Maersk North America Market Update: Navigating Ocean Challenges, Emissions Trading Expansion, and Logistics Solutions

Maersk North America Market Update: Navigating Ocean Challenges, Emissions Trading Expansion, and Logistics Solutions

(IN BRIEF) The Maersk North America Market Update for August 2023 provides insights on various aspects of the shipping and logistics industry. It discusses updates on ocean operations, including adjustments due to low water levels at the Panama Canal and the clearing of container backlogs in the Pacific Northwest. The report also highlights improvements in East and West Coast services, shifts in Transatlantic service schedules, and the expansion of the European Union’s Emissions Trading System (ETS) to include emissions from ocean transit. The update further covers challenges and solutions in the Less than Truckload (LTL) sector, emphasizing the importance of integrated logistics and flexible solutions. Warehouse and distribution implementation timelines are discussed, along with the factors that influence project durations. The news piece also provides information on Maersk’s Q2 2023 Interim Results, the expansion of air freight services, and the company’s commitment to achieving net-zero emissions by 2040.

(PRESS RELEASE) COPENHAGEN, 24-Aug-2023 — /EuropaWire/ —

Panama Canal

To mitigate the adverse effects of the extended dry season, the Panama Canal Authority has set the current draft for vessels crossing the Neopanamax Locks to 44 feet. The low water levels have led to operational adjustments, particularly impacting our largest vessels deployed on the Asia/US East Coast route, to accommodate the available draft.

Maersk has taken proactive measures to mitigate the situation. To make sure we are able to offer our customers the needed capacity through the Canal, we have deployed additional vessels, known as extra loaders. Besides adding extra loaders, we work closely with the Canal to ensure that we have access to the needed transit slots to ensure minimum impact on our customers.

We closely monitor the draft adjustments and the efforts to mitigate low water levels announced by the Panama Canal. We follow the guidance from the Panama Canal and adapt our intake on relevant services in advance of the departure at origin. Maersk remains committed to minimizing disruptions to our operations.

Pacific Northwest Updates

The container backlogs built up during the sporadic dockworker strikes last month in the Western Canadian ports of Vancouver and Prince Rupert are clearing up. Rail and trucking activities in the area are gradually resuming regular operations.

East and West Coast Services

Maersk will continue to deploy weekly extra loaders for the East Coast, ensuring enhanced capacity well into the upcoming month of September.

Additionally, Maersk shifted the TP8 service call from Los Angeles APM Terminal Pier 400 to Long Beach Total Terminals International to provide a reliable and efficient service. The first vessel call to Long Beach will be on September 15th.

Transatlantic services

We remain committed to delivering the highest level of reliability on our Europe services. We have decided to adjust to the schedules of the TA5 sailings to match the following updated schedules. With these adjustments, our customer’s will be better able to plan for the arrival of their cargo as actual schedules will be better aligned to posted proforma schedules going forward.

Along with the schedule reset of the TA5, we included a blank sailing of the TA2 service in Week 33 which was set to depart from Bremerhaven on August 18th to help this service remain on schedule in the coming weeks. However, all booked cargo will be carried via our TA1 and TA3 vessels to ensure our customers are not impacted.

Capacity into the U.S. East Coast originating from our IMEA region (India, Middle East, and Africa) is available to accept customer volumes as needed via the TP11 Service. With its South Africa point of origin, the Maersk AMEX is also available to accept customer volumes as the Reefer season has slowed down. For the WCA trade we anticipate space restrictions, as demand increases.

To receive the latest updates on your cargo, sign up for ETA notifications or check schedules on Maersk.com. For operational updates such as posted in our “Weekly Reader,” be sure to subscribe to our advisories at www.maersk.com/newsletter.

Europe’s Emissions Trading System (ETS) – A New Era for Shipping

A new ocean shipping era dawns on January 1, 2024, when the European Union (EU) expands its Emissions Trading System (ETS) to include emissions from ocean transit; effectively applying an emissions surcharge to every container moving in or out, or through the European continent.

The Race to Carbon Neutral – Carbon now has a Price.

The EU aims to be the first carbon-neutral continent by 2050. A cornerstone of their decarbonization plan is the ETS, which requires companies to purchase European Union Allowances (EUAs) for every metric ton of CO2 emitted within the EU.

Historically, international climate policy has ignored ocean shipping emissions due to their complex and global nature. Furthermore, container ships are already the most sustainable mode of transportation. Still, due to the massive volume of cargo moved by sea, however, ocean transport does account for nearly 3% of the world’s total emissions.

Maersk believes these innovative policies will encourage transformational investments, further supporting the blue world to go green.

So, how will we Pay for Carbon?

Below is everything we know so far about the EU ETS:

• Pass through, non-negotiable, standalone surcharge on top of contracted rates for all applicable shipments, including SPOT and contracts, even those with a “No New Surcharge” (NNS) clause.
• The price of EUAs is volatile. We will review and update the surcharge quarterly, like BAF, and will communicate these changes 30 days prior to the effective date.
• There will be a phase in period: 40% coverage in 2024, 70% coverage in 2025, 100% coverage (plus NOx and methane) in 2026 onwards.
• To prevent ‘emissions leakage’, the EU ETS will also apply to ports within 300 nautical miles of the EU (EU to set final port determination in Q4 2023).
• Estimates for these surcharges will be posted in a few weeks on Maersk.com.
• Our expert, Raj Kumar Khatri, explains more here.

A Carbonless Tomorrow?

It’s safe to think that other parts of the world will soon follow suit with the EU’s approach to tax emissions.

Luckily, there are already solutions in motion to help us become carbon neutral and avoid emission-related surcharges. It is only through a stronger partnership that we are to achieve deep decarbonization and avoid the worst impacts of climate change, as well as unnecessary surcharges. Learn more about ECO Delivery here and how you can reach your carbon neutral goals by shipping with us.

Less than Truckload (LTL) – Challenges and Solutions

“If it fits, it ships.” This 2011 US Postal Service slogan was an attempt to simplify the complexity of parcel shipping and provide shippers with a program they could easily understand and implement.

But what about all the freight that doesn’t “fit”? From kayaks, couches, and garden equipment, this is where the Less than Truckload (LTL) service steps in to cover the wide gap between what a parcel carrier can handle, and the expense of booking a dedicated truck for your shipment.

Today, LTL carriers find themselves challenged to move items they never thought they would see and fulfill delivery requirements that are economically challenging. They face rapidly changing dynamics that drive constant innovation, while demanding they operate at the lowest possible price in a highly competitive market. Yellow, one of the nation’s largest and oldest LTL carriers, succumbed to these challenges when it was forced to close its doors earlier this year.

Yellow, one of the nation’s largest and oldest LTL carriers, succumbed to these challenges when it was forced to close its doors earlier this year.

As market conditions create new challenges, integrated and flexible logistics have become even more important. Now, it is possible to have end-to-end visibility across several modes of transportation. Solutions are addressing the coordination of Ocean, TL, LTL, and parcel distribution. Billing and cost forecasting for the entire supply chain have been simplified. And customers now have an increased capacity and economical flexibility that can adapt to fluctuations in shipping volume with dedicated customer experience that eliminates issues as freight moves from ocean to land.

Through the recent acquisitions of Pilot Freight Services, Performance Team, Visible Supply Chain Management and other LTL related entities, Maersk is providing clients with flexible LTL solutions so that all your goods can fit and ship seamlessly.

Warehouse & Distribution – Creating an Effective Implementation Plan

On average, three to four months have been the timeline for many of our partners from the moment a Letter of Intent (LOI) / agreement is signed, until the “Go Live” date is reached. Although this is the average timeline, there have been instances where projects have moved quicker or taken longer.

Here are some key factors to consider when creating your Warehouse Implementation timeline:

• How much CAPEX, Automation, and IT equipment will you need?
  We operate facilities ranging from new start-ups with no racking needs, to fully automated facilities possessing full racking and robotics.
  • It takes around 8-10 weeks for the CAPEX and IT to arrive on location, and then another 2-3 weeks for instalment.
  • Robotics and complex automation like walls and conveyors can take 6-10 months to arrive from the time ordered.
• What technology will be used to exchange data?
  How much customized mapping is required between the two companies? Will you utilize standard EDI transactions or APIs? What ERP do you have? Do you have existing mapping that we can review or is it a whole new initiative?
  • EDIs exchange structured business data between trading partners’ systems.
  • APIs integrate and communicate between different software applications for real-time data exchange.
• Location of the new facility
  Will you move into an existing facility? Will a new distribution center open? Will existing employees support the business or will new ones have to be hired?
• Size of the business?
  Will you occupy 10,000 square feet of space or 1 million square feet of space? The more space needed, the longer the lead time.
• Number of wholesale retailers shipping to
  Wholesale retailers have comprehensive and complex routing guides one must comply with for every shipment. The greater number of retailers, the more retail compliance requirements and testing required to minimize exposure to retailer chargebacks.

When you think of the timeline needed to bring a project of this scale to fruition, it is important to look at all the components and team members who will play an integral role in it. All the way from leadership to IT, Operations, Customer Experience, and implementation managers from both sides; a synchronized approach will ensure a smooth “Go Live” date. Learn more about Maersk’s Warehouse Solutions.

Media Contact:

Florencia Serra
North American
Customer Communications

SOURCE: A.P. Moller – Maersk