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News Letter April 2017

Commentary: Dockworkers hold fist over America’s supply chains
U.S. shippers should not underestimate the power the nation’s longshore unions hold over the flow of containerized cargo, said Chris Gillis, editor at American Shipper. More…
Senators introduce legislation to prevent port slowdowns
Legislation was introduced last week in the U.S. Senate aimed at preventing labor union slowdowns at ports.More…
Brexit: Seven things that have happened in the seven days since the UK triggered Article 50
Talk of war with longstanding allies, hate crime and national hysteria over a dubious story about chocolate eggs have marked the beginning of the UK’s divorce from the EU. More..

Ocean Alliance starts ploughing the seas
CMA CGM, COSCO Container Lines, Evergreen Line and Orient Overseas Container Line (OOCL) launched the forty new services through the OCEAN Alliance on Saturday, April 1.
The OCEAN Alliance comprises a total of 323 ships with an estimated total carrying capacity of over 3 million TEUs, and will run for the next ten years. More…

Singapore grants Japan’s ‘Big 3’ approval to merge container operations
Separately, the three Japanese ocean carriers – NYK, “K” Line and MOL – on Friday filed an agreement with the Federal Maritime Commission to merge container operations.More...

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News Flash

  ILA members call for shutdown of ports along Atlantic, Gulf Coasts

The International Longshoremen’s Association said it plans to march in Washington, targeting the Waterfront Commission of New York Harbor and the South Carolina Ports Authority.

The International Longshoremen’s Association (ILA) said it is calling for a shutdown of ports along the Atlantic and Gulf Coasts and a march on Washington next week.
   The union, whose members work at marine terminals from Texas to Maine, said the protest “is expected to bring much of America’s port economy to a halt.”
   The ILA said it is protesting “job loss and the resulting negative impacts on America’s economy,” but is using the event to protest two issues:
     • Its long-standing desire to eliminate the Waterfront Commission of New York Harbor;
     • And the use of state employees at terminals operated by the South Carolina Ports Authority (SCPA).
   The ILA has not yet announced what day and exactly where the march will be held, but said it will “highlight hiring practices in some of the nation’s ports that purposely reduce the numbers of dockworkers, causing immeasurable damage to the nation’s economy.”
   The union said, “Specifically, interference by the South Carolina Port Authority has reduced the number of dockworkers, injuring not only the port itself, but also the local and national economy.”
   Over 500 state workers are employed at SCPA terminals. They operate ship to shore cranes, and container handling equipment in the container yards at the port. ILA members shuttle containers between the container yard and cranes and man the gates truckers use to move containers in and out of the terminals.
   The ILA also complains that the Waterfront Commission, an agency created in the 1950s to fight corruption and crime on New York and New Jersey docks and regulate the supply of labor is “damaging the regional economy of the Port of New York and New Jersey” by “causing hundreds of jobs at the port to remained unfilled.”
   “We will wake up the decision makers and force them to focus on our ports,” said Kenneth Riley, vice president and president of ILA Local 1422 in Charleston. “We are protesting damage to the nation’s economy that is caused by the kind of interference that President Trump promised to stop.”
   When contacted by American Shipper, neither the Waterfront Commission or the SCPA were willing to comment on the ILA announcement.

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News Flash

The after effects from container shipping industry’s momentous 2016

Last year saw massive changes in container shipping, but will they benefit retailers and other shippers in 2017?   By Chris Dupin  AS Magazine Jan 30, 2017
This year, shippers will have to grapple with the implications of changes that rocked the container shipping industry in 2016 – the continued delivery and deployment of dozens of mega-containerships; widespread overcapacity; carriers suffering huge financial losses, eventually leading to the Hanjin Shipping bankruptcy; and a wave of mergers and acquisitions, some consummated and some still in progress.
Many retailers and others importing goods from Asia are grappling with these changes as they renegotiate transpacific shipping contracts, which commonly run from May 1 to April 30.
Those contracts will kick in as carriers consolidate the four major global container carrier alliances on the east-west trades between Asia, North America and Europe into just three agreements this April.

The Trump Factor. Adding more uncertainty is the election of Donald Trump, who has questioned how much the United States is benefiting from international trade, often focusing his attention on the outsourcing of jobs to and importing of goods from Mexico and China.
Trump’s transition team has reportedly discussed imposing tariffs as high as 10 percent on imports in order to spur U.S. manufacturing, either through executive action or as part of a tax reform package.
Still, it’s early to tell if Trump’s rhetoric, or the actions of his new administration, will reduce container trade.
It’s one thing for Trump to convince Carrier to keep making air conditioners in Indiana or Ford not to open another assembly plant in Mexico, but it will be a much heavier lift to return other manufacturing jobs to the U.S.
For example, 97.3 percent of the apparel and 98.4 of footwear consumed in the U.S. in 2015 was imported, with 33.5 percent of apparel and 75.4 percent of footwear from China, according to U.S. government statistics cited by the American Apparel and Footwear Association (AAFA).
According to the Peterson Institute for International Economics, “For 825 products out of a total of about 5,000, adding up to nearly $300 billion, China supplies more than all other U.S. trade partners.”
“Clearly there’s a downside risk,” said Paul Bingham, vice president of trade and logistics at Economic Development Research Group. “Any move by Congress to actually throw up tariffs or even non-tariff barriers can certainly inhibit the volume of trade pretty quickly on the transpacific.”
Tariffs or other barriers thrown up by other countries – whether pre-emptive or retaliatory – could also hurt U.S. exports.
Case in point: China last month raised and made permanent tariffs first put in place in January 2016 on U.S. exports of corn, ethanol, and distiller’s dried grains with solubles (DDGS), an ethanol byproduct used as animal feed.
“These tariffs are the poster child of bad trade deals,” said Mark Marquis, chief executive officer of ethanol maker Marquis Energy. According to his firm, “U.S. farmers say these unfair tariffs will cost U.S. agriculture at least $2 billion per year.”
Last year, 234,895 TEUs of DDGS were exported from the U.S., 94,119 of those TEUs to China, according to data from trade information supplier Datamyne. Even with the lower tariffs in 2016, exports from the U.S. plummeted 70 percent in FOB value in the first 11 months of the year to $467 million.
“Even if there is some move to inhibit imports, if the dollar keeps strengthening, that will keep working to the advantage of the companies exporting to the U.S. and damage potential for exporters from the U.S.,” noted Bingham. “That will filter through to the container trades, as it has in the past for those products where the U.S. has essentially been a ‘swing supplier,’ and be competed away by other countries trying to export like the Europeans, Japanese, Canadians or Australians.” Many of those products are agricultural.

The Right Direction? Regardless of U.S. trade policy, some shippers are questioning the direction the container industry is heading. A report published in November by the Global Shippers Forum and supported by the National Industrial Transportation League said “mega-ships and strategic alliances reduce supply chain efficiency and rivalry on important parameters of competition, including capacity, sailing frequency, transit times, ports of call and associated service quality.”
The report asked if “the time is right to question the received wisdom that shipping alliances and consortia are preferable to consolidation between carriers,” even as 2016 saw the consummation of the COSCO-China Shipping and CMA CGM-APL mergers, and the announcement of mergers by Hapag-Lloyd and UASC, Maersk and Hamburg Süd, and the liner operations of Japanese carriers NYK, MOL, and “K” Line.
“To be honest, we’re still trying to figure out if the alliances, as a whole are good or bad,” said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation (NRF).
Jessica Dankert, senior director of retail operations at the Retail Industry Leaders Association (RILA), says ocean carrier competition is important for retailers, and that with consolidation comes a risk of “further commoditization” of ocean shipping services.
“It’s important to maintain that degree of competition,” she said, so carriers can “differentiate both at the alliance level and the individual carrier-line level.”
Walter Kemmsies, an economist for Jones Lang LaSalle (JLL), believes further container industry consolidation is likely, but noted there is still “an awful lot of supply out there,” and rates could continue to suffer. Whether last year’s record containership demolition pace continues will be key.

Hanjin Bankruptcy. Hanjin’s insolvency had an “outsized impact” on the apparel and footwear industry, said Nate Herman, senior vice president of the AAFA. As manufacturers negotiate new contracts, many are taking additional steps to ensure they are sufficiently diversified should one of their carriers fall into financial distress. It took months in some cases for shippers to recover goods that had been in transit with Hanjin when the company went bust. Even last month Gold was hearing from NRF members still trying to return empty Hanjin containers.
London-based consultant Drewry estimates container carriers lost $5 billion in 2016 and projects average freight rates (blended contract and spot) will rise 12 percent globally and 14 percent on east-west trades, cautioning that contract rates could jump 20 percent to 40 percent on certain lanes in 2017.
There could be a “flight to quality,” as shippers seeking to book cargo only with the most financially stable carriers, said Drewry. But Herman said there is a “certain murkiness” surrounding the finances of some carriers, and that the demise of Hanjin was a surprise for most AAFA members.
“We learned from Hanjin that it’s not just one carrier who’s affected because of the shared space,” added Gold.
Dankert said retailers “are paying really close attention to” the reduction in the number of alliances and the long-range outlook for carriers as they negotiate contracts.
U.S. Federal Maritime Commissioner William P. Doyle said THE Alliance, one of the space sharing agreements that goes into effect in April, has inserted “framework language” about how members of the alliance could deal with a carrier in financial trouble.
The details still need to be worked out, but in theory, if an alliance carrier failed, a collective funding mechanism “could be used to pay operational expenses to bring ships into port and unload containers to ensure that cargo is not stranded on the water,” he said.
FMC Commissioner Rebecca Dye noted that such a plan is not part of the competition analysis performed by the commission, but she supports the idea if it is “in response to concerns and needs that are expressed by their customers and the marketplace.”
Herman said shippers are pleased with THE Alliance’s plan, but noted “the proof is in the pudding. Hopefully we won’t have to see how it works in reality.”
Bill Heaney, vice president and head of consumer and retail sectors in the Americas region for DHL Global Forwarding, said he is having more in-depth discussions with shippers “regarding bringing an NVO into their carrier base or contracts so they can be sufficiently diversified.”
Small retailers were always willing to talk to NVOs because they didn’t have the buying power to get lower rates, he said, and large retailers would sometimes use NVOs on smaller, more challenging lanes. But this year, even the largest retailers are talking to DHL in order to ensure carrier diversification, as well as maintain service to all the ports they had previously utilized.

Detention And Demurrage. Shippers have become increasingly concerned about port congestion, whether it is caused by the challenges associated with working larger ships, poor weather, insufficient infrastructure in and around ports, or labor problems such as those seen during the 2014-15 contract negotiations between the International Longshore and Warehouse Union and employers.
After being hit with extensive detention and demurrage charges even when congestion prevented them from retrieving or delivering containers on time, a group of shippers petitioned the FMC in December to clarify when such penalties are “just and reasonable.” (Demurrage is a charge imposed on shippers for space occupied by a container at a terminal after a specified number of days, also known as “free time,” expires. Detention is a charge for the use of equipment such as containers and chassis after a similar grace period.)

National Portal. A major initiative of the Federal Maritime Commission in 2016 was the creation of “Supply Chain Innovation Teams” that initially focused on improving the flow of imports through the largest U.S. cargo ports – Los Angeles, Long Beach, and New York/New Jersey – and are now turning to exports in their second phase.
Dye, who is heading up the FMC’s efforts, said the teams are “attempting to integrate the American supply chain by developing critical information that each of the actors need, making sure that it’s made available by the other actors.”
For example, information from port operators about when import containers are available for pickup must be accessible by shippers, information technology firms and inland transportation providers in a format that they can actually can use.
The FMC will create a pilot national information portal once the information needs of companies involved in exports have been determined, she said.
Dankert said RILA members hope the Trump administration will support increased investment in infrastructure, but it is crucial that “they are smart investments, and that we are looking at the network as a whole, and not just individual parts.”
Both Dankert and Gold said they were hopeful that efforts to improve the flow of cargo through the ports of Los Angeles and Long Beach by changing the way the PierPass program works would be successful.
PierPass funds operations of container terminals in L.A. and Long Beach at night and on weekends, and provides an incentive to use off-peak hours by collecting a fee on container cargo that moves in and out of terminals on weekdays. Many terminals in the two ports have also instituted appointment programs for draymen.
Stakeholders in recent months have discussed reforming the PierPass program to require reservations for all container movements and changing to a fee that would be charged round the clock. Another idea is to create a port-wide “peel-off” program where drayage movements would be handled in much the same way taxi drivers serve passengers in a queue at an airport, taking whatever cargo is given to them to whatever destination the shipper has specified.
Gold said after a decade in operation, it makes sense to evaluate PierPass and see if reforms are needed.
Other ports are also taking steps to improve the flow of cargo. Oakland terminals have set up truck reservation programs and nighttime hours, while the GCT Bayonne Terminal in New Jersey began phasing in an appointment system in January.

Omni-channel. One of the biggest conundrums facing retailers these days is figuring out how to reconfigure their distribution networks and physical store networks in the face of increased online shopping. Major retailers, including Macy’s, Kohl’s, Sears, and Walmart, have announced plans to close stores as a result of shifting demand patterns.
At the same time, Heaney says an increasing number of retailers are seeking multiple distribution centers closer to consumers so they can offer next-day (or at least faster) delivery to customers at their homes or local stores.
Mike Curless, chief investment officer for industrial and logistics real estate developer Prologis, said his company has seen growing activity by retailers, not just for space linked to “last-mile” deliveries, but for more traditional distribution requirements as well.
Three or four years ago, big retail distribution centers were more likely to be located in tertiary markets where real estate was less expensive. But retailers today are migrating those facilities to large population centers with major airports and, in some cases, seaports.
Consumer delivery expectations driven in large part by companies like Amazon are changing the decision-making process around facility location, said Curless. Proximity to major population centers is critical to having same-day, or even one- or two-day, delivery capabilities.
Because they are more likely to handle parcels than pallets, and because they are more likely to be involved in reverse logistics (some analysts say nearly 30 percent of e-commerce goods are returned, compared to 10 percent of goods sold through brick-and-mortar stores), e-commerce facilities must also be larger.
Greg West, vice president of less-than-truckload (LTL) at C.H. Robinson, said retailers and consumer goods companies are trying to find the best way to serve an omni-channel consumer that may want to shop on the internet, at a store, or over the phone.
Some companies are looking to spread inventory to more distribution locations or stores, as well as putting more pressure on their transportation providers and requiring tighter delivery times for merchandise.
If products are moving through a number of different distribution centers on their way from the port to the retailer, “there’s more of a chance for things to go wrong and on-time is probably just more difficult,” said West.
As a result, C.H Robinson has increased the scale of its LTL offerings and built a network of 16 consolidation centers, where products from multiple suppliers are co-loaded and then sent to retail distribution centers, helping suppliers to reduce the variability of delivery times to retailers.
Lisa Harrington, president of supply chain and logistics consultant the LHarrington Group, said she believes many manufacturing sectors – not just retail and fashion – may move toward shorter, regional supply chains due to the exponential growth of e-commerce and the accompanying consumer demand for shorter delivery times.
Instead of so many products being manufactured in China and moved over long distances to markets in the U.S., for example, those products could be made elsewhere in the Americas and shipped to the U.S. on north-south routes.
Harrington pointed to the success of clothing retailer Zara, which “broke the mold” by manufacturing clothing in Spain instead of Asia in order to shorten its supply chain.
Manufacturers must serve two masters, time and cost, she said. The ability to use analytical software down to the item level will make it possible to determine when it makes sense to produce an item closer to consumers and reduce inventory, or when manufacturing cost is paramount and longer delivery times make sense.

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Westar News January 2017

Shipping Alliances
New alliances threaten to raise US port costs

More information – CLICK HERENew alliances, bigger ships put US ports on high alert
More information – CLICK HEREDrewry: New alliances to halt north-European service trends

Shipping analyst Drewry has claimed that the new alliances forming in April appear set to stop the trend of a reduced frequency of services at ports in northern Europe. According to a report by Drewry’s, while ports are yet to be “out of the woods”, the shift to a reduced service frequency and larger ships seems likely to decline at least in East-West trades at North European ports.
More information – CLICK HERE


Compliance – Reasonable Care White Page
More information – CLICK HERE

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Westar’s China Consolidation Service Is In Place

China Consolidation Has Arrived!

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FMC approves “The Alliance” for US Trade

The Federal Maritime Commission (FMC) on Wednesday approved a proposed liner carrier consortium of five ocean carriers for their planned services to and from the United States.
The FMC’s decision, which was made in a closed session during the agency’s final meeting of 2016, allows THE Alliance to become effective Dec. 19.
THE Alliance, announced in May, is composed of Hapag-Lloyd of Germany; Taiwan’s Yang Ming; and “K” Line, MOL and NYK of Japan. Also included in initial plans for THE Alliance was Hanjin Shipping before the South Korean carrier filed for insolvency in August.
Just last month, the three Japanese members of THE Alliance said they would combine their liner carrier divisions under a single entity.
Through the new alliance, the carriers said last month they plan to call over 75 ports in the Far East, North Europe, the Mediterranean, the United States, Canada, Mexico, Central America, the Caribbean, the Indian subcontinent and the Middle East.
“I am very cognizant of the concerns industry stakeholders had regarding provisions in this agreement, particularly those related to information sharing and joint procurement,” FMC Chairman Mario Cordero said in a statement. “This office will continue to carefully focus on the impacts of the carrier alliance restructuring that is taking place in the shipping industry. Considerable review and analysis goes into assessing a final agreement before it is allowed to go into force.”
THE Alliance formed in the aftermath of a musical chairs of realignment in carrier alliances and consolidation that has only continued in the second half of 2016. The grouping was nicknamed by some analysts as the “orphan alliance” since it was made up of carriers left on the sidelines by the formation of the Ocean Alliance, which brought together carriers from three previous alliances (the Ocean 3, G6, and CKYHE). Eric Johnson – American Shipper

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Newsletter December 2016

TPP: What is it and why does it matter?
US President-elect Donald Trump has promised to abandon the Trans-Pacific Partnership (TPP) trade deal as soon as he takes office.
The TPP, signed by 12 countries in February, covers 40% of the world’s economy. But all 12 nations need to ratify it, and Mr. Trumps comments suggest that simply won’t happen.

German Chancellor Angela Merkel Speaks Up for Trade Pact Opposed by Trump
U.S. president-elect has pledged to pull out of 12-nation Trans-Pacific Partnership deal
BERLIN—German Chancellor Angela Merkel on Wednesday expressed concern about the dim prospects for a sweeping trade pact between the U.S. and Asia, which President-elect Donald Trump opposes, and argued that Europe should keep pushing for trade liberalization.

Why U.K. Is Struggling to Find the Path to ‘Brexit’
LONDON — A recently leaked memo from a consultancy firm has highlighted cabinet divisions over Britain’s withdrawal from the European Union, while suggesting that the government may need six additional months to settle on a plan and to recruit tens of thousands of extra civil servants.®ion=stream&module=stream_unit&version=latest&contentPlacement=6&pgtype=collection&_r=0

CMA CGM suffers heavy loss in third quarter
CMA CGM has reported a US$268m loss in the third quarter of 2016, compared to a US$51m profit recorded in the same period last year.


Report: Hyundai Heavy’s Union Considering Strike
The labor union of South Korea’s shipbuilder Hyundai Heavy Industries (HHI) said that it would launch an industrial action as a response to the company’s plans to split its businesses, according to Yonhap News Agency.
The union claims that the latest development in HHI’s plans to reorganize its businesses into six separate companies next year would lead to a sell-off.

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Newsletter October 2016

German trade bodies back Angela Merkel’s tough stance over Brexit
Two of largest business associations say letting UK opt out of aspects of free movement could endanger EU. Two of the largest German trade associations have come out in support of Angela Merkel taking a firm stance during negotiations over Britain’s exit from the EU, even if it comes at a short-term cost. Asian Maritime Crimes Down 65 Pct
The number of piracy and armed robbery incidents in Asia from January to September 2016 decreased by 65%, compared to the same period in 2015, according to The Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP).A total of 59 incidents were reported during the period, including 3 piracy and 56 armed robbery incidents, ReCAAP said.
Infographic: World’s Container Shipping Alliances
The infographic below, published by Oslo-based benchmarking and market intelligence platform for containerized ocean freight Xeneta, shows current shipping alliances as well as upcoming alliance reorganizations.
As of 18 July 2016, the world’s shipping alliances include the 2M alliance (Maersk and MSC), the Ocean Three alliance (CMA CGM, UASC, COSCO Shipping), the G6 alliance (NYK Line, OOCL, APL, MOL, Hapag-Lloyd* and HMM) and the CKYHE alliance (K Line, COSCO, HANJIN, Evergreen, Yang Ming).

Drewry: Gradual Recovery Expected in Container Shipping
Despite continuing concerns of weak trade growth and fleet oversupply in the container shipping market, a gradual market recovery is now expected, according to shipping consultancy Drewry. Worse than expected second quarter financial results will be followed by a better second half-year. But Drewry still expects container carriers to record a collective operating loss of USD 5 billion this year. “We forecast industry profitability to recover next year, thanks to improving freight rates and slightly higher cargo volumes, and so record a modest operating profit of USD 2.5 billion in 2017,” Drewry said. While average freight rates are expected to improve next year, this will follow several years of negative returns and will still leave pricing well below the average for 2015, according to the shipping consultancy.

EU-Canada free trade deal at risk after Belgian regional parliament vote
Wallonia parliament passes resolution against CETA, which requires unanimous agreement of all 28 EU member states A landmark trade deal between the EU and Canada is in jeopardy after being rejected by a Belgian regional parliament, raising questions about other agreements such as a future arrangement between the UK and the EU.

U.K. Economy Plugs Along 100 Days Post-Brexit
The recessionary concerns that floated around immediately following the Brexit vote may have been overblown.
It’s been 100 days since the U.K. voted to leave the European Union – sending global stock markets careening and sparking concerns that the country would plunge into recession in the separation’s aftermath.

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News September 2016

Hanjin Shipping secures $45 million, more may take ‘considerable time’
The chairman of Hanjin Group transferred 40 billion won ($36 million) to Hanjin Shipping on Tuesday to help unload cargo stranded on the troubled shipper’s vessels, a spokesman said, but regulators warned securing further funds could take “considerable time.”
South Korea says tough luck to Hanjin as shipping line sinks
The South Korean government, long a bastion of support for the country’s big conglomerates, is sticking to its hard-line stance on Hanjin Shipping Co Ltd (117930.KS), whose collapse is roiling global supply chains. Terminals’ Los Angeles Pier Gets Ready for Mega-Ships
The first of ten ship-to-shore (STS) cranes at the APM Terminals Los Angeles Pier 400 facility was raised 33 feet, making it the tallest port crane in North America, ahead of regular Ultra-Large Container Vessel (ULCV) calls in the trans-Pacific trade lanes, according to the terminal operator.
Comprehensive Economic and Trade Agreement (CETA)
The Comprehensive Economic and Trade Agreement (CETA) is a freshly negotiated EU-Canada treaty. Once applied, it will offer EU firms more and better business opportunities in Canada and support jobs in Europe.
TTIP has failed – but no one is admitting it, says German Vice-Chancellor Sigmar Gabriel
Germany’s Vice-Chancellor said in 14 rounds of talks neither side had agreed on a single common chapter out of the 27 being deliberated.
The free trade negotiations between the European Union and the United States have failed, but “nobody is really admitting it”, Germany’s Vice-Chancellor Sigmar Gabriel has said.
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Track and Trace System

Our new and improved Track and Trace system is in place.
We now offer Real Time Visibility

Please contact your Westar representative for personal log in information.

  • Take control of your supply chain to achieve greater efficiencies with Westar’s extensive array of interactive track-and-trace functions via our SCOPE-Web-Tracking interface.
  • The system, completely web-based, allows you to stay on top of your supply chain and, unlike many tracking systems that require the shipper to know the carrier’s B/L or AWB number, Scope allows queries by a variety of customer reference numbers such as the purchase order.
  • Real-time status updates of your shipments, including ETD, ETA information, commercial invoice, customs clearance status and delivery timelines.
  • Access to reporting and historical shipment data.

Commercial invoice and commercial document retrieval, order visibility, management and status.

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