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September 2016

News and Views for the clients of Universal Logistics

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What you need to know about the bankruptcy of
the world’s seventh largest container carrier company

 Hanjin ontainer ship

Shipping rates spiking by 40-50%. $14 billion USD worth of stranded cargo. 80 stranded container vesssels. That’s the troubling situation following the collapse of South Korea’s Hanjin Shipping Co., the world’s seventh largest container carrier.

Hanjin’s bankruptcy announcement came as a huge shock to importers and exporters worldwide, but in reality the writing has been on the wall for a long time. Very few, if any, container shipping lines are currently making money as evidenced by the recent 2nd quarter financial results of some of the world’s largest carriers. In the simplest of terms, it really boils down to – capacity exceeding demand.

The company, which has a fleet capacity of about 600,000 TEUs and accounts for about 3.2% of the global container market, has declared bankruptcy and is taking legal action to prevent the seizure of its vessels by creditors. Some Hanjin vessels are already under “arrest” after warrants were issued by Federal courts on behalf of creditors. Still others are unable to move because they are under a port embargo or have simply run out of fuel.

Four other major carriers, Shanghai-based Cosco Container Lines, Japan’sKawasaki Kisen Kaisha (K-Line), Taiwan’s Yang Ming andEvergreen Line, are also being impacted because they often slot charter (book space) with Hanjin and, as such, have customer containers on stranded Hanjinvessels.

Affected shippers, including many Canadian importers, are scrambling to make other shipping arrangements at prices far above usual shipping rates.

Some containers are moving at Canadian ports, but only after shippers agree to pay port and rail charges they may have already paid to Hanjin. CN Rail as well as Prince Rupert (DP World) and Vancouver (GCT Terminal) ports have published tariffs outlining the rates, terms and conditions under which Hanjin containers will move.

The economic fallout of the Hanjin collapse will affect everyone who did business with Hanjin, including container lessors, ports, terminals and container yards, freight forwarders, truckers, rail operators, port agents, banks and bond holders. All face the prospect of not being paid or only receiving a portion of their fee. Worse still, many will be caught up in hundreds of costly insurance claims that could go on for years. For many businesses, it will be the "perfect storm" that is impossible to survive.

The ripple effect will be an upward trend in rates as ocean carriers turn their focus to increasing revenues versus gaining market share via a reduction in capacity through an increase in mergers and acquisitions in the ocean carrier industry.

If you have a shipment on a Hanjin vessel, please contact Debbie McGuire, Manager – Freight Solutions immediately to learn more about the status of the shipment and what, if anything, needs to be done to get it moving again.

Shipping industry not ready for new air cargo security amendments

With only a few weeks remaining before new Air Cargo Security Program regulations come into effect, many members of the shipping industry will be affected by the mandated screening services required by the program. Shippers may face earlier cut-off times and delays of up to 24 hours once the regulations come into effect on October 17, 2016.

One of the main issues is the slow uptake of shippers becoming Known Consignors. Doing so would allow shippers to secure their own cargo through a screening process applied at the time of packing. Otherwise, cargo will need to be screened prior to being uplifted on certain domestic, transborder and international aircraft. There is also a need for additional trucking and warehouse operators to become Certified Agents and additional parties to become Regulated Agents, who have the ability to offer active screening services across the country.

Shippers currently designated as a Registered Shipper within the Air Cargo Security program will remain until October 16, 2016, at which time they will be automatically transitioned to the Account Consignor category. The Account Consignor status is necessary for those wishing to ship via air to the United States, however, cargo will still have to be screened before it can be uplifted.

For more information, please refer to Transport Canada’s Air Cargo Fact Sheet or contact DavidLychek, Manager – Ocean & Air Services.

Have you received an "Informed Compliance" letter from
U.S. Customs?

Man reading letter

Companies that import high risk goods or have compliance issues could receive a letter from U.S. Customs with the subject line "Distribution of Informed Compliance Publications and Other Informative Documents."

It is believed that U.S. Customs is sending the letter to any business that is likely to receive a comprehensive audit and needs help on how to prepare, which typically will involve an internal review and the prior disclosure of discrepancies and deficiencies. If you receive the letter, contact us immediately to learn more about informed compliance and how it applies to your business.

For more information, contact Brian Rowe, General Manager – Customs Consulting Services.

Misdeclared cargo threatens safety of ships and crews

A study of container ship safety covering 2013-2014, shows that more than a quarter of all serious incidents on board container ships are caused by misdeclared cargo.

More accurate cargo descriptions would improve safety by giving crews the information they need to handle and stow dangerous goods to prevent incidents. A common mistake which has been the cause of several fires on board container ships in the past few years, is the misdeclaration of calcium hypochlorite (used to sanitize swimming pools and disinfect drinking water).

With an estimated 10% of all container cargo being dangerous goods, it is vital for the safety of ship and crew that the cargos are declared by their proper shipping name as per the International Maritime Dangerous Goods (IMDG) Code.

For more information, contact Debbie McGuire, Manager – Freight Solutions.

New free trade deal between Europe and Canada
moves closer to ratification

Canada - Europe free trade deal

The member states of the European Economic Union (EU) should ratify a new trade deal with Canada because it is the "best and most progressive agreement" ever negotiated by the EU, says the organization’s president, Jean-Claude Junker.

Canadian Prime Minister Justin Trudeau also supports ratification, saying in a tweet that "Canada is ready to work with the EU to build strong economies on both sides of the Atlantic." Austria, Germany and other European countries oppose ratification of the trade deal, called the Comprehensive Economic and Trade Agreement (CETA).

For more information, contact Brian Rowe, General Manager – Customs Consulting Services.

Global Spotlight Quiz
Global Spotlight
A world-famous beach attracts millions of tourists (and locals) annually. It was created by clearing away industrial areas to beautify the city for the 1992 Summer Olympics.

Global Spotlight Quiz

What city was the intended original location for the Eiffel tower?

This mystery city is inside a European country, and is the capital of an autonomous community that includes four provinces. Here are some more clues:

  • The city’s airport handles over 40million passengers per year.
  • More than 10% of this city is parkland.
  • A world famous cathedral has been under construction in this city since 1882 – and is still not finished.
  • This city has 9 UNESCO World Heritage Sites.
  • This city has 2 official languages, Spanish and Catalan.
  • Some say this city was founded by Hercules, 400 years before the building of Rome; others say the city was created by Carthaginian Hamilcar Barca, father of Hannibal.

Click here to see the answer

For more information about freight to/from this city, contact Debbie McGuire, Manager – FreightSolutions.

Quick Tip

Double check your insurance coverage

Don’t make the mistake of assuming your insurance coverage covers everything you ship. For example, if you insure books on a regular basis, buthave a one-time shipment of picture frames, your standard coverage may not apply (breakage of glassmay be excluded). Always confirm coverage before you ship.

Nora Su – Customs Operations

Shawn Kelly, Customs Operations
– Universal Logistics USA

At Your Service: Shawn Kelly, Customs Operations –
Universal Logistics USA

Shawn Kelly joined Universal Logistics USA in January 2015 as a member of the Customs Operations team, working out of our Buffalo, New York office.

He has over 10 years of industry experience, including a solid understanding of U.S. import requirements to process shipments imported via various modes of transport.

Shawn can be reached by phone (716) 882-4100 or byemail.

September 2016

is produced monthly for the clients of Universal Logistics. Reader comment and story ideas are welcome. Comments of general interest to all Route readers will, with the permission of the writer, be published. Copyright ©
Universal Logistics Inc. All rights reserved. Reproduction for any commercial use is strictly prohibited.

Route is produced by Universal Logistics. Editor: Bettina Scharnberg. While every effort has been made to ensure the accuracy of information contained herein, Universal Logistics accepts no responsibility or liability for errors or omissions. Written correspondence should be forwarded to:

Universal Logistics Inc.
125 Commerce Valley Drive West
Suite 750, Thornhill, Ontario L3T 7W4
Tel: 905-882-4880 Fax: 905-882-2250
Attention: Bettina Scharnberg
Universal Logistics

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