North American transportation and logistics

Ocean Freight Since last month, there have been some pricing adjustments in ocean freight rates for vessels coming from East Asia. The rates for Handymax ships coming from East Asia to the US Gulf Coast have declined by approximately $10 /mt, and the rates for ships coming from East Asia to the West Coast have gone down by about $5 /mt. However, the market has not softened; these slightly lower prices are just an adjustment that occurred because Pacific rates had shot up too fast while rates for ships coming from the Baltic, Black, and Mediterranean Seas remained depressed. There was just a short-lived lack of vessels that brought up some excitement and unrealistically high rate expectations, however, these high rates expectations were not sustainable. Still, experts say that the pricing trend for Pacific rates is still slightly up. On balance, rates for Handymax vessels coming from the Baltic Sea to the Gulf Coast are down by $5 /mt, while rates for ships coming from the Black and Mediterranean Sea to the US remain flat. Going rates for Handymax ships carrying large tonnages of steel (minimum 15,000 tons of hot rolled coils, rebar, wire rod, etc.) are as follows: Baltic to US East Coast: $40 /mt to $45 /mt Baltic to US Gulf Coast: $30 /mt to $35 /mt Black Sea and Mediterranean Sea to US East Coast: $35 /mt to $40 /mt Black Sea and Mediterranean Sea to US Gulf Coast: $30 /mt to $35 /mt East Asia to US Gulf Coast: $60 /mt to $65 /mt East Asia to US West Coast: $55 /mt to $60 /mt Port issues With record volumes of imports coming into US ports, congestion is still a major issue. California ports are currently quite congested with ships waiting four or five days for berth. Congestion problems also persist in Houston and New Orleans, though things have eased up slightly in Houston, as all ships are now finding berth, though not necessarily preferred berth. In both Houston and New Orleans, all stevedores are full, and no doubt, fatigued. The Port of New Orleans also remains extremely busy, but there are some signs that progress is being made with the labor shortage problem. Chris Bonura, PR representative at the Port of New Orleans, told SteelOrbis recently, that while the labor shortage in the city persists because of the lack of housing, the Port of New Orleans has been proactive in addressing the problem by working with FEMA to create two trailer park sites, one for employees at the Port of New Orleans, and another one for stevedores, truckers, and other laborers in the overall port community, each site with about 100 trailers each. “Every day there's some little sign of progress,” Mr. Bonura said. “People are starting to move back.” For now, although some progress is being made, the Gulf ports remain congested. The good news is that East Coast ports, like Philadelphia, Baltimore, and Camden, are becoming more manageable. Though they still have full schedules and are as busy as ever, they are no longer backlogged and ships are no longer waiting long periods for berth. Barge transportation Barge availability is still tight, with good demand and no oversupply. Carriers are busy, but they are not overwhelmed. The market will remain strong through July, but availability might become uncomfortably tight after grain season starts. Fuel surcharges are expected to rise from 30 to 50 percent in the third quarter, much higher than first and second quarter rates. Rail and truck transportation Rail car availability is still very tight, with high demand for coils, covered cars, open cars, gondolas, and bulkhead flats. However, major railroads say they are seeing some improvement in congestion. Current fuel surcharges for rail cars are approximately 16.5 percent, up from 15 percent last month. Fuel surcharges for trucks are at around 19 percent.