Largest box ship to call LA-LB ports to collect empty containers: report

THE largest container ship ever to call on the United States has arrived at the Ports of Los Angeles and Long Beach, part of a 2M alliance service offering

13 March 2019 - 19:00

THE largest container ship ever to call on the United States has arrived at the Ports of Los Angeles and Long Beach, part of a 2M alliance service offering.

The 19,500-TEU MSC Eloane, which is regularly deployed on the Asia-to-Northern Europe route, called at the APM Terminal at Los Angeles yesterday and is scheduled to berth at the Total Terminals International dock in Long Beach five days later.

The MSC Eloane is the largest container ship to visit the US, said maritime consultancy Dynamar. The previous record was set by CMA CGM's 17,900-TEU Benjamin Franklin, reports New York's FreightWaves.

Big ship vessel calls are always a point of pride as they allow a port to show off their readiness to handle ever larger container ships. But big ships also illustrate the troubled economics for ocean carriers and difficulties on the landside for handling those larger ships.

While the Eloane's exact manifest is not known, according to some logistics professionals a big part of its dispatch to the US will be to pick up empty containers.

The US has largely always been a net importer, so a backlog of empty containers is not unusual, particularly after the holiday rush. But the imbalance is a growing concern to ocean carriers looking for backhaul cargoes.

'I am personally concerned in North America about the export situation,' Jeremy Nixon, Chief Executive Officer of Ocean Network Express, told an audience at the Journal of Commerce's TPM 2019 conference in Long Beach. 'We do want to see more exports coming out of the US; of course that's linked back to the tariff issue.'

He said monthly exports of 700,000 TEU out of the US are roughly unchanged over the last seven years. In contrast, monthly imports have risen from 1.2 million TEU up to 1.9 million TEU over the same time. More than half of the containers going back to Asia are empty, he added.

'We do need to get US shippers and exporters back into the global market so that they are more competitive, and also for the selfish reason that we improve the equipment imbalance,' Mr Nixon said. The imbalance 'is not good for the supply chain, not good for round-trip economics of the trade.'

While the eastbound trans-Pacific ocean shipping spot rate reached as high as US$2,600 per FEU last year, the backhaul westbound rate largely remained at or below $600 per FEU.

The imbalance also hurts trucking economics for drayage as dual transactions, in which a driver can drop off an empty and pick up a full container, are curtailed. Weston LaBar, chief executive of the Harbour Trucking Association, said at the TPM 2019 conference that drayage operators in Southern California went from having 80 per cent dual transactions several years ago to some companies seeing less than 10 per cent dual transactions last year.

The upshot is that many drayage providers are providing essentially free storage for empty containers, said Robert Loya, president of the Harbour Trucking Association. If those containers are not returned with the free time allotted by ocean carriers, detention charges can also accrue.

'We are facing a myriad issues on returns,' Mr Loya said. 'You are delivering that empty to a different terminal than where the imports are coming in,' he added. 'We are constantly sitting on empties, either at the distribution centers or at the yards.'

Dr Noel Hacegaba, CCO for the Port of Long Beach, said the 20-odd extra vessel calls from last year's import rush 'injected extra TEU into the system. Now those have to go back.'

'We are in the process of levelling out all those additional imports we saw come in last year,' he added. 'We expect that to stabilize in the coming weeks.'


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