MSC, the world’s largest ocean carrier, has joined the list of ocean carriers which have stopped delivering out-of-port containers to shipping customers following a container ship accident near the Port of Baltimore that led to a tragic bridge collapse. Since the Port of Baltimore is closed indefinitely, the choice requires the shipper to select up the cargo on the diverted port and transport it to its final destination.
In an email obtained by CNBC on Thursday, MSC explained that for customer containers already within the water en path to the Port of Baltimore, the cargo might be redirected and offloaded at another port where it’s going to be available for pickup.
“For these shipments, the carriage contract will be deemed terminated at this alternative port and storage, dismantling and transportation costs to the original intended destination will be borne solely by the cargo,” MSC’s advisory reads.
MSC added that “traffic to and from Baltimore is currently unavailable and will not be restored for several weeks, if not months.”
CMA CGM, COSCO and Evergreen were the primary carriers to announce similar moves and, in some cases, formally declare “force majeure” – a legal term referring to the correct to terminate contractual obligations when events beyond a celebration’s control occur.
In its communication to the shopper, MSC said it “sorries for the disruption caused by this contingency plan, which is required in response to events beyond our control but which has been undertaken in accordance with the terms of the contract of carriage.”
MSC didn’t immediately reply to CNBC’s request for comment.
Maersk is the one major carrier that claims it’s going to transport customers from the modified ports.
Maersk was chartering the ten,000-container container ship Dali, which lost control and crashed into the Francis Scott Key Bridge early Tuesday morning.
Following a pandemic boom that delivered historic profits, ocean carriers have endured a period of monetary and operational challenges from vessel overcapacity, falling revenues, Houthi attacks within the Red Sea and drought within the Panama Canal, resulting in costly changes to major global trade routes.
Since the accident, logistics companies have been scrambling to develop alternative transportation plans and sustain with carrier diversions, and executives told CNBC on Wednesday that the subsequent few days can be crucial in moving diverted trade out of the Port of Baltimore.
The Port of Baltimore, the nation’s eleventh-largest port, is No. 1 within the U.S. for imports and exports of passenger cars, light trucks and agricultural tractors, and likewise handles clothing, household goods, construction materials, electronics and appliances, and agricultural products .
Among the unresolved issues, logistics executives cited ocean carriers not updating their ships’ transit times quickly enough to alert them of a brand new port diversion so that they can schedule customer pickups of containers.
Major East Coast ports including Savannah, Brunswick, Virginia, Charleston and New York/New Jersey, in addition to rail and truck chassis companies, told CNBC they can increase operations to satisfy the needs of incoming cargo.
In a series of updates, MSC sent an inventory of 23 ships arriving at diverted ports between March 28 and April 29. Eight have an unknown diversion port, 11 are certain for the Port of New York/New Jersey; three to Norfolk; and one to Philadelphia.
On Thursday, Transportation Secretary Pete Buttigieg met with supply chain experts concerning the crisis and ways to cut back congestion. The meeting was attended by ocean carriers CMA CGM, Maersk, MSC, Evergreen, and CSX and Norfolk Southern railroads. Ports in New York/New Jersey, Georgia, Baltimore, Philadelphia, Jacksonville, South Carolina and Virginia were also present. Shipping customers on the meeting included John Deere, Stellantis, Home Depot, Under Armor and Volkswagen.
“We are much better prepared to mitigate supply chain disruptions than we were just a few years ago thanks to increased coordination across the supply chain and new efforts to strengthen our physical and digital infrastructure,” Buttigieg said in a readout from the agency meeting.
National economic adviser Lael Brainard, who was also present, noted that in previous disruptions, the dearth of complete information between various elements of the private and public sectors hampered decision-making and response. She mentioned the recent DOT FLOW initiative as an element introducing changes. “It has already been activated to provide full capacity to all federal government agencies to help ocean carriers, port leaders, railroads, shippers and labor unions come together to assess the potential supply chain impacts and then work together to address these issues.”
Paul Brashier, vice chairman of freight and intermodal at ITS Logistics, said the largest challenges could also be faced by smaller companies that coordinate bookings themselves and will not have relationships at these modified ports. “You want to get the redirected container out of the port as quickly as possible so as not to incur any detention and demurrage fees. For some of these shippers, they are starting from scratch,” Brashier said.
Once the container arrives on the terminal, the clock starts counting down the free time allocated to the container. After this free time, detention and demurrage fees begin to be levied unless ports comply with waive them.
“We want to see if terminals will allow extensions of time off or waive fees,” Brashier told CNBC on Wednesday. – That’s what it’s all about.
