Freight forwarder and third-party logistics provider (3PL) UTi Worldwide Inc. will launch starting Monday a weekly air charter service from Shanghai to Chicago in an effort to ease the growing backlog of Asian-made goods bound for the United States.
The operation will use a Boeing 747-400 aircraft with a 100-ton capacity. The service will have virtually no weight, size, or commodity restrictions. It is unclear at this time whether the service will be extended beyond the peak holiday shipping season.
The service was launched to help importers needing to get their goods into the U.S. market during a period of unusually acute congestion at West Coast ports that has forced importers to scramble for service alternatives and has driven up recent airfreight demand to levels not seen in years, UTi said. Port congestion "has reached a critical level, and we think it will get worse before we see any improvements," said Ed Feitzinger, UTi's executive vice president, global operations, in the statement.
UTi is not the only forwarder exercising this option. Dutch forwarder Ceva Logistics has been running ad hoc charters across the Pacific, with one recently moving from Hong Kong to Chicago. Ceva, like other multinational forwarders, also has "blocked space" agreements with airlines, where forwarders commit to per-determined amounts of cargo space at negotiated rates for a specified period of time.
Cargo charters are not unusual for this time of year, as retailer demand spikes for high-value holiday merchandise that cannot afford to sit on the ocean, while it travels from Asia to North America for weeks at a time. This year, however, the impact of the seasonal surge has been amplified by major congestion problems at ports throughout the country, most notably at the ports of Los Angeles and Long Beach, which handles 40 percent of all U.S. containerized imports. The influx of large containerships and their massive cargoes have overwhelmed the handling capacity of West Coast ports, leading to significant backlogs. An acute imbalance of truck chassis at key port facilities has made it difficult for truckers to move boxes in a timely manner from the vessels to inland locations.
In response, trans-Pacific ship lines have begun imposing congestion surcharges of up to $1,000 per 40-foot equivalent unit (FEU) for containers to be discharged on or after Nov. 17 or 18, meaning that surcharges are being slapped on boxes still in transit aboard waterborne vessels. The Federal Maritime Commission, which regulates the U.S. shipping industry, is looking into whether the carriers have economic grounds to impose the surcharges, which, at the highest levels, constitute a roughly 50-percent increase over the prevailing rate for an eastbound FEU container shipment.
Meanwhile, the intermodal trucking unit of the American Trucking Associations plans to petition the Federal Motor Carrier Safety Administration (FMCSA) for a waiver of the agency's driver "hours of service" rules on behalf of Southern California port truckers. Under the rules, a driver can work no more than 14 hours in a day and drive for no more than 11. A driver must also take a 30-minute break within the first eight hours of drive time.
Due to current congestion problems, port drivers at the ports of Los Angeles and Long Beach can spend two to three hours a day alone just queuing up to load or unload boxes.