JOC: Most shippers to divert cargo away from US West Coast ports

 © 2015 Journal of Commerce
© 2015 Journal of Commerce



This week, the Journal of Commerce surveyed about 140 shippers to gauge sentiments on the recent West Coast port congestion debacle.  Despite tentative settlement of the labor dispute that resulted in the massive cargo backups at these ports, nearly two-thirds of respondents indicated their intention to redirect shipments away from the West Coast, primarily to the US East and Gulf Coasts, as well as the Port of Vancouver in Canada.

While the majority of shippers specified that they would divert 10 to 30% of their cargo, nearly an equal number signaled that they plan to reroute 31% or more.

Meanwhile, JOC also reports that retailers, a key driver of imports of US  West Coast ports, expect shipping delays, product shortages and increased trucking rates caused by the port slowdown to adversely affect business for weeks.  Perhaps this development has had some effect on the survey results.  (JOC site registration required).

Don’t let your freight payment vendor co-mingle your funds

commingling-fundsImporters, do you trust that your freight payment and audit vendor will actually pay your carriers with your money?  According to an article in American Shipper (February 2015)*, shippers need to be careful of unscrupulous vendors who pool their clients’ monies to fund their own businesses – and neglect to pay the carriers.

Many shippers use the services of a freight payment and audit provider for the obvious advantages:

  • Automation
  • Payment accuracy
  • Reduced headcount
  • Supply chain management analytics

Unfortunately, some shippers fail to inquire whether their vendor prohibits the co-mingling of different shippers’ funds.  And here’s the danger:

 “When vendors co-mingle funds, it becomes nearly impossible for any individual shipper to maintain visibility into its payments to carriers – that is, until a carrier is not paid on time, and that shipper is alerted to that fact by the carrier.  The failure to pay carriers on time on behalf of their shipper customers is generally the first warning sign….

It takes time-consuming, expensive forensic investigations to unspool the details of failed vendors who co-mingled funds.  And shippers are the ones who eventually take the financial hit.”

Bottom line:  Thoroughly vet any potential freight payment and audit vendors.  Ensure that your funds will be maintained in a separate account into which you will have visibility… and continuously monitor the activity in that account to ensure legitimacy.

(*Site registration required)

See West Coast port congestion from the sky

© 2015 Michael Kelley
© 2015 Michael Kelley

Check out the bird’s eye view of the congestion at the Los Angeles/Long Beach port complex, captured by aerial photographer, Michael Kelley.  Kelley noted that he saw “30 to 40 ships” waiting to discharge their cargo, the result of the ongoing US West Coast port labor dispute.

Just over two weeks ago, it appeared that the Pacific Maritime Association and International Longshore and Warehouse Union had reached agreement on a major issue — management of truck chassis —  a key point of contention in the dispute.

That consensus, however, seems to have evaporated as shipping lines have announced that they will suspend the loading and unloading of cargo ships over the next four days.  The move is an attempt to avoid paying holiday/weekend overtime wages, a response to a perceived “chronic” work slowdown by dockworkers, which their union disputes.


How many shippers are filing in ACE and how are they using it?

In US Customs’ latest ACE Monthly Trade Update (January 2015), CBP provides the most recently available statistics in its ACE Adoption Rate Monthly Report for December 2014.  Among the data is a general overview of ACE user statistics, showing primarily an uptick in activity in most categories:

Screen Shot 2015-02-05 at 10.16.58 AM

In addition, the report demonstrates an increase in both cargo entry and entry summary submission rates (see tables below).  Note the difference in the total entries submitted in ACS vs. ACE for both categories.  For entry summary, nearly half of entry summaries were filed in ACE, compared to less than 4% of cargo entries.

This disparity makes sense in that CBP has been focusing its technical efforts on entry summary first, which is further along in implementation than cargo entry functionality.  Currently, ACE cargo entry is still lacking a tie-in to all 47 Participating Government Agencies (PGAs), so importers with non-CBP agencies having jurisdiction over their import shipments cannot yet file cargo entries in ACE, and are relegated to ACS.  Even so, it is clear that a notable portion of these importers file their entry summaries in ACE to take advantage of ACE’s many benefits, including enhanced, robust reporting, e-bonds, as well as the ability to file electronic Post-Summary Corrections (PSCs) in ACE up to 270 days after the date of entry.

Screen Shot 2015-02-05 at 12.18.15 PM

In any event, soon this distinction will be moot.  On November 1, 2015, CBP will mandate use of ACE for all electronic cargo release and related entry summary filing.  Since this deadline is just 9 months away, make sure that your ABI system (or your broker’s, if you’re not direct filing yet) is ACE-Certified.  (The first ACE deadline is May 1, 2015, when CBP will mandate the use of ACE for all e-manifest filing.)

For more statistics — and other ACE updates — see the ACE Monthly Trade Update (January 2015).