Shipping is the linchpin that ties your business to international markets. At the end of the day, no matter how fantastic your product or your price, your success depends on getting your product from point A to point B in a timely and cost-effective manner.
Infrastructure challenges, freight costs, shipping alliances and heightened regulations are key factors changing the face of the shipping landscape — and all have potential impacts for your business.
Zions Bank visited with two experts working in the Idaho and Utah markets to gain insight into key issues facing exporters and importers. Here’s what they shared with us.
Brenda BarnesDirector of Export Customer Services
Allports Forwarding, Inc., Portland, Ore.
- ILWU contract negotiations: The International Longshore and Warehouse Union’s West Coast contract expires June 30 and so we’ll be keeping an eye on those negotiations because of the potential for disruption in West Coast ports. We’re seeing trucking companies that won’t go to certain terminals in Oakland based on how long it takes them to get in and out of the terminal. We have the same issue in Portland, and the trucking companies are charging surcharges of $200 per container. That affects cargo from Idaho and Utah.
- Rail infrastructure: The railroads have been overburdened servicing the oil industry boom in North Dakota and that, in turn, has slowed the transportation of agricultural goods. We’ve seen instances where shippers have had to reject equipment not suited for carrying agricultural products, which has further slowed movement. Another challenge is that some countries are requiring that there are no traces of genetically modified organisms (GMOs) in the rail cars, which adds another hurdle, especially in light of the amount of GMO corn being shipped currently.
- Regulations: Japan recently instituted a rule requiring shippers to give all details of their shipment 24 hours in advance. The terminal operator in Portland has put in some stipulations that would only allow containers of certain booking qualifications to be lifted on and off the barge between Portland and Lewiston, Idaho. They’ve also increased the minimum number of containers that need to be on a barge before they will hire the workers to load and unload it.
Keith PettyjohnDistrict Sales Executive
Expeditors International, Boise, Idaho
- Steamship Line Alliances: The supply of new vessels over the last few years has been exceeding the demand for space, and there’s just too much capacity chasing not enough cargo. As a result, some carriers have created alliances, with the rationale of controlling costs and gaining efficiencies. Carriers maintain that rates will stay competitive, as they will still compete for market share, but it’s too early to gauge the impact of carrier alliances on shipping rates.
- Cost of inland freight: An overarching concern for a lot of shippers is the cost of inland freight because it impedes competitiveness. Inland shipping often costs more than ocean freight. It’s a testament to the spirit of people in Idaho, who love where they live and will work harder to figure out a way to be competitive, despite being at a competitive disadvantage to shippers on the West Coast. Lots of stakeholders (private and government) are spending time and energy to find solutions, such as intermodal service, to improve the competitiveness of Idaho’s exporters.
Regulations & Cargo Security: The regulatory environment has continued to escalate since September 11, in terms of cargo security. At Expeditors, our aim is to provide a secure network through a consistent set of global supply chain security standards. Each trucking and warehousing service provider we manage is expected to operate in accordance with Expeditors Security Standards among which include personnel security, access control, information security, container security, awareness training, and incident reporting.
The information presented is presented for general informational purposes only and does not constitute tax, legal, investment or business advice. For further information, terms or conditions for Zions Bank international services please visit www.zionsbank.com.