This week:
- An updated amendment to the US Ocean Shipping Reform Act of 2022 has passed the House of Representatives
- US trucking capacity last year fell less than projected thanks to small trucking firms
- The Port of Charleston begins efforts to upgrade its North Charleston Terminal, more than doubling its container yard area and berth space
- Ocean carriers faced with overcapacity on the India-US trade lane drop TEU and FEU prices by approximately $200/container
- International seafarer unions declare the Red Sea and Gulf of Aden as “warlike” zones, asking all carriers and governments to avoid the area
US House Passes “OSRA 2.0” to Protect Against Unfair Shipping Practices
On March 21, the US House of Representatives passed the latest amendment to the Ocean Shipping Reform Act 2022 (OSRA-22) to protect shippers and US industry from the Chinese Government’s influence while improving shipping transparency.
Referred to as OSRA 2.0, the Ocean Shipping Reform Implementation Act gives the Federal Maritime Commission (FMC) more authority over controlled carriers. Previously, the definition of a controlled carrier was one that received support from a foreign government. Under the new act, a controlled carrier would also refer to shipping lines under the control of a nonmarket economy country or any countries under US investigation for anticompetitive practices.
US shippers will also be able to report shipping exchange market manipulation. At the same time, US terminal operators will be barred from using Chinese-developed LOGINK software currently installed on ship-to-shore cranes.
In addition to these changes, OSRA 2.0 will require the FMC to establish new data standard rules for maritime freight logistics along with new committees allowing carriers and terminals to advise the FMC moving forward.
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Recent Truckload Survey Shows Small Trucking Firms Prolonged Surplus Truck Capacity
In a recent survey released by freight marketplace Truckstop.com, small trucking firms were shown to be responsible for the sustained availability of trucking capacity as thousands of small trucking companies left the industry.
As large trucking carriers awaited a strong drop in truckload capacity last year, the remaining small trucking firms stepped in to fill the gaps by working overtime. With 2,000 motor carrier respondents, the survey found that small motor carriers each drove an extra 3,000 miles on average and transported an additional two loads per month.
The overtime work put in by these small firms effectively created more capacity, slowing the drop as 24,569 motor carriers left the market in 2023, and another 4,652 left in January and February this year, according to the Federal Motor Carrier Safety Administration (FMCSA).
Spot truck rates fell 18.7% and contract rates 7.2% on average in 2023, but recent metrics could show a bounce back as broker-posted spot dry van truckload rates were up 1.7% week-on-week from March 16, although down 5% from a year earlier.
North Charleston Container Terminal to Receive Numerous Operational Upgrades
The Port of Charleston is making moves to upgrade its smallest container terminal, the North Charleston Terminal, so that it can serve larger neo-Panamax ships that carry container volumes of 15,000 TEU and above.
The South Carolina State Ports Authority (SC Ports) has already approved the purchase of a neighboring 280-acre plot of land, formerly occupied by the WestRock paper mill. With the terminal’s current size totaling 201 acres, 132 of which are used for the terminal’s container yard, the purchase would bring the terminal’s container yard size up to 400 acres. The purchase of the WestRock site will also double the size of the terminal’s berth space to 5,000 linear feet.
SC Ports’ plan for the terminal’s modernization includes a full range of upgraded port equipment and the deepening of Cooper River. They are currently talking with the South Carolina Department of Transportation about raising the Don Holt Bridge which spans the river, allowing larger vessels to pass under it and reducing the need for current air draft restrictions on ships.
Ocean Carriers Lower Spot Rates on India-US Bookings to Fill Overcapacity
While price increases from West India to the US increased due to the Red Sea crisis, spot rate prices this past week have dropped $200/TEU and FEU from West India to the US East Coast as carriers struggle to fill their overcapacity. The current overcapacity has been caused by carriers compensating for longer voyages around the south of Africa with vessel repositioning creating the current overcapacity issue.
The price drop is affecting bookings for the final week of March. However, it is not the first price drop to happen this month. The average spot rates from West India to the US East Coast on March 19 averaged out at $4,375/FEU, $275 lower than the March 8 rates.
Multiple carriers have also been forced to postpone or outright cancel many of their peak season rate increases. Mediterranean Shipping Co. has canceled its $1,000 general container rate increase on cargo traveling from India to the US East Coast after postponing it through March. CMA CGM has also postponed its $1,000 rate increase to the US East and Gulf Coasts to April 1.
Red Sea and Gulf of Aden Declared as “Warlike” No-Go Areas by Seafarer Unions
Despite the efforts of a US-led coalition and the European Union’s maritime operations in the area, international seafarers’ unions at the International Bargaining Forum (IBF) have designated the Red Sea and the Gulf of Aden as “warlike” areas.
The various unions have called on all ocean carriers to avoid the areas entirely to protect the lives of seafarers after three crew members of a bulk carrier were killed by a Houthi missile strike on March 7. In addition to the continued Houthi rebel strikes on vessels, activity from Somali pirates has also picked up since December with two bulk carriers and multiple fishing vessels being hijacked.
When the IBF first designated the area as high-risk, they defined an area from the Yemeni coast spanning 12 nautical miles out to sea. This area has now been expanded to include a southern section of the Red Sea and the Gulf of Aden, stretching across to the coast of Eritrea.
Photo by Joshua Woods on Unsplash
