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Federal Officials Watching Container Capacity Issue

The Canadian Transportation Agency is monitoring container ship capacity for export cargoes, but can’t take any action until someone complains about a lack of capacity, or rate increases.

Alex Robertson, a CTA spokesman, said in an interview the agency has been made aware of the problem “and is monitoring the situation.” But it can’t take any formal action without a complaint. So far, several shippers have inquired about the process, he added.

One of those is the Forest Products Association of Canada. David Church, director of transportation and recycling, said in an interview several member companies have complained about a jump in rates and a drop in export capacity space on the container vessels.

“It’s tough to get slots (on the ships) and often not get all you need.” The amount of break bulk shipping is also quite tight, he noted.

His group complained to Transport Canada and was told to take up the issue with the CTA. “We have to see whether it’s worth making an application under the Shipping Conferences Exemptions Act.”

Michael Broad, president of the Shipping Federation of Canada, says the shipping lines lost billions of dollars in the last couple of years and are being very cautious about bringing ships back into service. “They want to be fairly certain that the business is sustainable.”

In the meantime, they’re doing the best they can to provide service, he said in an interview. Many ships were mothballed in 2008 and 2009 and it takes time and a lot of money to bring them back into operation.

CN spokesman Mark Hallman said the railway “is aware of the current supply/demand situation for ocean boxes for imports and exports. This is a challenging time for shippers and ocean carriers alike.”

CN, he said, is doing its best to ensure requests to empty reposition boxes for subsequent loads are handled efficiently, as “exporters are counting on these boxes.”

Container ship shortages are also a hot issue in the U. S., where both Congress and the Federal Maritime Commission (FMC) are actively investigating the situation. The House of Representatives’ subcommittee on coast guard and maritime transportation has begun hearings on whether the shortfall threatens the U. S. economic recovery.

Export demand for U. S. products is on the rise but there aren’t enough ships to meet the demand, several congressmen say. The FMC expects to issue a preliminary report by early summer.

The SFC’s Broad also said container liners are plagued with “ghost” bookings. Shippers reserve space but then don’t deliver the containers they said they would. But the line has had to pass up other business because of the bookings or gamble with accepting more bookings than it has space for.

Ghost bookings “impact the industry’s ability to properly forecast space requirements,” he said.

Maersk Line, he noted, has said it will start charging for containers “that don’t gate on time” for some shipments from the U. S. and will consider expanding the fee to all its business if it’s effective at curing ghost booking. It will also refund part of its shipping fee for boxes which arrive on time.

Maersk has reported that it’s not unusual for a third of its bookings not to materialize, and that it overbooks to make sure it has a full load. It suspects other carriers face the same challenge, he added.

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