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Seems a little crazy that ships can charge truckers for the empties not being returned when they won't even take the empties back? I feel like that one stuck ou

Seems a little crazy that ships can charge truckers for the empties not being returned when they won't even take the empties back? I feel like that one stuck out to me as a bit odd

anonymouse008 5y ago
This right here is where I'm scratching my head. Demurrage sinks many an export/import-er -- and it feels rather brash to leave ports with no empties back on the ship. Something feels amiss in the long term business relationship ship liners are trying to foster at the moment. > The real issue, Schrap says, is just that the shipping companies won’t take their empty containers back: “The ocean carriers need to come sweep out the empties.” Adding insult to injury, the ocean carriers bill truckers a late fee every day for unreturned empty containers, Schrap said, even if they won’t accept them at the port. “It makes you want to pick up your laptop and Frisbee it out into the backyard,” Schrap said. “That’s the frustration running through our veins.” This is a financial bazooka aimed at small importers/exporters. Forget the empties stacking up as an eye sore, this is the crisis -- charging late fees on something the ship liners won't take back.
- hef19898 5y ago
  Demurrage is only an issue if logistics are badly managed. Easier said then done, especially now I know. And still the number of companies, especially in eCommerve just ignore how important logistics is mind boggling. People tend to ignore how much of Amazon's success is owed dud to worldclass supply chain and logistics management.
  - anonymouse008 5y ago
    > Demurrage is only an issue if logistics are badly managed. Oh man, we could sit around the fire and tell stories all night on this topic. It's even better when your customer is the primary logistics on the other end, especially when they wanted a better price and they forget to bring the container back for a couple days. That was our rookie mistake, not having logistics across the lake or not doing exworks.
    - hef19898 5y ago
      Admitedly, containers were more fun back when you could get two weeks demurrage free. That stopped being athing long before covid, so, when they charged for unloading taking longer then 2 hours. I had a consulting gig where I tried to sell the cliwnt on using a cross dock facility near the port to get stuff out of boxes, on pallets and then on trucks. Failed to to disuade him from using some container railway yard, all of that managed by his tradituonal forwarder without much overaight, before the whole project broke down end of 2020.
  - bostik 5y ago
    IIRC there's even an old saying about that, coming from military: "Amateurs think strategy. Professionals think logistics."
    - hef19898 5y ago
      There are a ton variations of this, attributed to a ton of people. I love all of them!
- nradov 5y ago
  Aren't those charges for container detention, not demurrage?
  - thedogeye 5y ago
    Detention is when you keep a container out too long. Demurrage is when you wait too long to pick it up.
- mikewarot 5y ago
  >Something feels amiss in the long term business relationship ship liners are trying to foster at the moment. "Long term" in MBA speak is an evil curse. They want to make the numbers for the Quarter, they don't give a hoot about anything past that... that's for Future MBA to worry about.
  - ryguytilidie 5y ago
    Finally someone on hacker news comes up with the brave and original idea to blame everything on MBAs in an extremely simplistic way.
  - hangonhn 5y ago
    I love the term you coined “Future MBA”. Seems like one can run a pretty interesting/witty/funny blog or Twitter account about Present MBA screwing over Future MBA to underline the ever present quarter by quarter decision making in corporate America.
    - TeMPOraL 5y ago
      I'd go with painting it as, MBAs make the quarterly return look good despite the overwhelming odds, and if the Present MBA makes things worse long-term, that's just an interesting challenge for the Future MBA to excel in navigating around.
    - buran77 5y ago
      Current CTO vs. Future CTO was an ongoing joke in every bank with an AS/400 in the basement. They were all planning a complete refresh of the tech stack... to begin right after they retired or moved to another company. Future CTO has to earn their pay too.
  - xadhominemx 5y ago
    Shippers could actually use some MBAs to clean up their operations. It’s definitely not an industry that has been associated with professional managers and has been boom-bust forever.
moron4hire 5y ago
If they won't take back the empties, what do they expect to be done with them? Where are they getting containers to fill in the first place? What is going on?!
- HWR_14 5y ago
  The demand for shipping throughput is so high that it is cheaper to have the Chinese build new containers and have them filled and waiting at the docks than pay the extra time to have the empties loaded in the US then unloaded in China. This will change at some point, but until then there's no point in bringing the empties back. It's literally not worth the hassle. Honestly, it might go on long enough that figuring how to smelt the containers might be viable given the high cost of metals.
  - kabes 5y ago
    But if there are no trucks to unload the ship, since they're all occupied with empties, who's unloading the ship? Wouldn't this mean delays in unloading, and thus incentive for the shipping companies to take the empties back?
  - kansface 5y ago
    A container must cost at least a couple thousand dollars... a ship carries, what, 1000 or so? That's roughly 2 million dollars being "thrown away". Maybe they can build them for half that in China? I suppose if the turnaround time is in months, this makes sense. Someone will make a tidy profit returning the containers at some point (although I have no idea what their lifecycle is like).
    - HWR_14 5y ago
      Ultralarge ships (top 161 in the world edit: that number of ships is a decade old, sorry) all carry at least 5,000 40' containers (and up to 10,000). That sounds like a lot, but right now the Chinese factories are cranking out about the 600,000 a quarter. (Note, I'm talking about 40' containers, but the industry talks about 20' so you may find double my numbers on a search.) They seem to cost about 2,500-4,000 to purchase new, so theoretically they could make 20-28MM loading them with empties (if they were worth the same as new). I don't know how long it would take to load the ships with cargo, but there are currently $24MMM (that's 24 billion) in goods anchored outside the port of LA waiting to be unloaded. So 3 orders of magnitude higher. How much of a premium must load/unload capacity be at right now? If we weren't truck limited, we could just move all the empties far away and stockpile them until they can be profitably returned. But I know people who have tens-of-thousands of dollars in tons of raw materials (think universal inputs) stacked in a warehouse they have to vacate soon and they cannot even give it away because of transportation costs. They're going to have to pay someone to take away the things they (correctly assumed) they could buy for almost nothing last year and would be worth more today.
bkor 5y ago
It's a misleading statement. The terminal isn't accepting the empty. That's a different business from the shipping line. What likely happens is that the shipping line is sending these charges out automatically (global systems, huge company, etc). Which are then usually disputed as the terminal isn't accepting the empty. The story makes it out that a shipping line is behaving more strangely than what happens in practice.

Seems a little crazy that ships can charge truckers for the empties not being returned when they won't even take the empties back? I feel like that one stuck out to me as a bit odd

anonymouse008 5y ago

This right here is where I'm scratching my head. Demurrage sinks many an export/import-er -- and it feels rather brash to leave ports with no empties back on the ship. Something feels amiss in the long term business relationship ship liners are trying to foster at the moment. > The real issue, Schrap says, is just that the shipping companies won’t take their empty containers back: “The ocean carriers need to come sweep out the empties.” Adding insult to injury, the ocean carriers bill truckers a late fee every day for unreturned empty containers, Schrap said, even if they won’t accept them at the port. “It makes you want to pick up your laptop and Frisbee it out into the backyard,” Schrap said. “That’s the frustration running through our veins.” This is a financial bazooka aimed at small importers/exporters. Forget the empties stacking up as an eye sore, this is the crisis -- charging late fees on something the ship liners won't take back.

hef19898 5y ago
Demurrage is only an issue if logistics are badly managed. Easier said then done, especially now I know. And still the number of companies, especially in eCommerve just ignore how important logistics is mind boggling. People tend to ignore how much of Amazon's success is owed dud to worldclass supply chain and logistics management.
- anonymouse008 5y ago
  > Demurrage is only an issue if logistics are badly managed. Oh man, we could sit around the fire and tell stories all night on this topic. It's even better when your customer is the primary logistics on the other end, especially when they wanted a better price and they forget to bring the container back for a couple days. That was our rookie mistake, not having logistics across the lake or not doing exworks.
  - hef19898 5y ago
    Admitedly, containers were more fun back when you could get two weeks demurrage free. That stopped being athing long before covid, so, when they charged for unloading taking longer then 2 hours. I had a consulting gig where I tried to sell the cliwnt on using a cross dock facility near the port to get stuff out of boxes, on pallets and then on trucks. Failed to to disuade him from using some container railway yard, all of that managed by his tradituonal forwarder without much overaight, before the whole project broke down end of 2020.
- bostik 5y ago
  IIRC there's even an old saying about that, coming from military: "Amateurs think strategy. Professionals think logistics."
  - hef19898 5y ago
    There are a ton variations of this, attributed to a ton of people. I love all of them!
nradov 5y ago
Aren't those charges for container detention, not demurrage?
- thedogeye 5y ago
  Detention is when you keep a container out too long. Demurrage is when you wait too long to pick it up.
mikewarot 5y ago
>Something feels amiss in the long term business relationship ship liners are trying to foster at the moment. "Long term" in MBA speak is an evil curse. They want to make the numbers for the Quarter, they don't give a hoot about anything past that... that's for Future MBA to worry about.
- ryguytilidie 5y ago
  Finally someone on hacker news comes up with the brave and original idea to blame everything on MBAs in an extremely simplistic way.
- hangonhn 5y ago
  I love the term you coined “Future MBA”. Seems like one can run a pretty interesting/witty/funny blog or Twitter account about Present MBA screwing over Future MBA to underline the ever present quarter by quarter decision making in corporate America.
  - TeMPOraL 5y ago
    I'd go with painting it as, MBAs make the quarterly return look good despite the overwhelming odds, and if the Present MBA makes things worse long-term, that's just an interesting challenge for the Future MBA to excel in navigating around.
  - buran77 5y ago
    Current CTO vs. Future CTO was an ongoing joke in every bank with an AS/400 in the basement. They were all planning a complete refresh of the tech stack... to begin right after they retired or moved to another company. Future CTO has to earn their pay too.
- xadhominemx 5y ago
  Shippers could actually use some MBAs to clean up their operations. It’s definitely not an industry that has been associated with professional managers and has been boom-bust forever.

moron4hire 5y ago

If they won't take back the empties, what do they expect to be done with them? Where are they getting containers to fill in the first place? What is going on?!

HWR_14 5y ago
The demand for shipping throughput is so high that it is cheaper to have the Chinese build new containers and have them filled and waiting at the docks than pay the extra time to have the empties loaded in the US then unloaded in China. This will change at some point, but until then there's no point in bringing the empties back. It's literally not worth the hassle. Honestly, it might go on long enough that figuring how to smelt the containers might be viable given the high cost of metals.
- kabes 5y ago
  But if there are no trucks to unload the ship, since they're all occupied with empties, who's unloading the ship? Wouldn't this mean delays in unloading, and thus incentive for the shipping companies to take the empties back?
- kansface 5y ago
  A container must cost at least a couple thousand dollars... a ship carries, what, 1000 or so? That's roughly 2 million dollars being "thrown away". Maybe they can build them for half that in China? I suppose if the turnaround time is in months, this makes sense. Someone will make a tidy profit returning the containers at some point (although I have no idea what their lifecycle is like).
  - HWR_14 5y ago
    Ultralarge ships (top 161 in the world edit: that number of ships is a decade old, sorry) all carry at least 5,000 40' containers (and up to 10,000). That sounds like a lot, but right now the Chinese factories are cranking out about the 600,000 a quarter. (Note, I'm talking about 40' containers, but the industry talks about 20' so you may find double my numbers on a search.) They seem to cost about 2,500-4,000 to purchase new, so theoretically they could make 20-28MM loading them with empties (if they were worth the same as new). I don't know how long it would take to load the ships with cargo, but there are currently $24MMM (that's 24 billion) in goods anchored outside the port of LA waiting to be unloaded. So 3 orders of magnitude higher. How much of a premium must load/unload capacity be at right now? If we weren't truck limited, we could just move all the empties far away and stockpile them until they can be profitably returned. But I know people who have tens-of-thousands of dollars in tons of raw materials (think universal inputs) stacked in a warehouse they have to vacate soon and they cannot even give it away because of transportation costs. They're going to have to pay someone to take away the things they (correctly assumed) they could buy for almost nothing last year and would be worth more today.

bkor 5y ago

It's a misleading statement. The terminal isn't accepting the empty. That's a different business from the shipping line. What likely happens is that the shipping line is sending these charges out automatically (global systems, huge company, etc). Which are then usually disputed as the terminal isn't accepting the empty. The story makes it out that a shipping line is behaving more strangely than what happens in practice.