container. The TSA
described the ERC as an “interim” charge and said it is “intended to expire”
when 2010–2011 service contracts are signed, beginning in May.
“As an industry, we’re sending out an SOS to the shipping community
with this emergency charge,” said Jack Yen, president of Evergreen Marine
Corp. and a member of TSA’s Executive Committee, in a statement.
TSA lines found no sympathy among Asian exporters, however. The ERC
follows an October 2009 general rate increase of $800 per FEU for West
Coast port-to-port and local cargo, and $1,000 per FEU for all other all-water and intermodal shipments. Bunker fuel surcharges have also soared.
In a Jan. 15 statement, the Asian Shippers Council (ASC), which repre-
sents 20 shipper councils in 16 countries, slammed the new fee. The coun-
cil said the addition of the ERC to earlier increases has nearly doubled the
cost of shipping a container from Asia to the United States in just one year.
Of equal concern was the TSA’s announcement that it would apply the ERC
where contract terms allow and “[seek] to negotiate reopening of contracts
that do not provide for interim adjustments.”
The shipper group said it was “astounded” by TSA’s plan to reopen legal-
ly binding contracts. “What good are service contracts if shipping lines can
just alter them without proper consultation with shippers?” asked ASC
Convenor for Greater China Willy Lin.
The backlash against the ERC could have far-reaching implications. ASC
Chairman John Y. Lu said the emergency charge had reinvigorated his organization’s efforts to get Asian governments to revoke ocean carriers’ antitrust
immunity. He also said that ASC would work with shipper groups in other
regions to “bring an end to shipping conferences and rate agreements.” ;
Wal-Mart to cut produce
supplier base
As part of an ambitious initiative to transform its supply chain and reduce its supply
chain costs, Wal-Mart Stores Inc. plans to
begin narrowing its supplier base for produce bound for its stores in North America.
The world’s largest retailer will begin
sourcing fruits and vegetables from select
key producers, many of whom are based
outside the continent, according to Wal-Mart executives. The Bentonville, Ark.-based company is expected to follow a
similar centralized procurement strategy
across other lines of its business, including
other perishable foodstuffs. Such a move
is likely to have an enormous impact on
how Wal-Mart manages one of the world’s
largest and most complex supply chains.
Wal-Mart executives disclosed the strategy at a meeting last October with analysts
and investors. Pam Kohn, Wal-Mart’s senior
vice president and manager for perishables
and general merchandise, said the retailer
plans to strengthen and develop key partnerships with growers and suppliers of fruits
and vegetables. By working with a few key
growers, Wal-Mart believes it can improve
product quality, shorten time to market for
the goods, and reduce costs through
increased efficiencies, Kohn told the group.
As part of this strategy, Wal-Mart conducted a pilot program in 2009 with
apple growers in Washington state. Wal-Mart said the program resulted in savings
of more than 10 percent. ;
—James Aaron Cooke
; Office Depot has announced that its entire Northeast market will now be served by a new 600,000-square-foot distribution facility in Cumberland County, Pa. The Florida-based
provider of office products and services will occupy half of
the building at Key Logistics Park, southwest of Harrisburg.
ground breakers
; Ozburn-Hessey Logistics (OHL) has renewed its lease for
over 650,000 square feet of distribution space in Sparks, Nev.
The lease covers a 383,000-square-foot building owned by
ProLogis and a 271,000-square-foot building owned by
Selective Real Estate Investments.
; Seegrid Corp., an industrial mobile robots provider for warehousing, distribution, and manufacturing applications, has
announced plans to move its Pittsburgh headquarters to a
30,000-square-foot facility near Pittsburgh International Airport.
The move will give Seegrid needed room for expansion.
; Home Depot has completed construction on a 465,000-
square-foot distribution center in West Columbia, S.C. The
facility, located in the Lexington County Industrial Park, is
intended as a rapid deployment center, serving Home Depot’s
stores in the Carolinas, Tennessee, Florida, and Georgia.
