MSC Joins Ocean Carriers in Termination of Delivery Outside Port After Baltimore Accident

Shipping Chaos Ensues After Tragic Bridge Collapse

Following the devastating container ship accident near the Port of Baltimore, MSC, the largest ocean carrier in the world, has made a significant decision that will have widespread implications for shipping clients.

Port Closure Sparks Disruption

With the Baltimore port indefinitely closed, MSC has announced that it will no longer deliver diverted containers outside of the port for shipping clients. This decision places the responsibility of cargo pick up and transport to its final destination on the shipper.

Customer Advisory and Rerouting

In an email to customers obtained by CNBC on Thursday, MSC explained that for customer containers already on the water bound for the Port of Baltimore, cargo will be rerouted and discharged at an alternate port where it will be made available for pick-up. The contract of carriage will be declared terminated at this alternate port, with additional costs to be borne by the cargo's account.

Impact on Transport to and from Baltimore

According to MSC, transport to and from Baltimore is currently impossible and will not be reestablished for several weeks, possibly even months. This move follows similar announcements by other carriers such as CMA CGM, COSCO, and Evergreen, some of which have formally declared "force majeure" in light of the circumstances.

Industry Response and Challenges

Maersk, however, stands as the only major carrier to commit to providing transport from diverted ports for customers. Nevertheless, the entire ocean carrier industry has been facing financial and operational challenges, including vessel overcapacity, declining earnings, and costly diversions from major global trade routes.

Logistical Implications

Logistics companies have been scrambling to make alternate transport plans and keep up with carrier diversions. However, there have been unresolved issues, such as ocean carriers not updating their vessel transits fast enough to alert logistics executives to the new diverted ports, making it difficult to plan for customer container pick-up.

Capacity of Other Ports

Major ports up and down the East Coast, including Savannah, Brunswick, Virginia, Charleston, and New York/New Jersey, have assured CNBC that they have the capacity to ramp up operations to meet the needs of incoming cargo.

Government Response and Meeting

Transportation Secretary Pete Buttigieg had a meeting with supply chain professionals, including ocean carriers and railroads, to discuss the crisis and how to mitigate any congestion. This meeting involved shipping clients from major companies and emphasized the need for increased coordination and efforts to strengthen both physical and digital infrastructure.

Challenges for Small Companies

According to Paul Brashier, vice president of drayage and intermodal at ITS Logistics, smaller companies without prior relationships at diverted ports may face significant challenges in coordinating the bookings for their diverted containers. The urgency to remove diverted containers from the port to avoid additional fees adds to the pressure faced by these companies.

Port Terminals and Fees

Once a container arrives at a terminal, the free time allocated to it begins to expire, leading to detention and demurrage fees. There is currently a concern regarding whether terminals will consider giving an extension of free time or waiving the fees.