Issue 367, October 1, 2002 - 11:30 EDT
As the labor dispute at West Coast ports continues, its effects on both Importers and Exporters are now beginning to be felt.

We are experiencing very significant disruptions to both import and export ocean freight. The shutdown has effectively stopped virtually all activity. Even if back-to-work legislation is introduced quickly, it will be some time before the backlog of vessels and containers can be cleared. Port and Steamship Line officials noted this morning that each day the shutdown continues, at least four to five days will be added to the delivery times of Import containers. Obviously, there have now been severe disruptions in the sailing schedules of the steamship lines, which again will take weeks to restore once service resumes. If operations are not resumed quickly and fully, vessels now backlogged at West Coast ports will not be able to return to Asia by mid-month with empty equipment, nor to pickup return containerized cargo to the USA. Significant delays should be expected on shipments currently in the upstream pipeline, as well as at origin ports. As noted in the press, there was already a significant shortage of empty equipment in Asia well before the work-slowdowns began last week. The current situation is now far worse, with many exporters in Asia unable to load shipments due to lack of equipment.

For exports, the inland railway network is in increasing disarray, with some railways now refusing to accept both loaded containers and empties destined to West Coast ports. Vessel Operators and Railways are concerned that the North American intermodal network will become gridlocked.

There are no easy alternatives to this situation, and all come at a cost, as well as the potential for additional delays.

As a consequence to the Port shutdowns, we are now receiving initial notifications from certain air carriers of rate increases and surcharges for Air Freight from Asia to North America. This includes formal notice this morning in Japan of a 120 JPY/kg emergency surcharge on airfreight destined to North America. We are contesting the imposition of these surcharges, however, it will be difficult to prevent market forces from affecting the cost of capacity in the short term. Danzas AEI Intercontinental will, of course, protect the space now being used by our Customers. The potential is very high that accessing excess capacity over and above normal allocations will come at a premium price until the situation stabilizes, and backlogs have cleared.

Danzas AEI Intercontinental had already scheduled B747F Charters from Hong Kong to the USA to help our Customers through the peak season. In addition, we are ready to facilitate additional Chartered capacity for those Customers needing to convert planned ocean freight shipments to air. Please note that significant airfreight backlogs have already accumulated at Shanghai, as well as at the airline hub operations in Seoul, Korea.

Our Danzas AEI Intercontinental offices are ready to help our Customers in developing alternative solutions, to the extent possible in this very difficult situation. Further, we will continue to provide updates through this website with information as it develops.

Please note that due to the complex nature of the subject matter, DHL Danzas Air & Ocean cannot be responsible for actions taken by the reader in reliance on the information contained herein without prior consultation with DHL Danzas Air & Ocean.