The diverted cargo issue during the Baltimore port crisis has been passed on to US companies by the world's largest container ship company, MSC.

The diverted cargo issue during the Baltimore port crisis has been passed on to US companies by the world's largest container ship company, MSC.
The diverted cargo issue during the Baltimore port crisis has been passed on to US companies by the world's largest container ship company, MSC.
  • The largest ocean carrier in the world, MSC, has informed clients that their container contracts will be terminated once cargo is delivered to a diversion port, and shippers will be responsible for moving goods or may face delay charges.
  • In recent days, MSC has announced to its customers that it has joined forces with multiple ocean carriers following the Francis Scott Key bridge collapse near the Port of Baltimore.
  • On Thursday, Pete Buttigieg, the Transportation Secretary, held talks with supply chain experts regarding the port closure and its impact on diverted trade.
Logistics companies scramble with Port of Baltimore closed until further notice

The largest ocean carrier in the world, MSC, has decided to stop delivering diverted containers outside of the port for its shipping clients due to the container ship accident near the Port of Baltimore that resulted in a tragic bridge collapse. Since the Baltimore port is indefinitely closed, the shipper will now be responsible for picking up cargo from a diverted port and transporting it to its final destination.

MSC announced in an email to customers that for containers on the water heading to the Port of Baltimore, cargo will be rerouted and discharged at an alternate port for pick-up.

The MSC advisory stated that the contract of carriage for these shipments will be terminated at the alternate port and storage, and the D&Ds and on-carriage costs to the initially intended destination will be charged to the cargo alone.

The first carriers to announce similar moves and in some cases formally declare "force majeure" were CMA CGM, COSCO, and Evergreen.

MSC expressed regret for the inconvenience caused by the contingency plan, which is necessary due to circumstances beyond their control, and is being implemented in accordance with the terms of the contract of carriage.

MSC did not immediately respond to CNBC's request for comment.

The Dali, a 10,000-container capacity containership, was chartered by Maersk and lost control, crashing into the Francis Scott Key Bridge in the early hours of Tuesday.

Since the accident, logistics companies have been working to create alternative transport plans and keep up with carrier diversions. Executives told CNBC on Wednesday that the next few days will be crucial in moving the diverted trade away from the Port of Baltimore.

The Port of Baltimore ranks eleventh in the country and is the top U.S. port for auto/light truck and agriculture tractor imports and exports. It also handles a variety of other goods, including clothing, household items, construction materials, electronics, appliances, and produce.

The major ports along the East Coast, including Savannah, Brunswick, Virginia, Charleston, and New York/New Jersey, as well as the companies that provide chassis for rail and truck transport, have informed CNBC that they are capable of increasing their operations to accommodate the influx of cargo.

A list of 23 vessels that were diverted from their original ports between March 28 and April 29 was sent by MSC. Out of these, the destination of eight vessels is unknown, while 11 are heading to the Port of New York/New Jersey, three to Norfolk, and one to Philadelphia.

On Thursday, Transportation Secretary Pete Buttigieg met with supply chain professionals to discuss the crisis and ways to reduce congestion. The meeting included ocean carriers CMA CGM, Maersk, MSC, Evergreen, and railroads CSX and Norfolk Southern. The Port of New York/New Jersey, Georgia, Baltimore, Philadelphia, Jacksonville, South Carolina, and Virginia were also present. Shipping clients John Deere, Stellantis, Home Depot, Under Armour, and Volkswagen were also in attendance.

"Thanks to increased coordination across the supply chain and new efforts to strengthen both our physical and digital infrastructure, we are now better equipped to mitigate supply chain disruptions than we were just a few years ago," Buttigieg stated in a meeting readout.

Lael Brainard, the National Economic Advisor, pointed out that the lack of complete information across different sectors in previous disruptions hindered decision-making and response capabilities. However, she highlighted the DOT FLOW initiative as a solution, stating that it has already been activated to bring all federal government agencies together to assess potential supply chain impacts and work collaboratively to address them.

ITS Logistics' vice president of drayage and intermodal, Paul Brashier, stated that smaller companies that manage their own bookings may face the greatest challenges due to the lack of relationships at diverted ports. Brashier emphasized the importance of getting diverted containers out of the port quickly to avoid detention and demurrage fees, which can be costly for some shippers who are starting from scratch.

If a container reaches a terminal, a countdown begins for the free time allocated to it. If the free time ends without the container being loaded or unloaded, detention and demurrage fees will be charged unless ports decide to waive them.

"Brashier stated on CNBC on Wednesday that they are examining whether terminals will grant an extension of free time or waive fees. The current issue is whether terminals will provide an extension of free time or waive fees, according to Brashier."

How ports are handling shipping diversions from Baltimore
by Lori Ann LaRocco

Business News