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World’s biggest shipping firm dumps port cargo problem on U.S. companies

MSC, the world’s largest shipping carrier, has joined the list of shipping carriers that have halted out-of-port delivery of diverted containers to shipping customers following a container ship accident near the Baltimore Harbor that led to the tragic collapse of the bridge. . With the Port of Baltimore closed indefinitely, the decision places responsibility on the shipper for picking up the cargo at a diverted port and transporting it to its final destination.

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 another port where it will be made available for pickup.

“For these shipments, the contract of carriage will be declared terminated at this alternative port and the costs of storage, D&D and transportation to the originally intended destination will be borne by the cargo only,” the MSC notice said.

MSC added that “passage to and from Baltimore is currently impossible and will not be restored for several weeks, if not months.”

CMA CGM, COSCO and Evergreen were the first carriers to announce similar measures and, in some cases, to officially declare “force majeure”, a legal term that refers to the right to waive contractual obligations when events beyond the control of the will of one party occur.

MSC said in its customer communication that it “apologizes for the disruption caused by this contingency plan which is required in response to events beyond our control, but which is made 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 transport customers from diverted ports.

Maersk was the charterer of the 10,000-container container ship Dali, which lost control and crashed into the Francis Scott Key Bridge in the early hours of Tuesday.

After the pandemic boom that generated historic profits, shipping carriers have endured a period of financial and operational challenges, with vessel overcapacity, falling profits, as well as Houthi attacks in the Red Sea and canal drought of Panama that led to costly diversions of major global trade routes.

Read more about the collapse of the Francis Scott Key Bridge in Baltimore

Logistics companies have been scrambling since the accident to develop alternative transportation plans and track carrier diversions, and executives told CNBC on Wednesday that the coming days will be critical for keeping diverted commerce away from the port from Baltimore.

The Port of Baltimore, the eleventh largest port in the nation, is number one in the United States for imports and exports of automobiles, light trucks and agricultural tractors, in addition to handling clothing, household goods , building materials, electronics and household appliances and products.

Among the unresolved problems, logistics executives cited shipping carriers not updating their ships’ transits quickly enough to alert them of the new diverted port so they can schedule pickup of their customers’ containers.

Major East Coast ports, including Savannah, Brunswick, Virginia, Charleston and New York/New Jersey, as well as companies supplying chassis for rail and trucking, told CNBC they have the capacity to step up their operations to meet the needs of inbound freight.

In a series of updates, MSC sent a list of 23 ships that arrived at diverted ports between March 28 and April 29. Eight have an unknown diverted port, 11 are heading to the port of New York/New Jersey; three in Norfolk; and one in Philadelphia.

Transportation Secretary Pete Buttigieg held a meeting with supply chain professionals on Thursday about the crisis and how to alleviate traffic jams. The meeting included shipping carriers CMA CGM, Maersk, MSC, Evergreen and railroads CSX and Norfolk Southern. Also present were the Port of New York/New Jersey, Georgia, Baltimore, Philadelphia, Jacksonville, South Carolina and Virginia. Shipping customers at the meeting included John Deere, Stellantis, Home Depot, Under Armor and Volkswagen.

“We are much better equipped to mitigate supply chain disruptions than we were a few years ago, thanks to increased coordination throughout the supply chain and new efforts to strengthen our physical infrastructure and digital,” Buttigieg said, according to a newspaper statement. meeting.

National Economic Advisor Lael Brainard, who was also present, noted that during previous disruptions, the lack of comprehensive information on the different components of the private and public sectors hampered decision-making capabilities and responses. She cited the recent DOT FLOW initiative as a difference maker. “It has already been activated to bring together the full capabilities of all federal government agencies to ensure that we help ocean carriers, port leaders, railroads, shippers and unions come together to assess potential impacts on the supply chain and then work together to fix it.

Paul Brashier, vice president of drayage and intermodal at ITS Logistics, said the greatest difficulties could be faced by smaller companies that coordinate bookings themselves and may not have relationships in these diverted ports. “You want to get your diverted container out of the port as quickly as possible so you don’t incur detention fees and demurrage. For some of these shippers, they’re starting from scratch,” Brashier said.

Once a container arrives at a terminal, the timer begins counting the free time allocated to a container. Once this free time expires, detention and demurrage charges begin unless ports agree to waive them.

“We are looking to see if the terminals will grant an extension of the free time or waive the fee,” Brashier told CNBC on Wednesday. “That’s the problem right now.”

How ports handle ship hijackings from Baltimore

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