CYBERATTACK MAULS MAERSK

Maersk Cntr LiftMaersk Line is limping back after being hit with the ransomware virus Petya on June 27, 2017. The cyberattack crippled operations and communications worldwide.  The line is slowly bringing global terminal operations back on-line. It is an arduous process, and, in the meantime, many operational functions are being handled manually.

In Oakland, we have not experienced any issues with the release of imports traveling on a Maersk bill of lading.

WHAT THE HECK IS BLOCKCHAIN?

Maersk Cntr LiftMaersk and IBM recently announced they are teaming up on blockchain technology, which made us wonder…what the heck is blockchain?  We found a definition that seemed to make sense.

The information held on a blockchain exists as a shared, and continually updated/reconciled, database. The blockchain database is not stored in any single location.  The records are truly public and easily verifiable.  No centralized version of this information exists for a hacker to corrupt. Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet.

LOW RATES = INCREASED SURCHARGES

SurchargesOcean carriage rates are at new lows, and surcharges are at new highs…CAF, FAF, EBAF, THC, Chassis Usage, Documentation, Peak Season, Pier Pass, Congestion, Extended Hours, Delay, Per Diem, Demurrage, just to name a few. The number of itemized charges are on the rise as are the quantum of the individual charges.

The fact of the matter is ocean carrier base rates, and trucker base rates, have been so squeezed that any additional service, new expense, or hiccup in the chain of events causing delays or inconveniences by carriers will result in an extra charge…a surcharge.

Who’s to blame? The consumer. That’s where it all starts, after all. Baby boomers grew up knowing prices only went up year after year. Inflation was a fact of life, plain and simple. But, no more. That reversal, whereby consumers expect to pay less year after year, can be accomplished only by squeezing EVERY element of the supply chain…all the way down to the chain’s last element, the truck driver. It has been going on for years, and the transportation sector is tapped out. The pendulum is swinging, however, and that truck driver is pushing back, hard. Base rates and itemization are on the rise. Stay tuned.

RIPE FOR CONSOLIDATION

SONY DSCOcean container shipping’s unfavorable supply/ demand ratio, the continuing need to “go big or go home” and ever-declining freight rates are making the industry ripe for consolidation.

China Shipping and COSCO have already filed their merger plans with the Federal Maritime Commission (FMC). CMA-CGM is now in exclusive talks with NOL/APL regarding a buyout.  It was recently rumored that Hanjin and Hyundai were headed for a merger before South Korean officials announced their belief that reducing the country’s ocean carriers would have a negative impact on their export competitiveness. Even Maersk, once in discussions with NOL/APL, has indicated consolidation is in the wind.  Soren Toft, Chief Operating Officer, Maersk Line, was recently quoted as saying, “This industry is in need of consolidation.  To the extent that if it makes sense for us to participate, then we will do so.”

The impact of consolidations on cargo owners is still being debated.  Some say a reduction in the number of ocean carriers will lead to stability and lower freight rates while others surmise it will lead to higher freight rates and decreased service offerings.  The last round of mergers and acquisitions, about 20 years ago, taught us that all of the above are true.  Give it time, and every single one of those effects, positive and negative, will happen.

CHINA NIXES P3

P3It has been widely covered that the Chinese Ministry of Commerce put the kibosh on the P3. The P3 was the alliance of Maersk, CMA-CGM and Mediterranean Shipping Co. These ocean carriers are the three largest in the world, and China was not comfortable with the percentage of the market in the various trade lanes, especially Asia-Europe at 42%, the alliance would control.

This decision does not mean these three carriers will cease to share vessel space, especially in the TransPacific. We are confident we have not heard the last from this alliance.