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June 7 2021

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6 The Journal of Commerce | June 7 2021 Spotlight Continued from page 4 Marco Polo heralds Southeast Asia import growth The Port of New York and New Jersey is among the US East Coast gateways that are growing their import business from Southeast Asia faster than other regions and planning to handle even more volume in the coming years. The shi• is highlighted by the arrival of the largest container ship ever to call the North American East Coast, the 16,000-TEU CMA CGM Marco Polo, which made its first US call at APM Terminals' Elizabeth, New Jersey, facility May 20, discharg- ing about 3,000 of the approximately 7,000 containers it was carrying. The ship also called Norfolk, Savannah, and Charleston. Ed Aldridge, president of CMA CGM America, attributed the Marco Polo's addition to the carrier's west- bound Columbus JAX service to higher demand from US importers to source products in countries such as Vietnam and Thailand, adding that vessel capacity on the loop is "sold out" through at least Chinese New Year. "Some of our customers have taken a portion of their manufactur- ing down there as a hedge," Aldridge told The Journal of Commerce. "We see a great future from Southeast Asia, especially into the US East Coast." He said the Columbus JAX service may gain additional capacity once more vessels become available. With 11 services through the Panama Canal, imports from China accounted for 26.6 per- cent of New York–New Jersey import volumes last year, the most of any region, according to data from the Port Author- ity of New York and New Jersey (PANYNJ). But that share has fallen from approximately one-third of total import volume as recently as 2017. Imports from Southeast Asia accounted for 24 percent of import volumes last year, up from 17.3 percent in 2014. Southeast Asian imports through New York–New Jersey have been growing 10.3 percent per year on average since 2015, faster than the 4.8 percent five-year average growth rate for total imports, PANYNJ data show. New York–New Jersey currently has 10 weekly services that transit the Suez from Southeast Asia. While all North American gateways have been stretched by the sus- tained swell in container volumes that began last summer, Aldridge said that the investments at New York–New Jersey and other East Coast ports over the last several years have made it possible to handle the additional volumes that would come from larger vessels such as the Marco Polo. cargo and have been loath to slow circulation of containers by repo- sitioning them outside hubs for imports. As other shipper groups consider throwing their support behind the NITL eorts, legislators will also be hearing more from importers as well. If Congress chooses to pur- sue reforms to the Shipping Act, they'll also hear from the new FMC leadership, which is emphasizing enforcement. In an early May inter- view with The Journal of Commerce, new FMC chairman Daniel Maei said his priority is getting his four fellow commissioners to agree on what the agency's enforcement priorities will be, after the lack of consensus that marked his prede- cessor's tenure during the Trump administration, which encouraged deregulation. "There has clearly been abuse" in how detention and demurrage fees are levied against shippers and consignees, he said. Maei, who was tapped by President Joe Biden, was clear that the FMC will exercise its power under the Shipping Act, but only Congress can determine whether the agency's limited pur- view should be expanded. Despite the pleas of some ship- pers for Congress to intervene, the eort may not be able to marshal enough momentum on Capitol Hill. And even its backers agree it's unlikely that all their proposed reforms would ultimately be included in rewritten legislation if Congress were to take it up. At the heart of NITL's proposal is a desire to firm up "common car- rier" obligations that have largely been eliminated. Its proposals include requiring ocean carriers to provide more clarity on detention and demurrage fees, abide by book- ing commitments, and provide containers as contracted. Impor- tantly, the burden of proof for showing detention and demurrage charges are reasonable — in that they encourage cargo flow, rather than seeking to generate revenue — would shift to carriers. The group also wants to dial back antitrust immunityŒthat pro- tects container carrier alliances in the US by allowing the FMC "to act upon complaints filed against anti- competitive agreements between ocean carriers that operate with antitrust immunity, such as alli- ances." NITL also proposed allowing third parties, including shippers, to join the litigation, though ship- pers rarely litigate against carriers to ensure access to capacity. If the FMC, for example, were to seek a federal injunction against an agree- ment — which it has done only once — the carrier would be open to dam- ages sought by those third parties. WSC warned such measures can't change the fundamental phys- ical problem — i.e., the strongest sustained wave of US imports in history — and the proposed "gov- ernment managed system" would prevent private parties from man- aging their own commercial aairs. It is di"cult to believe that this is really what shippers want. Whether there is legislation or not, a red line in terms of shipper and carrier relationships may have been crossed already. Logistics managers say they understand that rates have been unsustainably low for years, and that carriers are simply making the best of a situation that's driving all the major lines — even those that have struggled in the past such as HMM and Yang Ming —Œwell into the black. But those shippers say carriers have pushed too hard, point- ing to record spot rates of $5,500 per FEU from Asia to the West Coast. Even then, non-vessel- operating common carriers and shippers tell The Journal of Commerce it can take more than $7,000 to guarantee that booking is accepted. One logistics manager who asked not to be identified pointed to the possibility of overcapacity returning to the market given a slew of newbuild vessel orders placed in recent months and carriers finding themselves in the trough of the cycle with limited shipper sympathy. At 17.4 percent, the per- centage of new capacity on order compared to total fleet capacity in service is the highest it's been since 2016, according to data from IHS Markit. JOC email: twitter: @markszakonyi Nick Souza Photography

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