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Container xChange: Suez Canal Closure Increases the Pressure on Europe’s Ports

suez canal

Container xChange: Suez Canal Closure Increases the Pressure on Europe’s Ports

The anticipated box crunch at European ports following the closure of the Suez Canal at the end of March has been less severe than expected, according to Container xChange.

However, Europe’s leading box hubs are still receiving far more boxes than are departing.

The average CAx reading of incoming 20-foot dry-containers across three of Europe’s biggest ports – Rotterdam, Antwerp, and Hamburg – climbed just 3% in week 17 compared to the week before.

At Rotterdam, the increase in incoming 20 ft. dry containers was most stark, with box numbers rising +3.75% week-on-week. At Antwerp, the week-on-week increase was +3.5%, while at Hamburg it was +2.2%.

At all three ports, incoming box traffic has been heavy since March. In Container xChange’s Container Availability Index (CAx) an index reading of below 0.5 means more containers leave a port compared to the number which enter. Above 0.5 means more containers are entering the port.

Chart: Container Availability Index for 20 ft. Dry-Containers at the ports of Antwerp, Rotterdam, Felixstowe, and Hamburg in 2021. For more info, click here.

Hamburg has recorded a CAx reading of above 0.8 since week 9 of this year. In week 17 its CAx reading was 0.93, up from 0.48 in week 1. Rotterdam’s CAx reading has also risen steadily in 2021, climbing from 0.65 in week 1 to 0.74 in week 9 and up to 0.83 in week 17.

Antwerp, meanwhile, recorded a CAx of 0.38 at the start of the year, 0.78 in week 9 and 0.9 in week 17.

In contrast, the situation at heavily-congested Felixstowe has been dire all year. The hub’s lowest CAx this year was 0.87 in week 3. In week 17 it recorded a CAx of 0.95, up from 0.94 in week 16.

Dr. Johannes Schlingmeier, CEO & Founder of Container xChange, the world’s leading container leasing and trading platform, commented:

“Europe’s top container terminals have been struggling to keep congestion at bay, with incoming boxes outweighing outgoing boxes for much of 2021. The closure of the Suez Canal appears to have only made the box crunch at Europe’s hubs only slightly worse than it already was.

“What we’re hearing from our container leasing and trading members is that they find it increasingly difficult to book export containers with the carriers across Europe. It seems shipping lines are prioritizing empty containers in order to move the boxes back to China as fast as possible.”

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About the Container Availability Index:

The Container Availability Index tracks millions of monthly container moves to monitor and forecast the global container equipment supply. An index of 0.5 describes a balanced market, below 0.5 a shortage of containers. For more information and weekly email updates, check out https://container-xchange.com/features/cax/

About Container xChange:

Container xChange is the world’s leading online platform used by 600+ companies to buy, sell and lease shipping containers. Container users and owners use the platform to find containers, work with vetted partners and automate the operational workload. Started by Dr. Johannes Schlingmeier and Christian Roeloffs in 2017, the company has now more than 100+ employees with headquarters in Hamburg, Germany. https://container-xchange.com/

lamar

LAMAR UNIVERSITY’S CENTER FOR PORT MANAGEMENT MASTER’S PROGRAM SHARPENS LEADERS’ SKILLS

Editor’s note-In this exclusive interview with Erik Stromberg, executive director of Lamar University’s Center for Port Management, we discover how the center’s advanced and continuing education programs are taking professional development in the port industry to the next level. 

Global Trade: What can professionals anticipate with a master’s degree in Port and Terminal Management from Lamar University?

Erik Stromberg: In brief, the goals for our graduates are, one, to improve their management skills and perform their current job better and, two, to increase their opportunities to grow their port and terminal management responsibilities. 

Allow me to step back and talk about public port management, and the skills and aptitudes required for success. I should say that I am more familiar with the challenges of managing a public port than a private marine terminal, but there is overlap, as well as a significant difference. 

Both require, to varying degrees, management skills and familiarity with the technical aspects of the industry, from planning, engineering and risk-based property and asset management, to business development; from government and public relations to terminal operations, safety and security; from IT and digital technologies to HR. In other words, both public and private port managers need to know how to run a business. While most port authorities lease out terminals and other facilities, many have decided their best interest lies in operating the terminals they own.  

The most profound distinction, however, between a port authority and a private terminal operating company lies in their ultimate stakeholders. Private terminals are owned by family, management or investors, or if publicly traded, its shareholders. A port authority is a public enterprise ultimately owned by and accountable to the taxpayer.  

The public aspect of managing the port creates a special challenge. It is my view that most public port industry leaders think of themselves as business people doing the public’s business, rather than public administrators trying to run an organization like a business. This is why our program is supported by Lamar’s Business College, as well as our Industrial Engineering Department. But the public aspect of port management must be abided. It doesn’t guarantee success, but ignoring public concerns is a risky strategy. And for every port authority, there are multiple public constituencies, further complicating matters. 

Global Trade: Why should professionals pick this program to enhance their career?

Erik Stromberg: Simply put, there is no program devoted to the advanced education of port and marine terminal managers in the hemisphere. The asynchronous program is fully online, facilitating access by students from wherever they live. We have designed flexibility into the program to help our students accommodate a significant demand on their work and personal lives. 

Taking one course per term, it typically takes two years to complete. Our program is affordable, at just over $14,000 for the master’s degree. Furthermore, based on the MOU Lamar has with the American Association of Port Authorities (AAPA), students with the Association’s Professional Port Manager certification can waive up to 15 credit hours toward their master’s degree. 

Stepping back, a fundamental question is: “Why a master’s degree?” In the continuum of professional education and training, a master’s degree represents a commitment and a focus not available with continuing education or an undergraduate degree. Our students enter Lamar’s advanced education in port management program seeking the “mastery” of a set of interdisciplinary skills and knowledge for the purpose of their application in the management of ports and marine terminals. In other words, theoretical study is valued to the extent it can be applied in practice. 

Our online platform facilitates not only access by working professionals entering the program as students, but also to the world of industry experts who sign up as adjunct faculty eager to teach what they’ve learned throughout their careers. Our students come from within the port and terminal operating industry seeking to enhance career opportunities, along with those from outside the port industry wanting to enter the exciting field of port and terminal management. Lamar’s interactive, online learning platform also facilitates the ability of students to learn from each other as well as from our faculty.

Global Trade: Can you briefly review what the student should expect in the way of course work?

Erik Stromberg: To start with, the 12-course program does not stretch the student’s quantitative skills (i.e., no calculus), but it’s still pretty intense. We have had exceptions, but one course per term seems to be enough for our working professional students to handle.   

The port master’s degree curriculum pulls in business and industrial engineering courses that provide both technical knowledge and “soft-skills,” management education. 

A summary of our degree program would mention the following:

-comprehensive and in-depth study and understanding of the public port and private marine terminal operating industry and the environment in which it operates

-analytical and decision-making skills

-leadership and team building skills

-lessons learned and best practices from industry experts, including student/faculty and student/student interaction 

-online, asynchronous learning

-latest advances in technology and management 

-focused and facilitated study opportunity of port and terminal operating industry

Global Trade: How does Lamar select the faculty for this program?

Erik Stromberg: Industry experts serving as adjunct faculty members teach fully half of our 12-course curriculum. I guide our students through Introduction to Port Management with a preponderance of guest lecturers. These industry veterans have an abiding interest not only in sharing their knowledge and experiences, but also continuing to learn and explore with our working professional students. 

The remaining courses are taught by faculty from the Industrial Engineering Department and the College of Business. Every course is populated with guest lectures given by subject matter experts from outside the university. 

Besides my Introduction to Port Management class, courses taught by our adjunct faculty are: Strategic and Facility Planning; Security and Emergency Management; Port Asset and Property Management; and Freight Transportation Logistics. Guest lecturers are used throughout the curriculum. 

The center’s Advisory Board members play a very helpful role in both serving at times as guest lecturers, as well as suggestions for curriculum content and adjunct faculty.

Global Trade: Have Lamar Business and Industrial Engineering faculty been able to create or adapt existing graduate-level courses to accommodate the needs of a port management curriculum?

Erik Stromberg: Absolutely. With the addition of industry experts serving as guest lecturers, these courses blend theory and practice. Included are the following courses: Capital Planning and Implementation; Legal Framework of Ports and Trade; and Marine Terminal Operations.

Global Trade: How is Lamar University handling challenges with the pandemic while still providing educational excellence?

Erik Stromberg: The current crisis has disrupted the traditional classroom experience. However, the pandemic has spotlighted successful, remote learning platforms, including Lamar’s, which has been utilized for over a decade.

Given that access to potential students as well as adjunct faculty and guest lecturers is facilitated by online learning, the challenges presented by the pandemic have been minimized. 

Center for Port Management Students Speak for Themselves

“I find the program challenging and providing new skills for how I manage my port projects and my decision-making process. I already see the value of the program as a tool to advance my career.” 

-Ron Coddington, port engineer, the Port of Palm Beach

“It made me a better manager, broadening my perspective and forcing me to think more analytically about the issues I regularly deal with.” 

-Larry Kelley, CEO, Port of Port Arthur (and the program’s first graduate)

“It is the only port-specific graduate program in the country that is focused on developing the interdisciplinary skills required of effective and impactful port managers. This means that students are exposed to every aspect of the port business, from business administration to engineering, economics to operations, and everything in between.” 

-Sean Fairchild, U.S. citizen currently working as a port industry consultant in Bogota, Colombia

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To learn more about Lamar University’s Center for Port Management master’s degree program, and other continuing education opportunities, visit lamar.edu/port management.

supply chain issues

What Warehouses Can Do to Minimize Supply Chain Issues

While the integral Suez Canal supply channel is no longer blocked, other supply chain issues remain. In fact, according to a recent report, 24 container ships – with a combined maximum carrying capacity nearly 10 times that of the Suez Canal ship – were recently anchored off the coast of Los Angeles and Long Beach holding up millions of dollars worth of cargo.1 While both instances of bottlenecks took place within days of each other, these traffic snarls are not the primary culprit of clogged supply chains. 

While shipping and data today are an important part of building successful logistics operations, these areas alone cannot solve real-time supply chain issues. If logistics operators and organizations don’t have the proper visibility into their warehouse data and operations, they are unable to make quick changes in response to supply chain snarls and backlogs. The lack of complete end-to-end visibility was also a reason so many manufacturers and suppliers suffered during the pandemic.2 Unfortunately for many organizations, this real-time visibility gap starts in the warehouse. 

Bridging the Gap Starts in the Warehouse

Various factors are being blamed for the recent supply chain disruptions – the size of ships and containers, congestion at the ports, and how narrow the canal channels remain. In fact, the Port of Los Angeles in North America is one of the busiest channels, but can’t regularly receive 20,000-container vessels due to the lack of infrastructure.3 Even so, fixing any one of these factors will not truly solve the primary causes of supply chain backlogs. 

Enhanced visibility technology into the warehouse, yard management and labor resources is yielding both time and cost savings for companies dealing with supply chain backlogs. For example, real-time access to data to determine which trucks have been sitting and for how long has become key to prioritizing and assigning tasks within the distribution center to improve customer fulfillment, minimize risks, and avoid costly and unnecessary fees. But without real-time visibility into the yard, appointments can get de-prioritized, delayed or missed. The warehouse is the heart of the supply chain, yet very few end-to-end tools are solving the problems of warehouse visibility and labor management. 

Shifting Supply Chain Strategies

While the warehouse is already the most technologically advanced area of the supply chain, it’s the transportation network within the supply chain that usually incorporates real-time data tools, leaving a massive gap in end-to-end supply chain visibility. Most operations find that there are simply too many data points and too much information to process to create real-time views that don’t time out and that are actionable when distribution teams need to make point-in-time decisions. Warehouse data without science is just noise, and analytics without actionable insights is just a spreadsheet. Shifting the strategy to fill the gap includes a series of industry-standard KPIs, live operations views, productivity metrics, inventory visibility, and labor management that’s actually helpful to enhance Warehouse Management Systems (WMS) already in place.  

As evidenced with the recent blockages, the impact of this lack of real-time warehouse visibility on the global supply chain is still in critical condition. What’s more is that even without substantial issues like canal blockages or a global pandemic, the supply chain regularly suffers from thousands of “mini disruptions” that both distribution operations and customers end up suffering from as a result.4 Without supply chain visibility tools for the warehouse, manufacturers, and suppliers suffer the same consequences from that of a channel backlog or global pandemic, but on an ongoing and daily basis.  

Supply chain executives must incorporate real-time warehouse visibility in their end-to-end supply chain optimization strategies to increase overall distribution efficiencies and reduce risks associated with problems from within the warehouse that arise not only from blocked canals, but from unseen blockage within their own four walls.  

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Alex Wakefield is the CEO of Longbow Advantage with over 20 years of experience in supply chain technology and implementations including leadership roles at IBM and Blue Yonder (formerly JDA/Red Prairie). His focus is on enabling distribution teams to better manage, leverage and action their data across the supply chain through the use of Rebus, the only real-time warehouse visibility and labor platform purpose-built for the supply chain. 

container prices

CONTAINER PRICES SURGE IN CHINA AND INDIA AS SUPPLY CHAIN BLOCKAGES TIGHTEN SUPPLY

The container shortages that have been adding to logistics logjams in Asia and beyond are showing few signs of being resolved, according to the latest data from Container xChange, the world’s leading online platform for the leasing and trading of shipping containers.

In China, average prices for used twenty-foot containers increased 94% between November 2020 and March 2021. The surge from an average price of $1,299 per box in November last year to $2,521 in March indicates that container scarcity is continuing to worsen.

The latest Container Availability Index (CAx) data also reveals that equipment shortages are also now driving up container prices at major Indian ports. Between June 2020 and March 2021, the average used 20 ft. container prices across the ports of Chennai, Mundra and Nhava Sheva rose from $1,106 to $1,755, an increase of 58%.

Dr. Johannes Schlingmeier, CEO & Founder of the container leasing and trading platform Container xChange, commented: “The relentless pace of container shipping trade since the summer of 2020 is not easing and this is reflected in equipment shortages in Asia, and elsewhere. We expect markets will tighten even further in the coming weeks as the ripple effect of the Suez Canal closure at the end of March further disrupts container shipping services and equipment availability.”

Shanghai prices fall

Across the eight biggest ports in China, average prices for used 20 ft. containers climbed 38% from $1,251 in November 2020 to $1,733 in March 2021.

There are indications that equipment is being funneled to China’s largest container hubs. At the port of Shanghai, the world’s largest box port by volume, the average used container price in January this year was $2,162 marking it as the most expensive port in China to procure a used box. By March, however, the average price of a used 20 ft. container at Shanghai had fallen to $1,686.

The port of Dalian is now the most expensive location in China to purchase a used 20 ft. container with prices in March averaging $2028. Equivalent prices at Qingdao and Tianjin were $1,850 and $1,800, respectively.

In India, Chennai was by far the most expensive port to buy used containers in March 2021 with an average price of $2,220 per 20 ft container. Average prices in March at Nhava Sheva were $1,667 per 20 ft container. Mundra was the cheapest location in India to procure a used box with an average price of $1,455.

New vs. used container prices

Such is the urgent demand for boxes in the current highly stressed ocean container market that the cost of procuring a used container has now increased far beyond what was previously considered a ‘normal’ price for a newbuild container.

“It always depends on the exact equipment type, but before shortages became critical a standard used container which was a few years old would cost around $1,000 in China, while a brand-new container would be about double the price,” said Schlingmeier.

“However, in the current market, used containers are selling at $2,300-$2,600 across China, while prices for brand-new containers at Shanghai, for example, have skyrocketed by 64% in 2021 to an average of $3,390.”

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About the Container Availability Index: 

The Container Availability Index tracks millions of monthly container moves to monitor and forecast the global container equipment supply. An index of 0.5 describes a balanced market, below 0.5 a shortage of containers. For more information and weekly email updates, check out https://container-xchange.com/features/cax/

About Container xChange: 

Container xChange is the world’s leading online platform used by 600+ companies to buy, sell and lease shipping containers. Container users and owners use the platform to find containers, work with vetted partners and automate the operational workload. Started by Dr. Johannes Schlingmeier and Christian Roeloffs in 2017, the company has now more than 100+ employees with headquarters in Hamburg, Germany. http://container-xchange.com/

ever given

Lessons from the Ever Given for an Increasingly Turbulent Global Supply Chain

The Ever Given’s blockage of the Suez Canal, which accommodates 30% of the word’s daily container freight shipments, has been yet another reminder of how unforeseeable and remote events can dramatically disrupt one’s business. Although the canal’s blockage lasted only a few days, its effect on supply chains was global. The traffic jam it caused worsened Asia’s shipping container shortage, further delaying the export of consumer goods; spoiled countless goods sitting in transit; and temporarily exacerbated a global semiconductor shortage affecting countless manufacturing industries. Unsurprisingly, because the Suez Canal is a critical route between Europe and Asia, the hardest-hit businesses were those whose supply chains terminate in or pass through Europe.

Coming off the heels of a global pandemic, this latest disruption has many wondering how to shore up their supply chains to protect against the next unexpected event. Doing so, however, is an exhausting prospect—particularly as industries globalize, supply chains become more far-flung, and markets become more interconnected. Counterintuitively, the best way to bolster against unforeseen exterior events is not to plan for every event, but instead to take stock of what your business needs to survive. In the end, those plans that reflect and harmonize with a business’s needs are those most likely to offer protection during uncertain times.

I. Spend energy creating stability rather than predicting catastrophe.

Globalization-induced regional production specialization (for example, raw materials for semiconductors coming from Japan and Mexico and chips being made in the US and China) has increased the number of links in businesses’ supply chains, thereby increasing the likelihood of a weak link. It is easy to imagine any number of events that may cripple one’s supply chain, and recent history is filled with novel examples: a low yield potato crop creates a potato shortage, a clothing strike decreases the availability of certain clotheslines, a power grid failure halts the production of semiconductors, and a culinary demand for a local grain makes the grain unsuitable for livestock feed, just to name a few.

In one sense, recognizing the risk of the unforeseeable has had its benefits. For example, businesses have begun to hold the ostensibly pro forma provisions found in their contracts—like force majeure provisions in sales contracts and virus exclusions in insurance policies—in greater regard.  Unfortunately, however, as we have become more fearful of novel risks, these risks tend to dominate risk management deliberations more than they perhaps should. As the Suez Canal incident, COVID-19, and any number of freak incidents have taught us, the events that cause the most disruptions are ultimately those that are hardest to predict (and therefore prepare for). Thus, while companies must always prepare for the worst, management should not overly focus on what might go wrong at the expense of ensuring what must occur to survive.

II. Know yourself; know your tools.

An “I’ll have what she’s having” approach to protecting your supply chain is a recipe for failure. It ignores differences that create competitive advantages and it offers little protection in times of industry-wide disruption, in which industry norms are per se insufficient. The best risk management programs are born from a profound understanding of one’s business, including the central pillars of its operations and its competitive success. When it comes to supply chains, profiling risk requires more than merely asking where your widgets come from, although it certainly includes that. A prudent risk profile should conceive of all critical ingredients necessary to ensure your business’s continued success. For example, in the context of a dine-in restaurant chain, one should consider all that is needed to provide the desired customer experience, like air conditioning for those restaurants in warm climates.

There are any number of tools available to protect one’s business against risk. Staples include prophylactic due diligence, contract terms and conditions, insurance, and, where necessary, litigation. These tools are quite versatile, but it is important to avoid putting the cart in front of the horse. They are a means to an end and should be evaluated in light of your business’s specific and tangible needs rather than as a blanket of hypothetical protection.

A. Due diligence

As Ben Franklin famously observed, “an ounce of prevention is worth a pound of cure.” In that regard, due diligence is the keystone of any risk management plan. Due diligence is not so much a solution to risk, but rather a diagnostic tool to help determine the best risk mitigation strategy. For example, due diligence gives one the insight needed to restructure one’s supply lines to avoid chokepoints, tailor one’s insurance coverage to target serious risks or decide whether a risk is best left unmitigated (which it sometimes is). When performing due diligence analysis, not only should a business’s specific needs direct the investigation, they should also dictate the solution.

Take, for example, a car manufacturer’s need for airbags. One could attempt to mitigate the risk of a supply shortage by keeping a stash of extra airbags on hand. But as increasingly common “just-in-time” auto manufacturing practices suggest, doing so brings with it increased overhead costs from procuring and managing excess inventory. One may instead consider insuring one’s airbag supply (a practice discussed below) but at the cost of a premium. Likewise, one may consider diversifying suppliers to ensure any one supplier’s failure will not stop production, understanding that this would do nothing to protect against an industry-wide shortage. The correct solution for any given auto manufacturer depends upon countless variables, some of which are common among manufacturers, and some of which are unique to each specific manufacture’s needs and goals. All variables, however, flow from a first principle—one needs airbags to make cars. In that sense, due diligence can be described as the final step in understanding how your business works.

B. Insurance—Contingent business interruption

Among the armamentarium of insurance products available to protect one’s business, in the supply chain context, contingent business interruption insurance (CBII) is king. Whereas traditional business interruption coverage only covers interruptions due to physical losses occurring on the insured’s premises, CBII policies protect supply chains, often covering disruptions caused by distant natural disasters, industrial accidents, labor disputes, public health emergencies, damage to infrastructure, and sometimes even disruptions cases by upstream production errors or supplier insolvency.

When disruptions occur, CBII policies typically provide coverage for lost income, extra expenses (costs to end the interruption), and additional funds expended to mitigate the risk of further losses. CBII policies, however, are not a silver bullet against supply chain losses. CBII policies frequently limit the extent and duration of coverage—for example, only covering losses incurred after 72 hours of interruption, only covering 6 months of losses, or limiting coverage for losses in any given month to 25% of the policy’s aggregate limits. They also often require an exhaustive list of those suppliers to which the insurance will apply—the composition of which the insured should give the utmost thought.

When securing coverage for your business, it is important to have done the homework required to ensure your policy’s terms accurately reflect the type, source, and duration of the disruptions your business may endure. Carriers frequently dispute whether interruptions in fact took place. For example, a burger chain that could not make French fries due to a potato shortage would reasonably argue that without its quintessential side item, it is essentially unable to conduct business. A carrier, on the other hand, would argue that the loss of one menu item does not constitute a business interruption. Therefore, it would behoove the burger chain to obtain CBII coverage that specifically covers the loss of key menu items. Carriers also frequently argue over the propriety of replacement products (or cover) obtained to resume operations. Businesses should therefore consider the availability of certain types of cover when procuring CBII coverage to ensure whatever replacement the business is forced to buy falls under extra expense coverage.

Despite the comfort of having an insurance product specifically designed to prevent supply chain disruptions, it is also important not to think of insurance as easy money. Securing insurance and making claims are ordeals unto themselves. The first hurdle to securing coverage following a loss is to properly document one’s loss.  In anticipation of filing a proof of claim, it is imperative that insureds document any delays in the arrival or departure of goods, fluctuations in the purchase price or availability of essential goods, and/or fluctuations in sales prices and volume. Keeping such records is important due to the aforementioned time limits common within CBII coverage.  Should coverage litigation arise, these contemporaneous records will also prove to be invaluable evidence at trial.  In particularly complex cases, or where coverage is not entirely clear, it may also be worthwhile for insureds with sizeable losses to retain coverage counsel to assess the scope of available coverage and pursue their claim.

C. Contact terms—The specific and the general

Regardless of what provisions the parties may ordain to include, given the intricacies of modern supply chains, all supply contracts should carefully contemplate responsibility for distant supply chain disruptions. There are two ways to achieve this: drafting specific provisions in hopes of better elucidating the contract’s purposes and including general provisions to serve as a safety net.

Drafting targeted provisions to address disruptions ultimately benefits all parties by making the implicit explicit. For example, there has been significant litigation in the past year regarding whether the COVID-19 pandemic constitutes a “force majeure” under supply contracts. For the uninitiated, force majeure provisions are meaningless boilerplate. But too frequently they are invoked during unforeseen events in an attempt to excuse performance. The solution to their misuse is simple: don’t assume the strength of your covenants. If you desire an unqualified promise to deliver goods, your contract should say just that. Doing so ensures the parties are on the same page from the beginning. It also has the added benefit of encouraging greater due diligence, decreasing the likelihood of disruption.

In addition to including targeted provisions that make the obligations under your contracts clear, one should consider safety net provisions to increase your contract’s resiliency. One of the most common safety nets found in contracts are indemnities protecting against losses stemming from breaches. Indemnities, however, are far from infallible. For example, they do nothing to protect against an indemnitor’s insolvency. For that reason, it may be wise also to include a covenant to procure and maintain specific levels of insurance coverage—including contractual liability coverage—under policies expressly designating your company as an “insured” and likewise identifying specific contracts subject to the policies’ coverage.

Conclusion

If the Suez Canal incident has taught us anything, it is that anything can happen to disrupt a supply chain. The greatest source of strength for a business is its understanding of its unique requirements. As a business owner or risk manager, the responsibility falls on you to learn your business’s needs and to take nothing for granted. Only once you have attained a nuanced understanding of what your business needs to succeed can you make the best decisions about how to bolster your supply chains against risks, foreseeable and otherwise, using the tools available to you.

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Andrew Van Osselaer, associate in the Austin office of Haynes and Boone, LLP, focuses his practice on the resolution of complex commercial disputes and regulatory investigations arising from clients’ commercial and industrial operations.

Wes Dutton is an associate in the Litigation Practice Group in the Dallas office of Haynes and Boone, LLP.

vessel

View from the US Gulf: Veteran Surveyor Details the Pitfalls of the Vessel Draught Survey

In this article, Chris Zeringue, Owner, MTS Marine Technical Surveyors, and a longtime worker on US Gulf waters, explains the pitfalls in Vessel Draught Surveys, and how prevailing water conditions and accessibility differences can result in ‘guesstimations’ rather than precise answers. He looks back on a long career on the water and explains where his passion for cargo surveying started.

The key to accuracy in a vessel draught survey may very well be found in a hole in the ship. I boarded my first vessel at the age of 17 in 1975. I was hired out of the local shape-up yard for the night shift aboard a bulker loaded with imported sugar. My job was to shovel sugar out of the vessel hold ribs(trimmer) so that the bulldozer/tractor could push the cargo to the crane bucket. My neighbour was the lead superintendent on the job and his son and I would ride to the shape-up yard with him and put our names on the list to try to get hired for a day or night. If there were not enough Union Hands for the job, they would then call out the names of the non-union hands (aka rabbits). On the days/nights that we did not make the cut, we would hitchhike or walk home, meaning we would have to cross the Mississippi River Bridge by foot at times. My other job during school was working nights and weekends for a mooring company.

The more I worked, the more I liked the waterfront. While shovelling cargo in the bottom of ship holds, my neighbour (the superintendent) would throw an apple or orange down to me to eat. Looking up one day there was a man standing next to him just observing. When I went up out of the hold for a meal break, I asked my neighbour, Papa Deck, “who was the guy with you?” His answer was, “he is a surveyor, and his job is to verify cargo quantity and quality.” I knew from that moment that I would someday trade my shovel position to be a Surveyor.

In 1978, I was hired at my first Surveying (training) position. Now fast forward 42 years and I am one of the owners of a survey company specializing in Ag and Fertilizer products at Marine Technical. Surveyors. I have travelled the world surveying and monitoring customers’ cargoes and solving customer issues.

The one thing that has always bothered me when it came to the accuracy of cargo accountability on bulkers was how to account for water conditions. On bulk cargo carriers, cargo accountability is determined by way of a Vessel Draught Survey, based on water displacement. Many factors go into the calculations and equations, but the one factor stated to be the most important (reference: The Naval Arch, Draught Surveys) yet least controllable, because of water conditions and accessibility, is the reading of the draught marks. The draught marks are stencilled at six positions on the vessel’s hull (forward/bow port and starboard, midship port and starboard, aft/stern port, and starboard).

These number stencils (usually in metres) are normally 10cm tall with 10cm space between each number. The numbers are usually in equal numerical stencils (2, 4, 6, 8 then the next metre number). As the water touches the bottom of the number 4 (using 4 as an example), the reading is 40cm, the middle of the 4 would be 45cm and the top would 50cm. Between 50 (top of the 4) and 60 (bottom of the 6), the surveyor has to make a visual judgment call. As in all surveys, the reading of the draught marks visually are judgmental calls. So, add in high swells, waves, chop, ice, obstruction, non-accessible points, and now you have guesstimations.

On bulk vessels of Handy and Panamax size, the vessel’s average in TPC (tonnes per centimetre) is approximately 50–65. So, this means that the distance in Draught from the bottom of the Draught Mark stencilled number to the top (10-cm) represents up to 650 tons.

Even in a light chop, there are 600–700 tonnes of possible error, noted in the photo at the bottom of p48. One could only imagine the judgment in 0.5 to 1m swells.

Or trying to read these in the dark of night, from a crew boat from a distance, or in heavy current. Because of anchors, buoys, and swift water, what we can see in the photo is as close as the launch boat can safely get.

And while one is riding around the vessel obtaining draughts, the remainder of the survey (ballast, voids, fuel, etc.) is out of the surveyor’s reach or control.

I once sent the photo at the top of p48 to a customer and said, “tell me where the water is and I’ll tell you what your tonnage
is.”

The Vessel Draught Survey consists of two parts, open and close, or light and heavy. The difference in water displaced between the two equals the quantity of cargo loaded (with adjustments made for ballast, bunkers, etc.). No matter the condition of the water which the vessel is sitting in, the show must go on. Time is always an issue with a vessel, and time is money. The draughts must be read, and from that, the calculations are made and the BOL (Bill of Lading) and Mates Receipt are set. Buyers and sellers trade on this number.

Many draught marks on the bow, stern, and offshore side are not accessible. I asked each of these guys in the first photo in this article (p47), what they had (without them saying out loud) and there was a large variance between each of their findings, and this was in calm water.

Try reading that draught from many metres away, looking down on it. The photograph below shows the vantage point for the guys in the first photo in this article.

Or try getting an accurate mid-ship draught, one of the most important readings of the survey, from the vantage point in swells (see photo, below).

Once the vessel is loaded, no matter what water conditions it’s loaded in, the vessel is to carry and deliver the BOL quantity (created by the Vessel Draught Survey). The seller sold the amount, the buyer bought the amount, and the vessel is paid freight on the amount. In many cases, the parties trading paper have no idea how the numbers were derived.

I guess this is why so many vessels now have a standard clause in their documents stating that they cannot guarantee the accuracy of the agreed-upon tonnage listed (verbiage differs, but generally states). It is stated that in optimal conditions, Vessel Draught Surveys are subject to 0.5% variances.

Now, as the vessel arrives for delivery, it is the position of the vessel to make sure that the arrival vessel draught survey matches the departure draught survey within close tolerances. If the cargo is delivered into a warehouse and the warehouse is not emptied and zeroed out immediately after the delivery, a loss/gain of cargo can’t be attributed to a certain vessel. In many cases, the tonnage on the ‘paper trail’ is kept in close tolerances, regardless of the cargo aboard or delivered. In some cases, common cargo warehouses may take more than a year (and many vessel deliveries) to zero out all cargo. In a case where a vessel delivers to another vessel or onto barges, there is an instant check and balance, a shortage or overage is noticed immediately. On an overage, you will not hear a peep, but on a shortage you, as the receiver surveyor are looked at as if you are responsible for the shortage, just for being the messenger of bad news. In my opinion, shortages outweigh overages manyfold, due to the vessel wanting to err on the side of caution to not exceed destination arrival draught restriction requirements, or carry cargo which they will not get freight. In most cases, the source of the problem can be attributed to the conditions of the water surface at the load port, yet is hidden in a paper trail.

How could this issue be eliminated? And is there a more accurate way to read the draughts? Well, devices have been made (such as freeboard indicators) but are not practical in all water, wave, and current applications. Years ago I invented such a device, which worked very well, but it would have to be attached to the hull at
the draught marks, which is not practical and can’t always be achieved. As I would say, when it is needed (in heavy sea swells and fast current) it couldn’t be used, and when it could be used (in perfectly calm water conditions) it is not needed. The one thing that keeps echoing in my mind is a hole in the ship (aka ‘The Zounding Tube’, named after the one who keeps thinking of it).

Having a sounding tube in the mid-ship point of the vessel (on a new build), or one port and one starboard, mid-ship, on a retrofit, through an existing ballast tank, which would go from keel to deck. With this, trim and list would not affect the readings because of their central location. In a perfect world, three tubes (one forward, mid and aft) could be added, to adust for hog and sag. A chart could be applied so that an ullage/outage could be taken (from a fixed given point to the water within the tube/pipe) and converted to draught. This draught reading would not be affected by waves, swells, etc., due to hydraulic pressure and the fact that water is calm below the surface. Accuracy could be achieved. I have always asked myself if this is possible and would it work?

Technologies have changed dramatically over the last 45 years — but the extremely important issue of vessel draught surveys have been largely left behind. The safe carriage of cargo is the vessel’s first concern, and it should be, but tonnage accountability is also very important. When I started 45 years ago, the older guys were still hauling adding machines onboard vessels to do their calculations, then calculators, and now computers. Liquid and gas cargo vessels (for years) now use sonar, radar, and level gauges for cargo readings. Zounding tubes could be equipped with radar which could send accurate draughts back to the cargo control room, for continuous accurate tonnage monitoring. And of course, safety remains paramount. All this could be done on the deck of the vessel, rather than hanging off the sides or in a crew boat in traffic and current.

At this point, I would have to leave the idea with naval architects and Class Societies, vessel designers and builders, as I am not well versed in the stress and build-out of vessels. One would think that as a proof of concept, a simple temporary test could be performed using a PVC pipe on the outer hull at mid-ship to compare reading accuracy. I guess as one works a lifetime at his/her craft, they hope to leave it better than they found it and also hope to leave their mark, as did Plimsoll in 1876.

I do know that billions of dollars are traded based on Vessel Draught Surveys, which are subject to accuracy by the water which the vessel lays afloat.

______________________________________________________________________

ABOUT CHRIS ZERINGUE: OWNER, MARINE TECHNICAL SURVEYORS (MTS)

Born in August of 1958, one of six children of a working class family, for Larry ‘Chris’ Zeringue, the old cliche of “born and raised on banks of the Mississippi River” could not be more true.

With his homes from birth to manhood being only yards from the river’s edge in the small town of Donaldsonville Louisiana — (all homesteads in a settlement called Smoke Bend).

The Mighty Mississippi became Chris’s playground as a child, passion as a young man and gateway to the world as an adult.

By the age of 17, Chris was working on the river — his passion and pride for his work were only outpaced by his energy levels and tireless efforts as a hard worker and businessman.

After many years of working on the river, in 1993 Zeringue founded and coowned Marine Technical Surveyors (with two other seasoned surveyors).

Zeringue worked day and night as a river rat and in suit and tie to see MTS to what it is today. MTS employs and has employed many great people, family and friends, over the past 28 years.

And like the waters of the river, and so many of its southbound vessels, Zeringue too would see his way across the world to many major ports.

Zeringue pursued that same passion on the behalf of his customers — representing their cargo and their reputations in numerous ports in countless countries.

The Zounding tube is only one of many ideas that Zeringue has arrived at in his efforts to better represent the most accurate accounts of cargo.

For Zeringue, it is not the recognition of an invention that bring his ideas to life — but rather the pride, passion and energy he takes and puts forth in the responsibility of accounting for another’s goods.

UK container

UK Ports Suffering Post-Brexit Container Logjams

Post-Brexit trade disruption and ongoing congestion are causing critical build-ups of containers at UK ports, according to the latest data from Container xChange.

The UK’s leading container terminals struggled to cope with the pandemic-driven surge of imports last year resulting in lengthy delays for haulers and vessels and an excess of containers building up in ports. 

Since the UK departed the European Union on January 1 and started trading under a post-Brexit customs and regulatory regime, the latest data from Container xChange, the world’s leading online platform for buying, selling, and leasing shipping containers, indicates the situation has worsened.

Under Container xChange’s Container Availability Index (CAx), an index reading of 0.5 describes a balanced market. Below 0.5 means there is a shortage of containers. Above 0.5 means there is an excess of containers.

At the port of Felixstowe, the average reading of the CAx so far in 2021 for a 40 ft container is 0.95, up from 0.79 in 2020. The CAx for a 20 ft box has increased from an average of 0.78 in 2020 to 0.90 this year.

A similar picture is apparent at the port of Southampton where the CAx reading for a 40 ft container is 0.86 in 2021, up from an average of 0.71 last year. For a 20 ft container, the CAx reading is 0.85, up from an average of 0.72 in 2020.

“The UK’s leading gateway terminals for container traffic suffered congestion for much of 2020 prompting carriers to cut some calls and ship cargo in from European hubs via the Channel Tunnel, ferry services, and feeder services instead,” said Dr. Johannes Schlingmeier, CEO of Container xChange.  

“Based on the build-up of containers at ports in 2021, it seems the situation has further deteriorated. We are now seeing critical levels of boxes building up at Southampton and Felixstowe. Post-Brexit cross-Channel shipments are more complicated under dual Customs regimes and this could be a factor in logistics bottlenecks.”

Efforts by container lines to avoid Brexit disruption and delays at southern terminals by launching new services into the port of Liverpool are also now coming unstuck, with the port struggling to handle increased volumes. This is reflected in an accelerating excess of containers at the port.

In 2020 the average CAx reading at the port of Liverpool for a 40 ft container was 0.59. In 2021 this has climbed to 0.75. For a 20 ft container, the CAx reading in 2021 is 0.82, up from an average of 0.68 last year.

European gateway ports have also suffered disruptions and delays due to pandemic-driven container traffic surges. However, container availability at leading hubs is currently better balanced than in the UK.

At the port of Rotterdam, the CAx average reading for a 40 ft container this year is 0.51, compared to an average of 0.40 in 2020. At Antwerp, shortages have been a problem, with an average reading for a 40 ft container of 0.21 in 2020 improving to a more balanced 0.41 this year. 

Similarly, in Hamburg, the average CAx reading for a 40 ft container in 2020 was 0.27 suggesting critical shortages. This year the average reading has improved to 0.49.

__________________________________________________________________

About Container xChange: Container xChange operates the leading online platform for the leasing and trading of shipping containers. More than 600 shipping companies including Kuehne+Nagel, Seaco and Sarjak rely on its platform to increase flexibility and simplify the operational handling of SOC Containers. http://container-xchange.com/

dry bulk

EXPECTATIONS ARE HIGH AS PORTS HANDLING DRY BULK SURVIVE AND EVEN GROW DESPITE PANDEMIC

Charting trade waters brought to a turbulent boil by a raging global pandemic would be difficult to do in the best of times. But these aren’t the best of times.

COVID-19, an uncertain global economy, and challenges to commodity demands and supply chains have all contributed, at least in part, to variances in trade trends. 

Those trends have been very evident in the volatile dry bulk trade.

“The turbulence of the past year has in many ways clouded the underlying fundamentals in the dry bulk shipping market, but with 2020 now behind us, we are in a better position to establish an overview of expectations for 2021,” says Peter Sand, chief shipping analyst with the Baltic International Maritime Council (BIMCO), the world’s largest organization for shipowners, charterers, shipbrokers, and agents. 

“For dry bulk shipping, the year (2020) can be divided in two with lower volumes and earnings in the first half followed by a recovery in the second as China split from the rest of the world, boosting tonne [metric ton] and tonne-mile demand and sending freight rates to profitable levels,” Sand says. “June was the turning point as volumes reached their highest point of the year and earnings jumped, especially for capesize ships.”

The BIMCO analyst points to these statistics: In the first 20 days of 2021, there were 1,427 capesize trips, up 10.4 percent over the same period in 2020. That strong start was reflected in earnings that, after high volatility in 2019 and 2020, have averaged $22,015 per day since the start of the year, comfortably above the $15,300 per day needed for an average capesize ship to break even. Rates peaked at $26,489 per day on Jan. 13 and stood at $24,148 per day on Jan. 19.

A sampling of U.S. ports involved in the dry bulk trade brought varied reactions to evolving trends and changing markets.

“The dry bulk sector is an important backbone of Port Tampa Bay’s activities and a major factor contributing to its status as Florida’s largest cargo tonnage port, as well as being one of the most diversified ports in the country,” says Wade Elliott, the port’s vice president of Business Development.

Elliott pointed to 38 percent—or 12.4 million tons—of Port Tampa Bay’s total cargo volume in 2020 having consisted of dry bulk cargo. Among the major dry bulk commodities handled at the port are phosphate fertilizer products, limestone, cement, granite, gypsum, coal, grain, sulfur, fly ash, salt, slag, pumice and bauxite.

Despite the pandemic, Port Tampa Bay’s total dry bulk cargo volume increased by 3 percent last year, and,” the VP says, “we are expecting that trend to continue. The demand for building materials remains very strong driven by Florida’s continued strong population growth, which is fueling the real estate construction market. The outlook for Port Tampa Bay fertilizer exports is also positive as Florida phosphate products are shipped around the world helping farmers meet expanding demand.” 

As the port’s dry bulk sector grows, the port is working closely with its dry bulk tenants to support their expansion of terminal facilities to keep pace with the demand by adding additional berths and storage.

Port Milwaukee has also managed to stay the course in the dry-bulk trade by keeping up on new trends and market conditions, working closely and regularly with port tenants and key stakeholders and leveraging opportunities collaboratively, according to Maria Cartier, the Market Development manager at the Great Lakes port. 

An example of taking advantage of market conditions, Cartier says, “is our partnership with the DeLong Company in the planned development of a new $31-million agricultural marine export facility. This new facility addresses the increased global demand for dry distilled grain solubles, a by-product of ethanol used in animal feed.” 

The port also “participates in conferences, events and various forums that allow us to network with industry partners and helps keep us up-to-date on new market conditions and developments,” she added.

Port Milwaukee is optimistic that by staying in tune with trends and markets, it will promote cargo growth. 

“A strong demand for Wisconsin-based agriculture, investments in infrastructure and our role as a major supplier of road salt to the region will continue to support our position as a primary handler of dry bulk materials on the Great Lakes,” Cartier says.

Dry bulk commodities—salt, cement, bottom ash and grain—account for approximately 80 percent of Port Milwaukee’s overall commodity throughput, according to the marketing manager.

“COVID-19 has not affected our cargo throughput thanks to Port Milwaukee’s team of expert staff and long-term tenants,” Cartier says. “Through their collaborative efforts, we have maintained safe, efficient and healthful operations without commercial interruption.” 

Dry bulk cargoes comprise about 7 percent of the Port of Corpus Christi’s (PCC) overall volumes that include a variety of commodities such as barite, iron ore fines, DRI, pet coke, slag, sulfur, grain such as sorghum and wheat. 

Unlike some ports, PCC has not escaped the pandemic.

COVID-19 “has impacted our oil and gas cargoes such as barite and some construction activity on aggregates coming in,” notes Eddie Martinez, PCC’s Trade Development manager. “Drilling activity has slowed down, in part due to COVID, as has a slowdown in construction overall,”

Although COVID is a constant these days, it hasn’t stopped the Texas port on the Gulf of Mexico from moving forward with growth in mind.

“PCC continues to make investments in our terminals to improve overall logistics for dry bulk cargo,” says Martinez. “The port acquired a new Liebherr crane in late 2019 to improve our overall discharge rate. Bulk grains are active and should continue to remain active in 2021.” 

The expectation, he said, is that dry bulk cargo will remain steady with nominal gains. Amid unpredictable market changes in the trade sector, PCC’s strategy is to work “hand-in-hand daily within our departments for capital project planning to improve overall facilities for our current and new customers to include planning, operations, engineering and trade development,” Martinez says. “We are actively engaged with our customers on their annual expectations and trends affecting them and offer possible solutions where we might be able to support them with logistic and infrastructure that may require capital on rail or waterfront.”

Even without a global pandemic, building dry bulk markets brings challenges, he notes. “PCC has to analyze where our strengths lie when being approached on new dry bulk opportunities. Some of our facilities are showing their age, and PCC is making necessary investments to get them up to standard. 

“Further, not every cargo is suitable for our port. The commodity itself, destination or origin, air permit limits, rail and dock infrastructure all play a role in the selection of new dry bulk market development. The port reviews each opportunity and tries to identify if it’s a good fit for both the customer and the port. We want to create a relationship where the client can really grow their business model here in our area and region for years to come.”

affreightment

Contract Of Affreightment: How to Know Your Obligations

Shipowners and charterers must make themselves aware of the contract of affreightment. This post details what a contract of affreightment is and the obligations this contract mandates. 

What is a Contract of Affreightment? 

A Contract of Affreightment is a legal agreement between the shipowner and the charterer. The shipowner agrees to transport a specific amount of cargo for a specific period for the charterer. In this agreement, the charterer is responsible to make payments whether the goods are ready to be moved or not.   

A Contract of affreightment is important when considering ship chartering. The terms of the contract express the liabilities, rights, and obligations agreed between the charterer and shipowner. Some obligations include: 

-When the agent of the charterer should be given notice by the master 

-When the vessel can be loaded and discharged from the port 

-When the bills of lading will be issued 

-How to pay the demurrage 

-Who will be held responsible for potential negligence by the stevedores and crew?  

Apart from these, there are other obligations in a contract:   

The Seaworthiness of the ship 

Every contract that is signed between the shipowner and charterer comes with an understanding that the ship must be seaworthy. The ship must be able to withstand the dangers that it will face during the sea journey. There are also certain other terms detailed in the contract. These would include the sufficiency of fuel, efficiency of the crew, and others that are vital for transporting goods. The ship should meet the charter requirements sufficiently to serve the purpose for which it has been agreed.  In every aspect, the ship should be ready to complete the service delivery.  

Staying on the agreed route – no deviation 

The shipowner commits to sticking to the route ( and not to deviate) agreed in the contract of the carriage. Deviation from the agreed route is not considered to be a reasonable switch from the pre-decided route mentioned in the contract. Deviation in the route can only be highlighted out by a party reviewing the contract. If no particular route is mentioned in the contract then the direct route between the port of loading and unloading is considered to be the proper route. However, the ship can choose to deviate to another path if the agreed path exposes it to some danger to the ship or its cargo. It may be acceptable if it is necessary to prevent damage to the ship, crew, or cargo.     

No shipping dangerous goods 

It is dangerous to ship certain goods without notifying the carrier. The shipper should not do it unilaterally. Some commodities may not only be dangerous during the beginning of the transport but later in the form of leaks or fumes. If the shipper fails to notify the carrier about the dangerous commodities or hides them for some reason, the shipper will be responsible for any accidents or damages that occur to the ship or cargo. 

The obligation of reasonable dispatch 

The shipowner or the carrier must be capable to perform the dispatch duties effectively. If the terms in the contract do not mention a specific time frame the dispatch should be done within a reasonable period. This would be based on the shipowner’s expectations. If the carrier violates this obligation the charterer may claim damages. The charterer will not be able to claim any damage if the delay is caused due to natural factors like storms, rain, or something else beyond their control.  

Nominating a safer port 

If the charterer (voyage or time) can nominate the port of their choice, it should be a safe one. It is the responsibility of the charterer to nominate a port that is safe for the charter service and to ensure that it remains safe for the period of the contract. The safe period will include the time the ship reaches the port till the time of its departure. The ship must be able to leave the port safely once the loading or unloading is completed.  

Frustration 

Frustration occurs when the contract cannot be completed without one party being at fault, for example, if the chartered ship is damaged or the charterer is lost. It reflects an incapability to perform the contract. Delay in transport also falls under frustration as it precludes achieving the objectives. The party alleging the delay must prove the frustration. They must satisfy the court and prove that the contract remains useless or stands as illegal due to its failure to perform.   

Summary 

When chartering a ship for a time or voyage charter, ensure that it is protected throughout the contract period. The charterer charters the ship from the shipowner by having an agreement in the form of a Contract of Affreightment. Such an agreement brings certain obligations which need to be aware of.      

port cities

20 INLAND PORT CITIES THAT ARE MAKING A DIFFERENCE IN THE SUPPLY CHAIN

From a logistics perspective, one of the biggest lessons learned (so far) in the COVID-19 pandemic is that long supply chains stretching across the globe can spell trouble. Shutdowns in one manufacturing center in Asia—or the United States, for that matter—can imperil companies down the chain. 

“The golden rule of the supply chain in a post-COVID-19 world is to avoid sourcing everything from one location or one company and to maintain alternative sources of supply,” said Brian Leonard and Mark Volkman, JLL’s managing director and executive vice president, respectively, in a July 2020 article in Heartland Real Estate Business magazine.

Morris Cohen, a professor of Manufacturing and Logistics at the Wharton School at the University of Pennsylvania, goes even further.

“The question of global sourcing will continue to be critical,” Cohen said in a March 31, 2020 Bloomberg News story. “I believe that there will be a shift toward more regional and local solutions, with less dependence on single sources in other countries, as companies determine that the costs and risks of offshoring are even more significant than what they perceived them to be in the past.”

Cities with inland ports are uniquely situated to localize manufacturing and make supply chains more agile and transparent. Here are 20 we looked at that can do supply chain wonders.  

St. Louis, MO

From a supply chain perspective, St. Louis is fairly close to ideal. The region, which stretches along 15 miles of the Mississippi River, includes four ports, six Class I railroad carriers, four interstate highways and two international cargo airports. It also offers more grain handling capacity than anywhere else on the Mississippi, which is why the region is known as the “Ag Coast of America,” according to Inbound Logistics. St. Louis is also very attractive to manufacturers, brought by in low tax rates and close proximity to a highly skilled workforce, much of which has been trained in Supply Chain Management at local colleges.

Cincinnati, OH

In their Heartland Real Estate Business magazine piece, Leonard and Volkman point to the fact that Cincinnati is “within a 10-hour truck drive of 54 percent of the U.S. population.” This is absolutely critical for companies trying to make their supply chain(s) as nimble as possible. Couple it with Cincinnati’s three intermodal terminals, quarter-million feet of industrial space, another 8 million square feet under construction and close proximity to Cincinnati/Northern Kentucky International Airport, and you have a desirable location from a supply chain perspective.

Pittsburgh, PA

Business leaders in Pittsburgh are taking the effects of the COVID-19 pandemic on the supply chain very serious. So much so that in July 2020, the Pittsburgh Post-Gazette reported that a coalition of companies, labor organizations and business associations called Pittsburgh Works Together—which formed as the pandemic lockdowns began—unveiled a new plan to shorten the region’s supply chain. Their proposals included that the region should “fully develop its energy sector, especially around natural gas; encourage trade school routes for high school graduates who don’t go to college; rebuild local infrastructure; and reduce Pennsylvania’s corporate tax burden,” according to the Post-Gazette

Kansas City, MO

Because four major interstate highways intersect in Kansas City, trucks leaving the region can reach virtually the entire continental U.S. within 48 hours. This is a major advantage for companies located there, and the city’s economic officials are doing what they can to make their supply chains more agile. “Technology is something we need to learn how to embrace and use to solve problems,” said Chris Gutierrez, president of KCSmartPort at its industry briefing in April 2020, according to the Kansas City Economic Development Corporation. “In Kansas City, we are proud to carry that innovative thinking into discussions around making our regional supply chain companies more successful in today’s global marketplace.”

Memphis, TN

One of just four cities in the U.S. that’s served by five Class I railroads, Memphis is uniquely suited for all supply chain needs. According to a September 2019 Supply Chain Dive post, the city is also served by Memphis International Airport (the largest air cargo airport in the Western Hemisphere), three major highways and a port that moved about 11 million short tons of goods in 2017. It’s no wonder that Udo Lange of FedEx Logistics told Supply Chain Dive that Memphis “is one of the great logistics hubs in the world.”

Chicago, IL

Chicago is a global supply chain powerhouse. “On the national scale, the region is a transportation node in a number of North American supply chains,” states the 2015 Chicago Metropolitan Agency for Planning (CMAP) report “Chicago Region Supply Chain Trends and Trading Partners.” “On a regional scale, transportation infrastructure supports the region’s manufacturing cluster, which benefits from strong connections to international markets.” All of which is made possible by Chicago’s connections to two major waterways, six Class I railroads, seven interstate highways and the nation’s fourth busiest cargo airport.

Houston, TX

As one of the top energy producers in the world, Houston is a part of many global supply chains. While steel imports at Port Houston are down considerably from this time last year, according to a June 2020 webinar on global supply chains hosted by the Greater Houston Partnership, the reason is due more to Section 232 tariffs and lower oil prices than the COVID-19 pandemic. Overall cargo remains steady, while aggregates and grains are up considerably, and the port itself is investing $2 billion in terminal and channel improvements, according to the Greater Houston Partnership. Houston is also served by three Class I railroads, three interstate highways and a major international airport.

Charlotte, NC

The Economic Development Partnership of North Carolina (EDPNC) says Charlotte “sits at the heart of the Southeast’s manufacturing and distribution sites.” The city connects to four interstate highways (two of which tie into the port). There are also two intermodal facilities in the city and Charlotte Douglas International Airport, the seventh busiest international airport in the world. According to a 2019 analysis of Charlotte’s logistics by the Charlotte Regional Business Alliance, the region sits within 12 hours of slightly more than half of the U.S. population. 

Stockton, CA

A transportation hub since the mid 19th century, Stockton is located in California’s Central Valley. Though the city is best known for its 35-foot-deep inland port, it also boasts extensive rail connections. According to a December 2019 Business View Magazine article, nine of the city’s 13 industrial parks have rail access. In addition, all of its industrial parks are freeway close, and are within five to 15 minutes of both the port and Stockton Metropolitan Airport, which can accommodate all wide body aircraft currently in service.

Cleveland, OH

Port of Cleveland officials say their public and private harbors handle about 13 million tons of cargo every year. Cleveland processes a lot of heavy machinery, containers, iron ore, limestone and steel, among other cargoes, which isn’t surprising given that it’s the first major port of call on the Great Lakes for ships traveling the St. Lawrence Seaway. The Cleveland Bulk Terminal can handle 5,200 tons of iron ore per hour and is connected to one of the two Class I railroads that serve the port. Given that the port is just an eight-hour drive from half the U.S. population, it’s no wonder Cleveland is big on a lot of supply chains.

Duluth, MN

The Duluth Seaway Port Authority considers the Port of Duluth-Superior to be the “bulk cargo capital” of the Great Lakes, which isn’t surprising since it handles 35 million short tons of bulk cargo every year. “Maritime’s inherent efficiencies are critical to the success of supply chain managers worldwide,” states the port authority. “Shared by two cities and two states, the Port of Duluth-Superior has been the backbone of this region’s economy for well over a century.” Couple this with the city’s immediate access to I-35 and four Class I railroads, and it’s clear why this inland port city is so valuable from a supply chain perspective. 

Detroit, MI

Detroit is the busiest northern border crossing into Canada, according to that city’s Chamber of Commerce. It’s also the second largest customs port of entry into the U.S. in terms of the value of goods. The city is served by four Class I railroads, three intermodal terminals and the Port of Detroit, which handles 17 million tons of cargo every year. Much of that is raw materials, according to port officials: high grade steel, coal, iron ore, cement, aggregate and other building materials. In fact, the Port of Detroit is the third largest port in the U.S. in terms of handling steel. 

Louisville, KY

Louisville actually has two inland ports, both of which are vital supply chain components. There is, of course, the Port of Louisville on the Ohio River, which handles a variety of bulk cargos, including coal, grain and potash, and is served by three major eastern railroads. But there’s also the massive UPS Worldport, an air hub built in the early 2000s that today moves a staggering quantity of packages—many of them within a day. Three hundred flights carrying 2 million packages move in and out of the Worldport, which is as large as 90 football fields, every day. Eventually, Worldport officials say the center will be able to process as many as half a million packages per hour.

Vicksburg, MS

The only rail crossing of the Mississippi River in the state of Mississippi is at the Port of Vicksburg. The port currently handles 14 million tons of freight each year, but Vicksburg officials are looking at expanding it in the near future. In July 2020, the Vicksburg Warren Economic Development Partnership released a report outlining the supply chain growth advantages of such an expansion. “The top six market opportunities identified in the report include scrap iron imports from Mexico, containerized soybean exports, wood-chip exports in containers, resin exports, steel (mini) mill attraction and the imports of spruce logs,” the Vicksburg Post reported.

Green Bay, WI

Logistics and supply chain management jobs have been centering in Green Bay for many years now. Today, the region has the 18th highest concentration of transportation logistics jobs in the nation, according to an August 2019 Go Press Times article. The Port of Green Bay ties into enough major interstates to allow trucks to make overnight deliveries to anywhere within a 400-mile radius, according to the University of Wisconsin, Green Bay. “The Port of Green Bay is the westernmost port of Lake Michigan,” port officials say. “The Port of Green Bay offers the shortest, most direct route for shipments between the Midwest and the world.”

Tulsa, OK

The Tulsa Port of Catoosa is one of the largest (and most inland) ports in the nation. It’s always ice-free and hosts more than 60 companies, according to the Oklahoma Chamber of Commerce. The port allows Oklahoma industries to take advantage of navigable waterways that connect Minneapolis, Chicago, Pittsburgh, Sioux City, Brownsville and the Florida coast. Tulsa is also served by two Class I railroads, three interstate highways and Tulsa International Airport, which is just 10 minutes from the port. Six air cargo carriers and the U.S. Postal Service all maintain operations at Tulsa International. 

Shreveport, LA

The Port of Caddo-Bossier, which is just four miles south of the Shreveport city limits, ties into two Class I railroads, two interstate highways and two U.S. highways. The port also provides access to the Red River, Mississippi River, Gulf Intercoastal Waterway and the Gulf of Mexico. The port authority considers it one of the fastest growing ports in the nation, and it currently handles liquid petroleum, aggregate, coiled steel, plate steel, fertilizer, over dimensional cargo, scrap steel, steel beams, coal, tire chips and frac sand. 

Philadelphia, PA

Because of its location in the heavily populated coastal Northeast, Philadelphia has nearly unmatched strategic value. In fact, because of the interstate highways and two Class I railroads that serve the Port of Philadelphia, shippers can move products to 70 percent of the nation’s population within 72 hours. In November 2016, when state officials announced a $300 Port Development Plan that would double container volume processing, Philadelphia Regional Port Authority Chairperson Jerry Sweeney said, “This new service validates what we have known for a long time. Philadelphia is a more efficient supply chain option for major beneficial cargo owners.”

Milwaukee, WI

Situated on Lake Michigan, 467-acre Port Milwaukee provides easy access to the St. Lawrence Seaway. According to Transportation & Logistics International, it’s also the only “Lake Michigan port beyond Chicago approved to serve the Mississippi River inland waterway system, which provides direct river barge access to the Illinois River that connects other U.S. ports on the Gulf of Mexico.” The port also connects to I-94/795, ties into two Class I railroads and processes around 2.5 million tons of cargo per year—much of grains, cement and limestone.

Toledo, OH

The supply chain advantages in Northwest Ohio almost defy belief. The region boasts a 130,000-strong workforce, according to Toledo’s Regional Growth Partnership. The city and its port are just a single day’s drive to 60 percent of the U.S. market. The three major interstates and four railways that service Toledo provide a huge advantage for shippers. And in terms of natural disasters, Toledo is a relatively low-risk area, and the whole region boasts an affordable cost of living.