FMC to Investigate Ocean Carriers Making Unilateral Changes to Service Contracts
According to an April 23 Federal Maritime Commission (FMC) news release, U.S. cargo owners forwarded complaints to FMC claiming some ocean carriers are unilaterally changing service contract terms by cancelling the port/container yard to final customer destination leg of the cargo shipment. These cancellations are allegedly due to lack of inland truck availability.
The Commission’s Bureau of Enforcement has initiated an expedited inquiry into these ocean carrier actions. Letters were sent last Friday, April 20, to those shipping lines whose service contract actions have been called into question.
In this inquiry, the Commission is seeking information that will assist in understanding the timing, fairness, and lawfulness of the alleged unilateral changes to ocean carriers’ obligations for inland trucking services. Shipping lines are expected to provide their responses to FMC within 30 days.
Diesel Fuel Prices Increase for Fifth Consecutive Week
The Energy Information Administration reported the average U.S. on-highway diesel fuel price increased 3 cents per gallon to $3.13, during the week ending April 23. Prices have increased 16 cents since the end of March and have not been this high since January 2015.
Demand for diesel fuel exports has been strong this year, putting pressure on supplies and prices. Prolonged winter weather has also put pressure on distillate fuel supplies, which are used to produce residential heating oil and diesel fuel.
STC Research Highlights Nation’s Approach to Funding Locks and Dams
On April 16, the Soybean Transportation Coalition released a report titled “Predictable Funding for Locks and Dams,” written by Texas A&M’s Transportation Institute. The report describes the cost escalations and project delays resulting from the current funding approach, and identifies potential best practices.
Grain News on AgFax
It also compares a hypothetical lock and dam project, constructed via the current funding approach, with one potentially constructed by implementing practices suggested in the study.
The study aims to demonstrate that a project with the same initial price tag can have very different outcomes due to the reliability of funding practices. In other words, the report found that less reliability of funding generally results in costlier projects with longer delays.
Pacific Northwest Grain Inspections Rebound
For the week ending April 19, total inspections of grain (corn, wheat, and soybeans) for export from all major U.S. export regions reached 2.8 million metric tons (mmt). This is an 11 percent increase from the previous week, up 2 percent from last year, and 35 percent above the 3-year average.
Export inspections were up for each of the three major grains, with wheat inspections experiencing the largest increase. Shipments of wheat were up 23 percent from the previous week, with Pacific Northwest (PNW) wheat inspections jumping 55 percent, and accounting for over 60 percent of total wheat inspections.
Total PNW grain inspections increased 39 percent from the past week. Current outstanding (unshipped) export sales are up for soybeans but down for corn and wheat.
Snapshots by Sector
For the week ending April 12, unshipped balances of wheat, corn, and soybeans totaled 36.4 mmt, up 30 percent from the same time last year. Net weekly wheat export sales were negative .067 mmt, the lowest so far for the current marketing year. Net corn export sales were 1.1 mmt, up 30 percent from the previous week. Net soybean export sales totaled 1.0 mmt, down 31 percent from the previous week.
U.S. Class I railroads originated 22,559 grain carloads for the week ending April 14, down 11 percent from the previous week, up 5 percent from last year, and 2 percent above the 3-year average.
Average May shuttle secondary railcar bids/offers per car were $692 above tariff for the week ending April 19, up $242 from last week, and $982 higher than last year. There were no non-shuttle bids/offers this week.
For the week ending April 21, barge grain movements totaled 654,800 tons, 6 percent lower than the previous week, and down 36 percent from the same period last year.
For the week ending April 21, 452 grain barges moved down river, 73 barges more than the previous week. There were 708 grain barges unloaded in New Orleans, 5 percent lower than the previous week.
For the week ending April 19, 37 ocean-going grain vessels were loaded in the Gulf, 12 percent more than the same period last year. Fifty vessels are expected to be loaded within the next 10 days, 35 percent more than the same period last year.
For the week ending April 19, the ocean freight rate for shipping bulk grain from the Gulf to Japan was $44.00 per metric ton, unchanged from the previous week. The cost of shipping from the PNW to Japan was $24.00 per metric ton, 1 percent less than the previous week.