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Ocean Freight: West Coast Port Congestion Causing Freight Woes Nationwide

The congestion that we are currently experiencing on the West Coast has been worsening in the past week and a half, making it arguably the worst we have seen in nearly a decade.   The ILWU has released a statement saying that, “congestion is being caused by shortages and the dislocation of chassis; rail service delays, including a national shortage of rail cars; exodus of truck drivers, and long truck turn lines”*.  Additionally, there has been an increase in retail import volumes, larger vessels discharging massive amounts of cargo, and container terminals pushed to storage capacities and the peak shipping season for the holidays.

•          Truckers are continuing to impose congestion surcharges for any moves from West Coast Ports

•          Most carriers are advising all West Coast terminals have only one team working a ship, so at this rate, it will take 8-9 days to clear most large vessels; it normally takes two days.

Congestion Surcharge:  Due to the infrastructure problems, manpower shortage, and ongoing equipment shortage to move import containers over the road and rails, it is quite possible that surcharges may be applied to all import shipments, from all ports, of up to $800/container!  This would translate to about $.80/case on all no. 10 cans, and $.55/case on all tuna 66.5 oz. cases!

Our infrastructure is not capable of handling the huge volume of import containers.  We used to suggest an 8-12 week lead time, however we will begin to request a 14 week lead time to compensate for all the very real issues facing the import process.

It makes more sense than ever, to get your turns, and buy ex warehouse!

 

*American Shipper


Tuna: Market Update

The tuna market has been fairly steady the past quarter, however, there is always a lot of chatter about ‘single duty’ at the end of the year.  Yes, this potential savings does exist to save a bit of money, however our view is not to make purchasing decisions solely with the idea of gaming the market.  All the packers around the world are aware of the spike in business in the USA for orders placed in September/October.  In many past years, there have been lower offers in November/December when business is slower for the packers which could mitigate the single duty savings!

There are a few very large packers of Light Chunk Tuna.  They employ thousands of people and if business is slow, these packers tend to sell controlled quantities of Light Chunk Tuna at a loss, just to keep the production lines filled.  This temporary drop in prices can be misleading.

Right now, we are in one of these drops, and Light Chunk Tuna, is generally being sold by the packers at a loss.  The price of the raw material does not warrant the current pricing, so it is a good time to buy, as the chance of further declines is very small as the packers will not continue to sell at a loss, and will eventually hold the line and sell at higher prices based on their true cost and selling profitably.

Tongol:

Tongol fishing in the Western Pacific Ocean near Viet Nam and Thailand, is over for the season.  It is usually a very short season.  Fishing in the waters off of Indonesia for processing there is also light now.  Product is available, and pricing has been steady with not much swing up or down.   In our opinion, the better Tongol is coming from Viet Nam and Indonesia.

Albacore:

The fishing season for the Fall has come to an end and landings over the next few months, will be light, until the new season in April.  Raw material has been pushing higher, reflecting in higher canned pricing.  Buying has been slow by world wide importers which has created a little softness, but pricing is still higher than the summer.

Pouch Tuna:

The only form that pouch tuna comes in is flake, as it is impossible to pack chunk or solid in a pouch, without brine!  Flakes are the lowest cost of Solid, and Chunks.  The drained weight of a 1.2 kg (43 oz.) pouch of tuna is about the same as a can.  Pouches are great for manufacturers because there is no brine to drain off, and disposing of empty pouches is much more economical than empty cans!  Pouch packing methods are a bit more expensive than cans, but using flakes sometimes equalizes the cost difference!


Ocean Freight: Pending Rate Change May Mean Higher Ocean Freight

ContainerOver the past several weeks, carriers in the Asia to USA trade have been discussing the idea of changing how rates are calculated for a 20’ container. The current rate for a 20’ container is essentially calculated by multiplying 80% of the dry 40’ container rate. The change being discussed that will be implemented in the 2015-2016 contract year will be increasing the current calculation of 80% to 90% of the dry 40’ container rate.

The reason for this increase is fairly well documented by the carriers and below are some of the reasons:
- Demand for service via the Panama Canal is at an all-time high and since 20’ equipment is typically used for heavy/dense cargo, like canned foods, the steamship line is limited in total 20’ equipment lift per vessel as the heavy weight containers make each vessel sailing hit their maximum payload allowed to transit the Canal.
- Essentially carriers can load more 40’ equipment per vessel with less weight generating more revenue.

The Panama Canal is now completing the current phase of enlarging the locks in depth, width, and length. In essence, ships prior to the enlargement could carry 5,000 TEU’s (Twenty foot Equivalent Units, size of ocean containers used to ship cargo) now will be able to carry 13,000 TEU’s! This will reduce congestion in the Canal, and expedite service.

During the past few months, there has not been enough space to accommodate all the cargo being imported for the holiday season, delaying many shipments from Asia to the USA.

 


Pears: Early Indications Point to an Adequate Yield; Prices Expected to Remain Firm

Pears are just beginning to come in from the fields now in China. Last year’s crop was severely damaged by hail shortly after the bud set, reducing the yield significantly. So far, this growing season has been very good and a normal yield is expected. Prices have not yet reflected the better supply this year over last, as the pipeline has been empty for some months. It will be some time before we may see prices more in line with a better supply.


Peaches: Strong Yield Means Slight Easing of Prices for New Crop

Peaches from China are almost all out of the fields now, and in cans. The unofficial yield was better than last year. The early varieties harvested are most similar in quality to California Yellow Clings. The sizing this season however is smaller than normal, which will result in smaller sized Slices. Dices will not be affected as much. Due to the good yield this season, raw material is lower priced, but the cost of labor and tin plate is up, with the net effect being slightly lower prices this year over last.


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