Shipping Costs, Delays Set to Rise Next Year

LONG BEACH, Calif. — Transporting shoes from China to the U.S. is about to get more expensive — and time-consuming — in the coming year, according to shipping experts at the Footwear Traffic Distribution and Customs conference held here Sept. 14-17.

Heading into next year, footwear players will see a narrowing gap between supply and demand and will also be dealing with new regulations.

Robert Sappio, SVP of transpacific trade for APL Ltd., said imports from China have declined in 2008, and he issued a similar outlook for 2009. “Next year we’ll likely see 0 to 3 percent volume growth [of imports] from Asia to the U.S.,” said Sappio. “That’s unprecedented in terms of its low number.”

But a drop in demand will not yield lower prices. “You will not see a big gap in supply and demand,” Sappio added. “The days of huge, empty ships moving around are over. You’ll get space, but there won’t be all this excess capacity to drive prices down.”

Sappio said footwear companies can also expect longer shipping times as the industry employs “slow steam” strategies, which reduce the speed of freighters traveling to the U.S., to save on fuel. “If you slow down a vessel 2 or 3 knots, you can save 20 percent in fuel,” he said.

John Ochs, managing director for APM Terminals in Los Angeles, said a new clean air action plan by the Ports of Long Beach and Los Angeles — slated to take effect Oct. 1 — could also cause delays in the supply chain. “Trucks 20 years and older will be banned from the ports,” he said.

“We’re very concerned about how this is going to play out,” said Hyundai Merchant Marine SVP Brian Black.

Black said railroad operators, too, are taking cost-saving measures that could cause delays. Already, Burlington Northern Santa Fe Railway requires trains to be loaded with 7,500 feet of cargo before leaving the port. And a new proposal could see the minimum length expanded to 10,000 feet.

“This is going to be a challenge,” said Black. “If [your cargo] is on the first train [leaving the port], that’s fine, but getting enough cargo to fill a second and third train is going to be a challenge.”

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