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September 3 2018

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6 The Journal of Commerce | September 3 2018 www.joc.com Spotlight "Given the likely downturn in eco- nomic activity from Q4 due to the negative effects of tariffs, it is hard to see how rates will be sustainable over the long run." Laufer added that amid the threat of an economic slowdown, the only option for carriers is to manage capacity "in a disruptive way to achieve any kind of com- pensatory rates," and that holds particularly true as they face higher trucking and bunker fuel costs. "Sometimes no space means no space," said Allen Clifford, executive vice president of Mediterranean Ship- ping Co. Although some shipments are shut out of some voyages at Asian ports, this is not by intention. "We take no pleasure in turning away any client's cargo. We are in the service business, and we are here to serve our partners," Clifford said. Amid these glaring signs of industry dysfunction, there is a creeping realization that shippers will have to pay more beyond just higher BAFs. Encouragingly, there are signs in the market of carriers delivering better service for higher prices and of shippers and carriers agreeing to enforceable contracts. In the inaugural sailing of its expedited trans-Pacific service guar- anteeing chassis availability, APL said 70 percent of the local cargo discharged at the Eagle Marine Ser- vice (EMS) terminal in Los Angeles was available for pickup within four hours of unloading and the rest of the cargo was available by day end. T he chaos endu red by US importers this peak season will also encourage more of them to check out the New York Shipping Exchange (NYSHEX) to guarantee that their cargo will ship for the sailing they booked — with the carrier facing a penalty if they fail to do so. Con- versely, shippers face a fine if they fail to deliver the cargo they booked via the platform. To meet that demand, Maersk Line for the first time is offer- ing slots on NYSHEX for eastbound trans-Pacific sailings. Small but posi- tive steps. JOC email: mark.szakonyi@ihsmarkit.com twitter: @MarkSzakonyi Fuel prices stifle carrier profits Higher bunker fuel prices and lower-than- expected freight rates wiped out many carriers' revenue and volume gains, though, they are optimistic conditions will improve through the end of the year. A.P. Moller-Maersk, parent company of the world's largest container carrier Maersk Line, eked out a profit of $26 million, thanks to discontinued operations making up for higher bunker fuel costs and a marginal increase in rates. Excluding a $111 million profit from discontinued operations, the Denmark-based company slumped to a loss of $85 million against a $10 million profit in the second quarter of 2017 as soaring bunker prices boosted costs by $260 million. Zim Integrated Shipping Services reported a net first-half loss of $67.3 million, Evergreen Line had a net loss of 1.2 billion New Taiwan dollars, Yang Ming reported a second-quarter net loss of 3.81 billion New Taiwan dollars, and HMM saw a $147 million loss in the second quarter. Hapag- Lloyd's first-half net loss more than doubled to 100.9 million euro ($114.8 million). Carriers do see an improving market ahead, barring a full-blown trade war. "We expect revenue of around $40 billion in 2018, up almost 50 percent since 2016," Maersk CEO Soren Skou said. "For the rest of the year, we expect improvements in our profitability driven by lower unit costs and higher freight rates." The global container fleet is forecast to increase 5.4 percent this year as container volume rises 5.3 percent, according to IHS Markit's Container Ships Forecast. Letter from Editor, continued from page 4 Advertisers 18th Annual Port of New York-New Jersey Port Industry Day .......................................................................... 13 American Independent Line, www.aishipping.com ................................................................... 39 Cosco Shipping, www.cosco-usa.com ....................................... 5 CSCMP 2018 Edge Supply Chain Conference & Exhibition, www.cscmpedge.org ..................................................................... 7 Direct ChassisLink Inc., www.deli.com/chassisreality ..................................................... 21 FlexiVan, www.flexivan.com ....................................................... 23 Georgia Ports Authority, www.gaports.com/portofbrunswick ........................................ 35 Jaxport FTZ 64, www.jaxport.com/z ...................................... 59 Northwest Seaport Alliance, www.nwseaportalliance.com/bigcargo ................................... 33 Pasha Hawaii, www.pashahawaii.com..................................... 38 PhilaPort, www.philaport.com .................................................. 37 Port Authority of New York and New Jersey, www.portnynj.com ...................................................................... 17 Port Canaveral Foreign Trade Zone No. 136, www.portcanaveral.com ............................................................. 55 Port Everglades, www.porteverglades.net .............................. 67 Port Freeport, www.portfreeport.com ..................................... 57 Port Houston, www.porthouston.com ..................................... 61 Port Tampa Bay, www.porttb.com ............................................ 65 Port of Baltimore, www.marylandports.com............................ 2 Port of Brownsville, www.portofbrownsville.com ...................................................... 53 Port of Virginia, www.portofvirginia.com................................. 72 Ports America, www.portsamerica.com .................................. 71 Seaonus, www.seaonus.com ..................................................... 63 South Carolina Ports, www.scspa.com,supplychainauthority ................................... 44 Yang Ming Line, www.yangming.com ......................................... 9

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