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August 20 2018

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12 The Journal of Commerce | August 20 2018 Cover Story adulterated scrap products, the ISRI advisory stated. Whether due to growing volumes to Southeast and South Asia, or persistent overbooking by exporters, or both reasons, space is tightening on outbound vessels, and exporters are finding they must book earlier than they had been. "I was hearing that space was actually tight and the East Coast is close to three weeks out on bookings," said Ed Zaninelli, presi- dent of Griffin Creek Consulting. Abbe said the capacity constraints aren't systemwide, but more so to the newer destinations in Southeast Asia and the Indian subcontinent. "The concerns we're hearing have to do with service — exporters' ability to deliver cargo to the destinations we need to go," he said. An added handicap in the Southeast and South Asia trade lanes is that those countries are served mostly through transshipment hubs. "The challenge is on the feeder ships," Burns said. Export shipments make their intended voyage to the hub ports, but delays may occur there because of competition for berth space among the many trans- shipment services to destinations throughout the region, he said. In addition to vessel capacity problems on some trade lanes, Abbe said agricultural exporters face sporadic equipment shortages in the US interior. This is a perennial issue because import containers move mostly to large population centers, which are often located hundreds of miles from the rural areas where agricultural exports are sourced. However, carrier pricing for the ocean leg of the export journey isn't an issue, even though outbound freight rates are edging up, partly because of rate hikes for bunker fuel, the average price of which was up 51.6 percent year over year in July across the ports of Rotterdam, New York-New Jersey, and Shanghai to $454.42 per metric ton (about $400 per ton), according to IHS Markit data. Spot shipping rates from the US East Coast to China for the week of July 30 rose 19.6 percent compared with the prior week to $616 per FEU, according to the Freightos Baltic Index, while the rate from the West Coast rose 6.5 percent to $477. stepping up inspections, even for shipments from reputable exporters, Adler said. While China has been cracking down on irresponsible recycling operations, "unfortunately, many of these unprincipled operators moved to Southeast Asia to take advantage of perceived relaxed environmental standards and enforcement," ISRI stated. Malaysia, Vietnam, Thailand, and Indonesia have recently taken actions to stem the importation of However, the problem of scrap shipments and recyclables being adulterated with toxic substances or waste that is not related to the commodity listed on the bill of lading is beginning to migrate to Southeast Asia. Some Chinese scrap processors have set up op- erations in those countries, those recyclers continue to import adulter- ated shipments, and now the South- east Asian countries are respond- ing by suspending shipments and $350 $400 $450 $500 $550 $600 $650 Jan- 18 Jan- 18 Jan- 18 Jan- 18 Feb-18 Feb-18 Feb-18 Feb-18 Mar-18 Mar-18 Mar-18 Mar-18 Apr-18 Apr-18 Apr-18 Apr-18 Apr-18 May- 18 May- 18 May- 18 May- 18 Jun- 18 Jun- 18 Jun- 18 Jun- 18 Jul-18 Jul-18 Jul-18 Jul-18 Jul-18 US East Coast to China Rate US West Coast to China Rate Westbound trans-Pacific spot shipping rates jump Source: Freightos Baltic Index © 2018 IHS Markit Rate per FEU -6% -5% -4% -3% -2% -1% 0% 1% 2% 3% Northeast Asia Centreal America Middle East North Europe Oceania Africa East Coast South America West Coast South America Mediterr anean Caribbean Indian Subcontinent Southeast Asia Southeast Asia, Indian Subcontinent grab US export market share Source: IHS Markit © 2018 IHS Markit Year-over-year change in US export market share by region, January to May 2018

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