12 Februari 2015

[120215.EN.LOG] Reefer Madness: USWC Pile Up Means Paying US$400 a Day Per Box

ANGRY cold chain logistics operator, Steve Alaerts, sales chief at Antwerp-based foodcareplus, has warned that delays and diversions due to the steadily worsening US west coast port congestion will wipe out shipper profit.

He said some of the company's latest deep-frozen shipments have been stuck in ports for three weeks "at a horrendous port storage and demurrage cost".

"An average daily storage cost of US$400 per reefer box would bring the cost to US$2,800-$3,000 per week. That is in many food commodity items over 10 per cent of its value.

"Depending on the product value, those additional costs are wiping away margin for the importers and retailers," Mr Alaerts told Newark's Journal of Commerce.

"In some cases, the shipping lines decide last-minute to omit the port calls, especially the Los Angeles-Long Beach port area, and reefer boxes are dropped in Central American transshipment centres, such as Panama, where they wait for days before being moved further to the west coast."

While steamship lines usually bear the costs in the transshipment port, the supply chain delays and added land transportation costs add up, especially if a containership diverts to US east coast ports.

"Shipping reefer products via the east coast is just not an option for many commodity items because of the total cost to move it to a warehouse and truck it to the west coast," Mr Alaerts said.

"The cost to discharge the product from a reefer box in a warehouse on the east coast amounts to $1,000-$2,000 per container depending on the location, the closer to the port the cheaper. Trucking the product to the west coast afterwards is at least another $3,500-$5,000 a box."

While railing reefer containers from the Gulf port of Houston via the Alameida Corridor to the west coast was another option, it costs $6,000 per container because of the lack of power packs (generators) on rail cars.

With no end in sight to the waterfront chaos, frustration is mounting among shippers. The National Retail Federation released a statement accusing the International Longshore and Warehouse Union and Pacific Maritime Association of "shooting themselves in the collective bargaining foot."

Source : HKSG.

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