Issue 20 June 2014 Shipment Success Through Intelligent Visibility WELCOME to the June issue of CargoSmart s Innovating, a monthly, complimentary e-newsletter for the ocean shipping industry. Innovating is designed to provide insights about cargo delays around the globe that you may find useful to improve your daily operations and strategic planning. On June 30, the current International Longshore and Warehouse Union (ILWU) contract is set to expire. The ILWU and port employers have been meeting regularly since May 12 to negotiate a new contract. Some shippers are moving cargo earlier and planning alternate routes to mitigate the risk of potential port disruptions in July. This month, we analyzed the port performance from March through May at the two largest US West Coast ports, Los Angeles and Long Beach. We found that the port performance has improved in the months leading up to the ILWU contract expiration date. However, if work slowdowns or stoppages occur, the ports could experience significant delays. This month, we continued to study the impact of large vessels on performance. We compared the on-time performance of vessels with greater than and less than a 10,000 TEU capacity at four European ports. Our results showed that among the ports, 24% of the larger vessels arrived over a day late, while 13.4% of the vessels overall arrived over a day late. Next, we are pleased to introduce CargoSmart s new schedule reliability methodology. The new methodology provides a better schedule reliability benchmark by carrier, port pair, transit time, and service. CargoSmart will use the new methodology for studies about carriers schedule reliability in forthcoming issues of CargoSmart s Innovating. In this month s Incidents Around the World column featuring vessel and port disruptions, we investigated the impact of the Nhava Sheva port closure due to electrical maintenance on May 1-2 and found that it did not affect vessel berth times around the closure dates though some vessels were forced to skip the port. We invite you to monitor current events affecting your shipments and share your delay experiences with us on our visibility blog at visibility.cargosmart.com/blog or by email at innovating@cargosmart.com. ABOUT INNOVATING CargoSmart is creating a whole new visibility model for ocean shippers and logistics service providers to monitor their shipments. The rules of the game are changing in the global shipping and logistics industry. CargoSmart s innovative methods offer insights for the industry to manage their shipments that have exceptions. CargoSmart s monthly, complimentary Innovating newsletter delivers refreshing insights for you to make intelligent decisions for your supply chain. CONTENTS US West Coast Ports 2 Vessel Capacity and Delays at European Ports 4 All New Schedule Reliability 5 World Incidents: Nhava Sheva Port Closure 7 Contact 8 Graham Collins Executive Editor 2014 CargoSmart Limited. All rights reserved. 1
US WEST COAST PORT PERFORMANCE IMPROVES BEFORE ILWU CONTRACT EXPIRATION On May 12, 2014, negotiators from the International Longshore and Warehouse Union (ILWU), representing nearly 20,000 workers at 29 US West Coast ports, and the Pacific Maritime Association (PMA), representing the port employers, initiated their negotiations for a new Longshore and Clerks Contract. The current six-year contract will expire at midnight on June 30, 2014. According to a survey that JOC conducted on May 12-14, 66% of the shipper respondents are planning to divert freight away from US West Coast ports and many are shipping earlier for cargo to arrive in June due to the negotiations. This month, CargoSmart s Global Vessel Voyage Monitoring Center (GVVMC) analyzed the port performance of the two largest US West Coast ports the Port of Los Angeles and the Port of Long Beach to see the current trend in performance leading up to the contract expiration date. We reviewed the two West Coast ports performance by analyzing data of the top 21 ocean carriers from March 21, 2014 to May 21, 2014 in the following aspects: Percentage of arrival delays Average arrival delay durations Average berth times Percentage of Arrival Delays: Increasing Performance from March to May The Port of Los Angeles is located in San Pedro Bay, 20 miles south of downtown Los Angeles. It encompasses 7,500 acres of land and water along 43 miles of waterfront. It is America s premier port since it moves more containers than any other port in the nation, more than doubling its volumes over a 10-year period, and is Southern California's gateway to international commerce. Furthermore, it is recognized as one of the safest seaports in the world. According to our sampling statistics from March 21 to April 20, 141 vessels berthed at the port, and 48.22% of the vessels arrived early or within a 12-hour on-time tolerance level (see Figure 1). From April 21 to May 21, 126 vessels berthed at the port, with 61.90% of the vessels arriving early or within a 12-hour on-time tolerance level. Arrival performance at the port has improved over the last few months leading up to the June 30 contract expiration date. 60% 50% 40% 30% 20% Arrival Delays at the Port of Los Angeles 10% 0% Early or On-time <12 Hours 12-24 Hours >24 Hours March 21 April 20 April 21 May 21 Figure 1: Arrival delays at the Port of Los Angeles Port of Los Angeles Port of Long Beach The Port of Long Beach is the second busiest port in the United States, right after the Port of Los Angeles. It covers 3,200 acres of land, 10 piers, and 80 berths while several container terminals are capable to welcome the most efficient and environmentally sustainable ships. Since more than 90% of the shipments through the port are East Asian trade with top traders such as China and Japan, having one of the deepest main channels in the continent at 76 feet, along with deep berths, of at least 55 feet, for adequate under-keel clearance is certainly an advantage to welcome long-haul vessels. If we 2014 CargoSmart Limited. All rights reserved. 2
view the ports of Long Beach and Los Angeles together, the port complex would be the world's ninth busiest by container volume. According to our sampling statistics for the four weeks from March 21 to April 20, 65 vessels berthed at the Port of Long Beach and 39.99% of the vessels arrived early or within a 12-hour on-time tolerance level (see Figure 2). When viewing our sampling statistics from April 21 to May 21, 57 vessels berthed at the port and only 33.33% of the vessels arrived early or within a 12-hour on-time tolerance level. Average Arrival Delay (Hours) 30.00 25.00 20.00 15.00 10.00 5.00 0.00 Average Arrival Delay at the Ports of Los Angeles and Long Beach 22.68 16.13 Los Angeles 26.66 March 21 April 20 April 21 May 21 22.90 Long Beach Figure 3: Average arrival delays at the ports of Los Angeles and Long Beach 50% 40% 30% 20% 10% 0% Arrival Delays at the Port of Long Beach Early or On-time <12 Hours 12-24 Hours >24 Hours March 21 April 20 April 21 May 21 Figure 2: Arrival delays at the Port of Long Beach When comparing the arrival performance of the two ports, we see that the Port of Los Angeles generally performed better with a higher percentage of on-time vessels than the Port of Long Beach in the two-month sampling period. Average Vessel Arrival Delays: Long Beach Experiences Longer Delays To measure average vessel arrival delays, the GVVMC compared the ports of Los Angeles and Long Beach over two time periods from March to May. As shown in Figure 3, the Port of Los Angeles had an average vessel arrival delay of 22.68 hours from March 21 to April 20 and 16.13 hours from April 21 to May 21. The Port of Long Beach experienced an average vessel arrival delay of 26.66 hours from March 21 to April 20 and 22.90 hours from April 21 to May 21. Both ports experienced shorter average vessel arrival delays from late March to late May. However, the Port of Los Angeles performed better with a shorter average delay than the Port of Long Beach during the two-month period. Average Berth Times: Longer Berth Times in Long Beach than Los Angeles To measure average berth times, the GVVMC compared the ports of Los Angeles and Long Beach over two time periods from March to May. From our actual arrival and actual departure data during the two-month period, we found that the average berth time of the vessels at the Port of Los Angeles during both time periods were about the same, 46.42 hours from March 21 to April 20 and 46.59 hours from April 21 to May 21 (see Figure 4). For the Port of Long Beach, it had an average berth time of 69.90 hours from March 21 to April 20 and 62.97 hours from April 21 to May 21. Although the Port of Long Beach had a decreasing average berth time in the latter time period, its average berth time was about 35-50% longer than the Port of Los Angeles. The statistics reveal how long on average each port needs to handle cargoes for each vessel. Average Berth Time (Hours) 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 Average Berth Times at the Ports of Los Angeles and Long Beach 46.42 46.59 Los Angeles 69.90 March 21 April 20 April 21 May 21 62.97 Long Beach Figure 4: Average berth times at the ports of Los Angeles and Long Beach 2014 CargoSmart Limited. All rights reserved. 3
Potential Work Slowdown or Stoppage Impact Based on our current West Coast analysis, we estimate that the drop in arrival delays may possibly be due to fewer vessels berthed at both ports (from 141 to 126 in Port of Los Angeles and from 65 to 57 in Port of Long Beach). From November 27 through December 4, 2012, there was an eight-day port strike at both ports that caused nearly half of the vessels GVVMC monitored (20 out of 44 vessels) to wait outside the terminal area or to skip port and redirect to other ports. If a contract agreement is not reached by June 30, 2014, then the ports could experience work slowdowns or stoppages that could cause port congestion and delays similar to 2012. The GVVMC shares statistics on ports performance so that you can better plan your shipments and carefully select the appropriate schedules and routings to minimize delays. The statistics reflect the general situation in the past. The future performance of the vessels and ports will depend on the actual conditions that are affected by weather, vessel delays, and other factors. VESSEL DELAY STUDY: VESSEL CAPACITY S INFLUENCE ON PERFORMANCE AT EUROPEAN PORTS Last month we studied the performance of European ports in the Asia-Europe Trade as more mega vessels are to be deployed to the Asia-Europe trade. This month, we focused on vessels, regardless of trade, with a capacity greater than 10,000 TEUs and studied the impact of their arrival delays on European ports. Larger Vessels Experienced Longer Delays on Average We analyzed the arrival schedules of 22 ocean carriers at four popular European ports (Antwerp, Bremerhaven, Hamburg, and Rotterdam) from April 15 to May 15. By analyzing schedule data and comparing the actual time of arrivals (ATAs) to the estimated time of arrivals (ETAs) of the coastal schedules provided by the carriers, we reviewed 2,017 unique vessel arrivals at the four ports (129 were vessels with a capacity of over 10,000 TEUs). Within this period, more than 50% of the 10,000+ TEU vessels arrivals were delayed more than 12 hours, while 24% were delayed over 24 hours. Compared to the overall average, large vessels delays were significantly more. A summary of the results is shown in Figure 1. Overall 10,000+ TEU Vessels Total Unique Vessel Arrivals 2,017 129 Number of Delayed Vessels (Delay > 12 Hours) 578 (28.7%) 67 (51.9%) Number of Delayed Vessels (Delay > 24 Hours) 270 (13.4%) 31 (24%) Figure 1: Abstract results of unique vessel arrivals from 22 carriers from April 15 to May 15 Bremerhaven Leads Large Vessel Arrival Performance Figures 2 and 3 show the details for container vessel delays at the four ports. The results show that vessels with a capacity of over 10,000 TEUs have more delays at all of the ports except Bremerhaven. In terms of average delays, large vessels had the biggest impact on Hamburg, because its average delay for vessels with a capacity of over 10,000 TEUs was more than 60% higher than the overall average. When evaluating the percentage of vessels delayed more than one day, Rotterdam experienced the most disruptions with 34% of its vessels delayed more than one day double the overall average of 17%. 2014 CargoSmart Limited. All rights reserved. 4
Average Delays (Hours) 25 20 15 10 5 0 Four European Ports' Performance - Average Delays 19.6 17.6 16.2 15.1 12.7 20.6 13.8 18.1 Antwerp Bremerhaven Hamburg Rotterdam Overall 10K+ TEU Vessels % of Vessel Delays (> 1 Day) 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Four European Ports' Performance - Percentage of Vessel Delays (> 1 Day) 25.7% 33.3% 21.8% 18.2% 13.1% 23.5% 17.0% 34.0% Antwerp Bremerhaven Hamburg Rotterdam Overall 10K+ TEU Vessels Figure 2: Average delays at four European ports from 22 carriers from April 15 to May 15 Figure 3: Percentage of vessel delays (> 1 day) at four European ports from 22 carriers from April 15 to May 15 As more mega vessels are deployed to call at European ports, and as new carrier services are introduced, the impact of mega vessels on ports performance may become more serious. We will continue to monitor their performance and share the findings with you. INTRODUCING A NEW SCHEDULE RELIABILITY METHODOLOGY Shippers and logistics service providers face frequent vessel schedule changes due to increased slow steaming, shifting port coverage, vessel diversions, and service changes. It is critical for shippers to measure carriers schedule reliability performance to identify the routes that best fit their service and transit time requirements. CargoSmart has adopted a brand new methodology to calculate carriers schedule reliability. CargoSmart compiles and verifies schedule data from multiple sources, including carriers and the Automatic Identification System (AIS), to deliver high-quality reliability results. CargoSmart s schedule reliability is calculated based on the Global Vessel Voyage Monitoring Center s (GVVMC) tracking of over 12,000 vessel schedules covering over 200 services, 20 leading ocean carriers, and over 250 port pairs around the world each month. CargoSmart measures port-pair reliability along four major trade lanes: Asia-Europe, intra-europe, trans-atlantic, and trans-pacific. The new schedule reliability methodology allows shippers and logistics service providers to more accurately compare schedule reliability by carrier, port pair, transit time, and service. CargoSmart will use the new methodology for studies about carriers schedule reliability in forthcoming issues of CargoSmart s Innovating. The new methodology comprises of the following definitions, scope, and calculations: Punctuality Definition Punctuality is determined by comparing the vessel s estimated time of arrival (ETA) and actual time of arrival (ATA) at the discharging port. If the ATA is earlier than its ETA or later than its ETA within a tolerance level, the vessel is considered on schedule. The measurement is down to hours and the tolerance level can be customized according to business needs, such as, 12 hours or 24 hours. Currently, CargoSmart is using 24 hours as the tolerance level. Port Pair Selection CargoSmart measures reliability for over 250 port pairs based on carrier services and transit times. The selected port pairs have at least four carrier services in operation and the vessel transit time of the port pairs is over 12 hours along the four major trade lanes: Asia-Europe, intra-europe, trans-atlantic, and trans-pacific. Domestic ocean services, feeder services, and transshipments are excluded. Data Collection To measure port-pair reliability, CargoSmart captures from the carriers the ETA at the discharging port at the time the 2014 CargoSmart Limited. All rights reserved. 5
vessel departs from the port of loading. The GVVMC tracks the actual time of departure (ATD) and ATA through AIS. CargoSmart then compares the ETA and ATA to determine whether a vessel is on time. Carrier Reliability Calculation The reliability results are measured by carriers, aggregating the service offerings by each carrier. The port pair reliability percentage of each carrier s schedule is calculated by dividing the number of on-time vessel arrivals by the total number of vessel arrivals for the scheduled services of the port pair within the measurement period. Alliance Reliability Calculation Alliance reliability is the average result of the alliance carriers. For the same vessel voyage, each alliance member will use its own data for measurement. For example, if a service shared by three carriers has one vessel voyage in one week, each carrier will contribute one record. The reliability result is calculated by dividing the number of on-time carrier records by the three carrier records. Measuring by Port Pair During each freight procurement cycle, shippers select carriers for their cargo routes. One of the key factors is reliability. Determining schedule reliability by carriers vessel arrivals at a port is limited. Shippers are most concerned about whether their own shipments can be delivered on time from the loading port to the discharging port. monitor the schedules with the ETA recorded. When the vessel arrives at the port of discharge, the GVVMC captures the actual arrival time and the reliability is measured. With CargoSmart s new methodology to measure port-pair reliability, the results of routes from different loading ports to the same discharging port could have significant variations. The new methodology provides more insight to help shippers and logistics service providers evaluate their route options and choose the services that best need their needs. Shipment Planning with Schedule Reliability Shipment planning is an end-to-end process that requires a number of measurements of multiple operations and parties to achieve optimization. Measuring schedule reliability is one of the critical practices and it will be more effective to come along with sailing schedules to optimize route selection and booking decisions based on the reliability performance. Furthermore, it is also important to measure the performance of other key aspects throughout the shipment cycle, such as, transit time, shipment allocation, and trucker and terminal reliability. Focusing on shipment level measurement, shippers and logistics service providers can review and improve their planning over time. CargoSmart s schedule reliability measures carriers performance from a port pair perspective. By comparing reliability between port pairs, shippers have information to support their carrier selection process for specific routes. For example, in a trans-pacific service of a carrier, from Shanghai to Newark, the transit time is 32 days, while from Hong Kong to Newark; the transit time is 27 days. If taking the ETA with a fixed time range (e.g. 40 days) before the ATA at Newark to measure the schedule reliability, the results of these two routes could be the same. The timing to collect the ETA should be dynamic, based on the transit time of the route. CargoSmart has set the timer at the moment the vessel departs from the port of loading and the GVVMC starts to 2014 CargoSmart Limited. All rights reserved. 6
INCIDENTS AROUND THE WORLD Vessel casualties, port strikes, facility shutdowns, and extreme weather can all affect vessel schedules and potentially delay shipments. In this column, we cover incidents around the world that caught our attention during the previous month and their impact on shipment delays. May 5 MOL MOTIVATOR collided with cargo ship ZHONG XING 2 Vessels May 11 May 15 May 19 SIMUSHIR collided with fishing vessel 5.5 miles off the coast near Ulsan MV SALOOS capsized in the Cabinda Gulf YM UNIFORMITY boiler explosion in the Elbe estuary May 30 HANJIN NINGBO collided with general cargo ship FORTUNA 98 Ports May 1-2 Nhava Sheva Terminals closed due to electrical power maintenance, India Port Closure: Nhava Sheva, India On May 1 and May 2, a 36-hour electrical power maintenance conducted by local authorities caused Nhava Sheva terminals to close for almost two full days. Port operations were suspended during the closure, and several vessels were forced to skip the port or wait outside it. On April 30, vessels experienced their shortest berth times, because they had to leave the port before the power outage, and on May 1, no vessels entered the port. After the terminals resumed services the evening of May 2, there were no prolonged berth times and no cargo backlogs. Date Range: April 24 May 22 Vessel Arrivals: 138 Longest Berth Time: 67.2 hours Average Berth Time: 28.0 hours Carriers Included: 15 45 40 35 30 25 20 15 10 5 0 Nhava Sheva Average Berth Time (Hours) 2014 CargoSmart Limited. All rights reserved. 7
ARE YOU THE LAST TO KNOW WHEN YOUR SHIPMENT IS DELAYED IN TRANSIT GET A HELPING HAND WITH EARLY VISIBILITY WHEN YOUR SHIPMENTS ARE DELAYED CargoSmart is pleased to offer VisibilitySmart, a new service for shippers and logistics service providers. VisibilitySmart identifies when cargo has an unexpected delay. While Innovating provides updates on vessels and trends at an aggregated level, VisibilitySmart delivers early alerts and summary reports at the container level when your cargo faces delivery exceptions. Pilot trials have proven the excellent potential for collaboration between shippers, logistics service providers, and ocean carriers.? Request a free demo today at visibility.cargosmart.com. DATA METHODOLOGY CargoSmart established the Global Vessel Voyage Monitoring Center (GVVMC) to detect and analyze exceptions as they are happening so that shippers, forwarders, and NVOCCs can be informed earlier. Opened in Hong Kong in October 2012, the GVVMC monitors and analyzes over 5,500 vessels' movements covering 90% of the world's container capacity and over 1,000 global container ports. Using advanced analytical software tools, the center analyzes standard vessel patterns, compares them with actual vessel movements, and detects deviations that have the potential to cause shipment-plan exceptions. The GVVMC obtains data from the Automatic Identification System (AIS), ocean carrier websites, marine terminals, and shipment data. The center ensures high data quality by observing and reconciling multiple data sources. VISIBILITY BLOG - JOIN THE DISCUSSION Follow updates and share your insights about vessel delays on CargoSmart's blog at visibility.cargosmart.com/blog. To receive the monthly Innovating newsletter for the shipping industry by e-mail, please subscribe at www.cargosmart.com/innovating. We value your feedback and want to continue to improve our service and information that we provide to you. To provide feedback or ask questions, please contact us at innovating@cargosmart.com. China +86-756-3633098 Germany +49-421-3018798 Hong Kong +852-2233-8098 United Kingdom +44-1473-654390 United States +1-408-325-7693 2014 CargoSmart Limited. All rights reserved. 8