TT Talk - Trade pain - US West Coast issues

The ports of Long Beach, Los Angeles and Oakland are jammed with ships waiting to unload containers. The US Coast Guard warned shipping lines 10 days ago that they should be prepared to make alternate mooring arrangements or expect that the ship will need to remain at sea until safe anchorage space becomes available. There are currently some 19 container ships in the Long Beach harbour waiting for a berth.

The increase in traffic has caused a pileup of containers on the docks which need to be shipped out to make room for more containers, and has led to a backup of goods arriving at the ports from inland destinations. Containers are apparently backed up all the way to the mid-west.

Some shipping lines have been discharging all containers in Los Angeles and skipping Oakland to avoid further delays. This creates problems with bills of lading issued for Oakland cargo. If the shipping line has made the decision to skip any of Los Angeles, Long Beach or Oakland, it is likely to issue a 'COD' (change of destination) and amend the bills of lading to show the new port of discharge - and any related ocean freight change. Where this occurs, the TT Club would recommend that the NVOC or logistics operator also seeks to amend the underlying bills of lading to mirror the shipping lines bill of lading. This would prevent any potential claims for deviation, although there may be issues relating to letters of credit that require delicate negotiation.

"Care should be taken where this delay may cause the overall transit time to exceed the shelf life for certain commodities"

In addition, NVOC or logistics operators who accept bookings for perishable cargo need to be aware that ships are typically experiencing seven to ten day delays. Care should be taken where this delay may cause the overall transit time to exceed the shelf life for certain commodities. Many bills of lading contain provisions absolving the carrier from claims filed for lockouts and strikes, but it cannot be certain that such clauses would be upheld in any litigation in the circumstances of port congestion.

Overall, the TT Club recommends NVOC or logistics operators to avoid accepting bookings for commodities with less than three weeks shelf life, where possible, until the situation on the US West Coast improves.

We hope that you have found the above interesting. If you would like further information, or have any comments, please email us, or take this opportunity to forward to any colleagues who you may feel would be interested.

We look forward to hearing from you.

Peregrine Storrs-Fox

Risk Management Director, TT Club