Industry News | More Than Shipping https://www.morethanshipping.com Brought to You by MTS Logistics Fri, 12 Jan 2018 15:28:08 +0000 en-US hourly 1 Maersk Created a Solution for Letter of Credit Complications https://www.morethanshipping.com/maersk-created-solution-letter-credit-complications/ https://www.morethanshipping.com/maersk-created-solution-letter-credit-complications/#respond Fri, 22 Dec 2017 15:53:53 +0000 https://www.morethanshipping.com/?p=10717 To have trade finance is one of the crucial challenges in global trade. Maersk has noticed this challenge in the market, and has created a product that can meet shippers and buyers needs. They are not promoting this in every country, but rather, in countries where there is too many bank transactions and paperwork requirements […]

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To have trade finance is one of the crucial challenges in global trade. Maersk has noticed this challenge in the market, and has created a product that can meet shippers and buyers needs. They are not promoting this in every country, but rather, in countries where there is too many bank transactions and paperwork requirements involved. Maersk Trade Finance combines the flow of goods and finances, supporting the businesses who import and export globally.

The banking industry itself is trying to find a solution that can simplify trade finance processes by developing blockchain technology.

While these developments are happening, this development by Maersk has the potential to save billions of dollars in costs, and speed up transaction times. We all know that most of the small and mid-size buyers are having financial issues when there is a payment due for a specific buying transaction. These issues are way more crucial in the countries where the U.S. Dollar is stronger than the local currencies.

In international trade, India is one of the most difficult countries to deal with when it comes to payment and finance, along with shipment requirements for the U.S. U.S. exporters still do not understand the concept of Letter of Credit requirements, especially Letter of Credit requirements for Indian shipments, as one may have experienced in the past on any Letter of Credit shipments that require a Vessel certificate, Free time certificate, Vessel Seaworthy certificate, Vessel age certificate, etc. I do not want to blame any party here, since I don’t think anyone wants to deal with too much paperwork in transactions, and discrepancies that delay payment and cause extra costs in releasing shipments.

This solution helps facilitate Maersk customers’ simplification efforts, enable global commerce, and speed up and simplify access to capital, while removing the paper trail from traditional financing options.

With this development, Maersk is also one step ahead of their competition. Maersk is not going to be competing with the major steamship lines to provide better rates, space, and service to get more market share. However, this will make a solid customer portfolio for Maersk to support Maersk Line for a lifetime, as long as Maersk is the only option that offers both finance and shipping.

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Los Angeles & Long Beach Ports to Propose Clean Air Plan in November https://www.morethanshipping.com/los-angeles-long-beach-ports-propose-clean-air-plan-november/ https://www.morethanshipping.com/los-angeles-long-beach-ports-propose-clean-air-plan-november/#respond Wed, 25 Oct 2017 14:56:13 +0000 https://www.morethanshipping.com/?p=10423 The Clean Air Action Plan (CAAP), whose purpose will be to seek zero, or near-zero, emissions from the largest U.S. port complex will be presented on November 2nd by the Ports of Los Angeles and Long Beach. This final draft presented by a joint session of their harbor commissions has a date set to fulfill […]

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The Clean Air Action Plan (CAAP), whose purpose will be to seek zero, or near-zero, emissions from the largest U.S. port complex will be presented on November 2nd by the Ports of Los Angeles and Long Beach. This final draft presented by a joint session of their harbor commissions has a date set to fulfill its purpose by no later than 2035.

This plan is also called the CAAP 3.0, drafted over the past three months after more than 70 meetings with community stakeholders, industry, and regulatory representatives.

There are 15 specific strategies to reduce health-risk pollution and greenhouse gas emissions. These are some of the updates to two previous versions of the CAAP, which were accomplished over three public workshops, and 150 days of formal public comment periods.

The initiative has been met with support by private sector sources, especially terminal operators, but they are also concerned that the CAAP 3.0 could result in a price tag of over $14 billion. Both the Ports of Los Angeles and Long Beach have already reduced pollution by 84 percent since 2005.

John McLaurin, president of the Pacific Merchant Shipping Association, stated that “The current CAAP draft lacks balance and a vision for keeping the ports of Los Angeles and Long Beach competitive while at the same time reducing emissions. Port tenants, customers, residents, and the one-in-nine jobs that are dependent on our ports deserve better.”

The Southern California port complex must continue to reduce health-risk and greenhouse gas emissions to meet California and federal clean-air requirements.

This complex currently accounts for almost 40 percent of US containerized imports, and 25 percent of exports. The ports are amid an infrastructure expansion project totaling more than $6 billion in the coming decade.

The strategies listed by the CAAP include:

Advancing the current clean-truck program to phase out older trucks and transition to zero and near-zero-emission trucks by 2035; transition to zero-emission cargo handling equipment by 2030; transition the oldest vessels out of service in Southern California; accelerate development of cleaner harbor craft; expand the use of on-dock rail; reduce population-weighted residential cancer risk from port-related diesel particulate emissions by 85 percent by 2020; reduce port-related emissions for nitrogen oxide by 59 percent, sulfur oxides by 93 percent, and diesel particulates by 77 percent by 2023; reduce greenhouse gas emissions to 80 percent below 1990 levels, by 2050.

Both Los Angeles and Long Beach Ports seek to enforce on their tenants, and users, a timeline that exceeds what is required on all other industries in the state. The CAAP has a set date for 2035, but the California Air Resource Board has set 2050 as their target date, with costs totaling up to $14 billion to achieve incremental gains in pollution reduction, as stated by John McLaurin.

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U.S. Exported 2 Million Barrels of Crude Oil A Day Last Week https://www.morethanshipping.com/u-s-exported-2-million-barrels-crude-oil-day-last-week/ https://www.morethanshipping.com/u-s-exported-2-million-barrels-crude-oil-day-last-week/#respond Fri, 06 Oct 2017 14:48:13 +0000 http://www.morethanshipping.com/?p=10345 Last week, the U.S. exported almost two million barrels of crude oil a day. This is a new record high since 1993, according to compiled government data. The high volume of crude exports has reduced the price of oil. This new trend has created fear of a global oversupply. The cause of this record high […]

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Last week, the U.S. exported almost two million barrels of crude oil a day. This is a new record high since 1993, according to compiled government data. The high volume of crude exports has reduced the price of oil. This new trend has created fear of a global oversupply.

The cause of this record high is Hurricane Harvey.

It was one of the most devastating hurricanes in U.S. history that mostly affected the Southeast Coast, and hit Texas refiners big time. Since then, the industry has been trying to recover from Harvey, and U.S. crude prices took a hit, too. Gulf Coast refiners had to shut down production for weeks. This forced oil producers to turn to markets overseas to sell their oil.

Lower crude supply has reduced the U.S. West Texas Intermediate crude (WTI) prices down to $49.98 a barrel, while Brent (North Sea oil) increased to $55.80 at the end of the week – that’s 1.98 million barrels exported a day.

Strategists are worried that increasing crude exports will affect other oil-producing countries’ efforts to reduce their oil supply.

After weeks of shutdowns due to Hurricane Harvey, Texas refiners have already started using more crude oil in their production.

Experts describe the current situation as “temporary” and believe that U.S. crude exports will diminish eventually, when the Gulf Coast industry returns to normal. Nobody believes that U.S. markets can keep the 1.5 – 2 million barrels a day pace of export.

The current situation shows that the U.S. crude production, and the export market, can be vastly affected by another hurricane if it were to hit other oil-producing states. The very thought of another devastating hurricane makes a lot of people around the world very nervous.

According to weather reports, a new tropical hurricane might hit the Gulf Coast area, again.

Tropical Storm Nate is currently affecting Nicaragua now, and could be heavy, with up to 30 inches of rain, as it gets closer to the U.S. Many people are wondering “Is it going to be another Harvey?” Now with Tropical Storm Nate heading up the coast, those fears may become a reality.

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Hurricane Harvey’s Impact on the Logistics Industry https://www.morethanshipping.com/hurricane-harveys-impact-logistics-industry/ https://www.morethanshipping.com/hurricane-harveys-impact-logistics-industry/#respond Wed, 30 Aug 2017 21:32:24 +0000 http://www.morethanshipping.com/?p=10158 Hurricane Harvey has taken its place as one of the costliest storms in U.S. history, with billions of dollars in property damage expected, and the as-of-yet undetermined lost economic activity, to the shipping industry, and energy and chemical industries. In fact, it is estimated that Harvey will be the second highest-cost hurricane after Hurricane Katrina, […]

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Hurricane Harvey has taken its place as one of the costliest storms in U.S. history, with billions of dollars in property damage expected, and the as-of-yet undetermined lost economic activity, to the shipping industry, and energy and chemical industries. In fact, it is estimated that Harvey will be the second highest-cost hurricane after Hurricane Katrina, which hit New Orleans in 2005. As per Moody’s, damage from Hurricane Harvey is projected to be as high as $40 billion to $50 billion.

The Houston metropolitan area is the fourth largest populated city in the U.S.

The region continues to grow, and is attracting investments in oil and other energy-related manufacturing industries. The city is also a very crucial hub for global trade. Texas accounts for about half of petroleum and gas exports, along with about a fifth of chemical exports. The Lone Star state is where 30% of U.S. oil refining capacity originates, and during Harvey, half, if not most, of the refineries shut their operations due to the storm. Steamship lines, trucking companies, and warehouses had to suspend their operations, partially or completely. In some areas, due to major highways closures, employees could not get to their offices safely. Railroad companies, such as BNF and UP, completely ceased operations in numerous areas, as a result of multiple failures on or around rails, and high water levels on rail lines.

Almost half of the products exported from Houston are resins, plastics, chemicals, and minerals, showcasing the nation’s focus in petrochemical business and industry on the Gulf Coast. Major imports flowing through the port include food, construction materials, machinery, and retail consumer goods. The Port of Houston is a major logistics center for the country’s south and central regions.

The ports in the Houston area have been closed since Friday mid-day, and remain closed, as of today.

As expected, it will likely take several weeks for ports and refineries to repair damaged equipment, fix issues caused by the storm, and reopen. Until then, port operations will be delayed. Houston handles more than two thirds of container traffic in the U.S. Gulf region. For some carriers, their main regional management center is located in Houston. Steamship lines are hoping ports will open their doors and berths soon, but little is known on when they will actually reopen. Currently, carriers are looking to adjust their schedules, in order to avoid an even more chaotic environment. For example, MSC Sao Paulo, which was scheduled to call Houston port on Sunday, discharged in Mobile port instead, and Hapag Lloyd announced they would be skipping this week’s Houston stop on its service for the Gulf Caribbean loop.

Obviously, the real cost and total effects of the storm to the U.S. and global economy will not be clear for a long-time.

Considering the importance of Texas’ commercial value to the U.S., economists expect the Houston region to recover fast, and even experience an increase in growth, as a reason of rebuilding the city’s damaged areas. From first look, Houston’s largest economic assets appear to be mostly undamaged, and will not be offline for long. As a nation, every American hopes to see Texas fully up and functioning again very soon.

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Port of Houston Works to Match Growing Activity https://www.morethanshipping.com/port-houston-works-match-growing-activity/ https://www.morethanshipping.com/port-houston-works-match-growing-activity/#respond Fri, 25 Aug 2017 13:39:30 +0000 http://www.morethanshipping.com/?p=10128 Image Credit: Houston Chronicles As exports at the Port of Houston surged by 14 percent in the first half of 2017, in comparison to the previous year, the port’s Bayport Terminal and Link Texas (TLT) have established a lease agreement to move forward with further expansion of a 25-acre empty container yard, set to be completed […]

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Image Credit: Houston Chronicles

As exports at the Port of Houston surged by 14 percent in the first half of 2017, in comparison to the previous year, the port’s Bayport Terminal and Link Texas (TLT) have established a lease agreement to move forward with further expansion of a 25-acre empty container yard, set to be completed by July 2018. The development is currently underway by TLT, a distributer of empty containers, which will increase TLT’s overall stacking capacity by as much as 80 percent.

The new facility’s purpose is to not only provide more storage for empty containers, but to improve operational procedures associated with repair and maintenance of both containers and chassis.

As more space becomes available by the project’s completion, 14-acres currently used for TLT’s activities will be handed over to the terminal to expand their container-loading capabilities.

According to Jeff Davis, the Port of Houston’s Chief Operations Officer, along with the 25 acres of yard space under development by TLT, another 25 acres are currently being constructed by the Port of Houston. The terminal currently has 240 acres and more will be added through TLT and the port’s partnership.

Bayport’s improvements are being carried out in multiple phases, and reportedly, $500 million in investments.

Construction is currently being done on phase 3. The resulting work with contribute to a total of 7 berths and 22 Post-Panamax cranes, in an effort to appease projected growth in activity.

Bayport’s operating hours are expected to be extended, from the current 7 AM – 7 PM, to 7 AM – 11 PM. The changes are stated to take into effect on October 2nd with the in-gate closing at 10 PM. The terminal services 5,000 trucking transactions daily. An extension of hours will be a welcoming change for the congestion and expectations of steady growth.

Along with Bayport renovations, the Port of Houston’s second terminal, Barbours Cut, is in the process of undergoing renovations, with the addition of 3 new Super Post-Panamax cranes by the end of the year. They are specifically needed for handling increasingly larger container ships entering the Port of Houston.

The Port of Houston reported to American Shipper that the Wharf 3 project at the Barbours Cut Container Terminal will prepare the dock for larger ship loads, an upgraded crane rail gauge, and faster multi-lane container transfer productivity.

The Port is responsible for handling around two-thirds of all the containers moving through the U.S. Gulf of Mexico.

The proactive move to expand operations in the wake of higher demand will hopefully prove to be beneficial for those dependent on the port’s services.

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Major Delays at Chittagong Port https://www.morethanshipping.com/major-delays-chittagong-port/ https://www.morethanshipping.com/major-delays-chittagong-port/#respond Wed, 23 Aug 2017 14:50:29 +0000 http://www.morethanshipping.com/?p=10118 Chittagong Port is Bangladesh’s prime seaport. Located on the coastline of the Bay of Bengal, it is the busiest seaport on the coastline, and the second busiest seaport in the overall region of countries dependent on the Bay of Bengal. Littoral and landlocked countries, such as India, Myanmar, Thailand, and Nepal, depend on the Bay […]

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Chittagong Port is Bangladesh’s prime seaport. Located on the coastline of the Bay of Bengal, it is the busiest seaport on the coastline, and the second busiest seaport in the overall region of countries dependent on the Bay of Bengal. Littoral and landlocked countries, such as India, Myanmar, Thailand, and Nepal, depend on the Bay of Bengal for maritime usage. Historically, the Bay of Bengal has been a super highway of trade, transport, and cultural exchange between South Asia and Southeast Asia. According to Lloyd’s of London marine insurance, it was ranked as the 76th busiest port in the world in 2016.

Recently, Chittagong Port has experienced major congestion between January 2017 and July 2017.

Many vessels are experiencing delays in berthing schedules, leaving ships waiting at the outer anchorage. The congestion has increased the average time in port by 43.1 percent, to 84.3 hours, between January and June. Time in port did not improve in July, as the average time in port for container ships was recorded at 54 hours a little over half-way through the month, according to IHS Markit, a world leader in critical analytical information.

Stakeholders blame the congestion squarely on the lack of adequate infrastructure at the port.

After an accident on June 25th, two gantry cranes were damaged, intensifying the situation and consequently disrupting container handling at the port. Nearly 90 percent of the country’s import and exports are done through Chittagong Port. With such a mass disruption in the trade route, businesses are likely to incur losses as the shipping companies charge more for overstay at the outer anchorage of Chittagong Oort. Mahfuzul Haque Shah, Director of Chittagong Chamber of Commerce & Industry, stated “Regrettably, the infrastructural capacity of Chittagong port has not increased over the years to cope with the ever-increasing growth. Therefore, it is the economy of the country which is now on the verge of collapse.”

Low draft has also crippled loading and unloading at Chittagong Port, nearly doubling the average time vessels spend in port.

Chittagong Port has seen a loss of nearly 2 meters (6.6 feet) in draft around it’s 13 jetty harbors. Six of these jetties are at a maximum range of 7 meters, preventing docking of vessels with drafts of 8.5 meters from berthing. Chittagong Port is relying on only two jetties to accommodate ships of such size. Vessels entering the port with deep-water draft must first be unloaded at these two jetties to reduce their draft to 6 meters. These ships are then directed to other jetties with a depth of 6.5 meters to unload the rest of the containers. This process has also resulted in higher costs on top of delays, as a result of having to pay two different groups of workers to unload the vessels.

Shippers facing a lead time of crisis, due to their inability to unload raw materials into their factories, have been desperate for government support. But as container vessels continue to experience extended delays, the future for Chittagong Port remains unclear.

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Largest Increase in Global Air Freight Since 2010 https://www.morethanshipping.com/largest-increase-global-air-freight-since-2010/ https://www.morethanshipping.com/largest-increase-global-air-freight-since-2010/#respond Mon, 14 Aug 2017 14:12:27 +0000 http://www.morethanshipping.com/?p=10062 Despite global air freight demand decreasing again, in June, overall global air freight cargo demand increased during the first half of this year. According to the International Air Transport Association (IATA)’s June 2017 Air Freight report, air freight has seen the largest increase in growth, since 2010. The report noted 10.4 percent growth in global […]

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Despite global air freight demand decreasing again, in June, overall global air freight cargo demand increased during the first half of this year. According to the International Air Transport Association (IATA)’s June 2017 Air Freight report, air freight has seen the largest increase in growth, since 2010. The report noted 10.4 percent growth in global freight ton kilometers (FTKs), and a 27 percent growth year-on-year, in H1 2017 from 2016. With support from a stronger global economy, new global export orders are near a six-year high.

This is the strongest recorded first half-year performance since air cargo’s rebound from the 2010 financial crisis.

The rate of growth nearly tripled from the industry’s average 3.9 percent over the last five years, according to the most recent report of IATA. While demand for global air freight cargo rose, so did the demand for freight capacity, measured in available freight tonne kilometers (AFTKs.) A 3.6 percent expansion was recorded during the same period.

“Demand is growing at a faster pace than at any time since the global financial crisis,” said IATA Director General and CEO Alexandre de Juniac. “That’s great news after many years of stagnation. And, even more importantly, the industry is taking advantage of this momentum to accelerate much-needed process modernization and improve the value it provides to its many customers.”

All regions experienced positive global freight growth in the first half of 2017.

Approximately two-thirds of the global demand growth can be credited to carriers in Asia and Europe. Europe has recorded a year-on-year increase of 14.3 percent for June, mainly as a result of a weak euro boosting the European freight market and incentivizing exports. Asia also recorded 10.1 percent growth, year-on-year, for June. Most of the growth from these two continents came from international routes within Asia and between Asia and Europe.

Latin America saw its second consecutive month of year-on-year demand growth in June, showing much improvement from its previous two-and-a-half years of consistent declines. Latin America recorded a rise of 9.8 percent in air freight demand, year-on-year, in June. Even though Latin America has shown great improvement, IATA attributed the majority of the increase to volatility in 2016, instead of consistent sustained growth in 2017 as political and economic conditions, particularly in Brazil, remain weak.

In a cyclical industry, such as global air freight, the peak of the growth period is usually followed by a decrease in demand.

IATA has noted its report on the side of caution, as June has been recognized as the peak of the latest growth period. It also noted a stabilization in the global inventory-to-sales ratio after recent declines, indicating that global air freight cargo may slow down as many companies will discontinue to restock falling inventories. IATA is still expecting to see continued growth in demand, although growth is expected to come in at a much slower rate of 8 percent. Shippers and carriers can expect a decline of air freight cargo in the second half of 2017, as history may repeat itself.

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China Secures Port Deal With Sri Lanka https://www.morethanshipping.com/china-secures-port-deal-sri-lanka/ https://www.morethanshipping.com/china-secures-port-deal-sri-lanka/#respond Fri, 11 Aug 2017 15:49:36 +0000 http://www.morethanshipping.com/?p=10050 Sri Lanka’s government has come to a $1.1 billion-dollar agreement with China Merchants Port Holding Company. The deal grants the Chinese firm majority operation control of Sri Lanka’s newly-constructed Hambantota port. Despite wide opposition, protests from trade unions, and security concerns, Sri Lanka’s Port Authority has agreed to sell a 70 percent stake in the […]

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Sri Lanka’s government has come to a $1.1 billion-dollar agreement with China Merchants Port Holding Company. The deal grants the Chinese firm majority operation control of Sri Lanka’s newly-constructed Hambantota port. Despite wide opposition, protests from trade unions, and security concerns, Sri Lanka’s Port Authority has agreed to sell a 70 percent stake in the Hambantota port to China Merchants Ports Holdings. This agreement is set for a 99-year lease and gives China majority ownership of the newly-constructed Hambantota port, based in the southeast of the country.

The Cabinet approved the agreement almost six months after the initial framework deal was signed.

Due to concerns that a Chinese colony is being created, and that the government will take their land to build industrial zones set up for Chinese investors, there was public outrage and protests that delayed the signing. Hundreds of angry protesters tried to storm the inauguration ceremony for the new port project called the “Sri Lanka China Logistics and Development Zone.” Trade unions also showed their opposition to the deal earlier this week by staging a strike, temporarily crippling fuel distribution on the island. The Sri Lankan government has dismissed the union’s fears, stating the deal would prove profitable and will help repay loans taken on to build the port.

After negotiations, the percentage of stake being sold was lowered to 70 percent, from the original 80 percent proposed. Responsibilities for commercial operation and security for the port have been split amongst the two companies. Sri Lanka’s Port Authority will be set up to handle the port’s security and services, while China Merchant Port Holdings will handle commercial operations.

Prime Minister Ranil Wickremesinghe stated industrial zones are needed in order to complement the redeveloped Port of Hambantota, and dismissed any concerns that Sri Lanka would lose control of any land to China. The Prime Minister stated “Sri Lanka law will apply to everyone who comes here, whether it is a Chinese merchant or someone who disembarks from a ship, the law applies. It is after agreeing on this, that we signed the first agreement.”

The previous Sri Lankan government built the new Hambantota port at the cost of $1.5 billion.

The port was built largely with the help from Chinese loans, which are due for repayment this year. The government views the Hambantota as a white elephant, as it has failed to become financially-viable since official operations began in 2011. Annual repayment commitment of the port was contracted at $59 million, but by the end of 2016, the port has recorded an estimated loss of $304 million, according to the Sri Lankan Government.

Sri Lanka is dealing with an estimated $47 billion worth of debt, most of it taken out by the government of former President Mahinda Rajapaksa, who sought help from China during the war against the Tamil Tigers.

Once the war was won, Sri Lanka granted China contracts to invest and become the preferred lender to Sri Lanka. The agreement would allow Sri Lanka to balance out some of this debt, but would also provide China a foot into an important shipping route. Both countries currently see the agreement as a win-win situation, but it is still unclear who will benefit the most.

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Port of Charleston Plan to Use Barges from Terminals to Railway https://www.morethanshipping.com/port-charleston-plan-use-barges-terminals-railway/ https://www.morethanshipping.com/port-charleston-plan-use-barges-terminals-railway/#respond Fri, 04 Aug 2017 14:32:04 +0000 http://www.morethanshipping.com/?p=10022 Authorities at the Port of Charleston have been experiencing difficulties moving containers by highway, due to congestion and road conditions. Recently, they came up with the idea of moving the cargo out of the terminal by barges. The Port of Charleston has applied to the Federal Government’s Department of Transportation to create a new ocean […]

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Authorities at the Port of Charleston have been experiencing difficulties moving containers by highway, due to congestion and road conditions. Recently, they came up with the idea of moving the cargo out of the terminal by barges.

The Port of Charleston has applied to the Federal Government’s Department of Transportation to create a new ocean route for barges to carry containers on two rivers, the Wando and Cooper Rivers, that surround the Charleston port.

The proposal includes the containers to be unloaded to the terminal’s container yard. Then, the containers will be loaded on to the barges that will carry between 500 to 1,000 containers. The barges will haul the cargo to the new railyard that is currently being built. Finally, the cargo will be moved out from the terminal, by train.

The new $130 million-valued railway system, which will be completed in 2019, is being built by Palmetto Railways, a company supervised by the State Department of Commerce. It is believed that the new railway system will help reduce congestion and waiting times at the . Port of Charleston. This is because it will connect the terminal without using any trucks and bad roads surrounding the terminal, such as Interstates 26 and 526.

The plan to use barges to move the cargo out of the Port of Charleston is still waiting for approval from the Federal Government’s Department of Transportation.

They expect an answer by the end of 2017. The Department of Transportation is taking its time to answer the proposal rather than confirming the project right away, because if they confirm the project, a good sum of federal grants will go to the project that could help pay for developing the long-range proposal.

The plan also aligns well with federal directives that grants be used for projects that support a larger initiative, rather than stand-alone ventures. “They like to see how projects fit into an entire network,” said, Barbara Melvin, the South Carolina Ports Authority’s vice president of operations and terminals, adding that the barges would complement other port activities, such as construction of a new container terminal on a former Navy Base, and deepening Charleston Harbor.

Jim Newsome, the state Ports Authority CEO, is confident about the project, saying, “We know it’s physically doable.” If he is right about that, we may be seeing similar projects at other busy ports to avoid congestions.

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Amazon Prime Comes to Mexico https://www.morethanshipping.com/amazon-prime-comes-mexico/ https://www.morethanshipping.com/amazon-prime-comes-mexico/#respond Fri, 28 Jul 2017 14:32:52 +0000 http://www.morethanshipping.com/?p=10007 In March, Amazon launched Amazon Prime Mexico, in a bid to capitalize on its extensive logistics network and capture a bigger share of the Mexican e-commerce market. According to the Wall Street Journal’s Robbie Whelan, at least six major logistics companies have invested heavily in their logistics operations, allowing them to import and export to […]

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In March, Amazon launched Amazon Prime Mexico, in a bid to capitalize on its extensive logistics network and capture a bigger share of the Mexican e-commerce market. According to the Wall Street Journal’s Robbie Whelan, at least six major logistics companies have invested heavily in their logistics operations, allowing them to import and export to countries in Latin America. Upgrading one’s Amazon account to an Amazon Prime subscription has benefits such as free, one-day delivery to Mexico’s four-largest cities. Additionally, the expansion will offer two-day shipping to the rest of the country. Products will be delivered from Amazon’s fulfilment centers in Mexico. Products will also be imported from United States distribution centers, too. This will increase the product portfolio available to customers in Mexico. Consumers subscribed to Amazon Prime will have over 20 million products to choose from, and enjoy unlimited shipping. It comes with free shipping, with approximately one-week deliveries and no minimum order price.

The retail price of the Amazon Prime service package is 899 Pesos, although a promotional subscription is available for first-time customers at 499 Pesos. Moreover, Amazon Prime subscribers will be able to test out the service for free, in the first 30 days. Mexico is experiencing a period of rapid growth in online retail. Companies such as Home Depot, Lowe’s, and now, Amazon, have been scaling up their operations. Amazon Prime is now in thirteen countries and has no signs of slowing down. Amazon’s latest venture into the Mexican e-commerce market means more competition for dominant players, such as Argentina’s MercadoLibere, Inc. MercadoLibere, Inc. recently announced plans to invest over $100 million in free shipping, as well as purchase protection, payment processing, and a rewards system based on customer points. These are all services that support logistics operations.

Some companies, however, believe that payment options, as opposed to logistics, are the real driver of the e-commerce market.

If that is the case, companies such as MercadoLibere, Inc., that already have an online payment platform (Mercado Pago) have a competitive advantage over those who have to rely on third parties. Nevertheless, operating an online business such as Amazon requires a special emphasis on logistics. Amazon and Alibaba, another e-retailer, have invested heavily in their logistics operations. Amazon has extended its supply chain capabilities to a level where it can compete with specialized logistics companies. This is because logistics are responsible for both reducing the cost of production and increasing customer responsiveness of an organization. Making the shipping of imports as efficient as possible by integrating the supply chain will reduce waste in terms of resources, time, labor, money, etc.  Ensuring their shipping and logistics operation are as agile as possible and flexible enough to accommodate unanticipated demand is key to enabling Amazon to be more responsive to customer needs. Satisfied customers are keepers.

The timing for launching Amazon Prime in Mexico could not be better.

The Mexican Peso has just recovered from its sharp drop, following Trump’s shock in the last United States presidential election, and consumer confidence is very high. Mexico presents an opportunity for e-commerce giants trying to grow, because there’s no monopoly in place, making entry to the market easier. Having just launched Amazon Prime in China, Amazon is trying to expand its logistics operations further south, and well into South America. However, this means the competition for online market share is going to be very stiff with already established competition in place.

In conclusion, shipping benefits and the perks that come with Amazon Prime help Amazon penetrate the Mexican market. However, political tensions between the Mexico and Trump’s administration might erode its competitive advantage.

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