MSC, the world's largest shipping company, has joined the list of shipping companies that have ended the delivery of out-of-port containers to shipping customers as a result of the container ship accident near the Port of Baltimore that led to the tragic bridge collapse. With the Port of Baltimore closed indefinitely, the decision places the burden of picking up cargo at a diverted port and transporting it to its final destination on the shipping company.
In an email to customers obtained by CNBC on Thursday, MSC explained that for customer containers already on the water bound for the Port of Baltimore, the cargo will be rerouted and unloaded at an alternate port where it will be available for pickup.
“For these shipments, the termination of the contract for transportation at this alternative port and storage will be announced, and the distribution, distribution and transportation costs to the intended destination will initially be at the expense of the sole shipment,” the MSC consultant said.
MSC added that “traffic to and from Baltimore is impossible at this time and will not be restored for several weeks if not months.”
CMA CGM, COSCO and Evergreen were the first carriers to announce similar moves and in some cases to formally declare “force majeure,” a legal term that refers to the right to waive contract duties upon the occurrence of events beyond a party’s control.
MSC said in its communications with customers that it “apologizes for the disruption caused by this contingency plan which is required in response to events beyond our control, but is being taken in accordance with the terms of the contract of carriage”.
MSC did not immediately respond to CNBC's request for comment.
Maersk is the only major carrier to say it will provide transportation from diverted ports to customers
Maersk was the leasing company for the 10,000 TEU container ship Daly, which lost control and collided with the Francis Scott Key Bridge in the early hours of Tuesday.
After a pandemic boom that led to historic profits, shipping companies have gone through a period of financial and operational challenges, with increased ship capacity, declining profits, Houthi attacks in the Red Sea, and the drying up of the Panama Canal, leading to costly diversions from major global trade routes.
Logistics companies have been scrambling since the accident to devise alternative transportation plans and keep up with carrier diversions, and executives told CNBC on Wednesday that the next few days will be critical in the movement of trade diverted away from the Port of Baltimore.
The Port of Baltimore, the nation's 11th largest, is No. 1 in the United States for imports and exports of automobiles, light trucks and farm tractors, in addition to handling clothing, household goods, construction materials, electronics, appliances and produce.
Among unresolved issues, logistics executives cited shipping companies not updating their ship transits quickly enough to alert them to the new converted port so they could plan to pick up their customers' containers.
Major ports up and down the East Coast, including Savannah, Brunswick, Virginia, Charleston and New York/New Jersey, as well as companies that provide chassis for rail and truck transportation, told CNBC they have the ability to ramp up operations to meet the needs of incoming cargo.
In a series of updates, MSC sent out a list of 23 ships that arrived at the converted ports from March 28 to April 29. Eight have an unidentified diverting port, and 11 are bound for the Port of New York/New Jersey; three to Norfolk; And one to Philadelphia.
On Thursday, Transportation Secretary Pete Buttigieg held a meeting with supply chain professionals about the crisis and how to mitigate any congestion. The meeting included shipping companies CMA CGM, Maersk, MSC, Evergreen, and railways CSX and Norfolk Southern. Also in attendance were New York/New Jersey, Georgia, Baltimore, Philadelphia, Jacksonville, South Carolina and Virginia. Shipping clients at the meeting included John Deere, Stellantis, Home Depot, Under Armour, and Volkswagen.
“We are much better equipped 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, according to a readout from the report. interview.
National Economic Advisor Lael Brainard, who was also present, noted that in previous disruptions, the lack of complete information across various private sector and public sector components hampered decision-making capabilities and responses. She cited the recent DOT FLOW initiative as a difference maker. “It has really been activated to bring the full capacity of all agencies in the federal government to ensure that we help ocean carriers, port leaders, railroads, shippers and unions come together to assess potential supply chain impacts and then work together to address them.”
The biggest challenges may be faced by smaller companies that coordinate bookings themselves and may not have relationships at these converted ports, said Paul Brashear, vice president of transportation and intermodal at ITS Logistics. “You want to get your converted container out of the port as quickly as possible so you don't incur any detention fees or demurrage fees. And for some of these shippers, they're starting from scratch,” Brashear said.
Once the container arrives at the terminal, the clock starts ticking on the free time allotted to the container. Once this free time expires, detention fees and demurrage kick in unless the ports agree to waive them.
“We're looking to see if the terminals will grant an extension of free time or waive the fee,” Brashear told CNBC on Wednesday. “That's the problem now.”
