Scanwell Monthly Logistics Report | May 2022hdfadmin
The latest news in the ocean, air, rail, and trucking industries
By Chris Donnell
Clients, Friends and Colleagues;
I feel like I’m in the Bill Murray movie “Groundhog Day” where each day brings another challenge that only adds to the complexities facing shippers, importers and anyone in general related to the transportation industry. Make no mistake about it, there are some pressing items which could have a profound impact on the Global Supply Chain. Please see below some of the issues I outline in my newsletter.
Ocean Carriers, Freight Rates and Ports:
- The port complex of Los Angeles and Long Beach handled more than 19 million containers in 2021, 16% higher compared to 2020; they are poised to break their record yet again this year as they are forecasting a modest growth of 4% this year. The complex is the nation’s busiest with regards to containerized cargo.
- There are more than 55 container vessels sitting off the coast of Los Angeles and Long Beach, another 70 at ports throughout the nation however this fails in comparison to the backlog of vessels awaiting to be emptied and filled which are sitting idle off the ports in China. It was reported there are over 270 vessels currently awaiting birthing, the vast majority sitting between the ports of Shanghai and Ningbo.
- Returning containers has been a struggle for the past 2 years however most of those struggles were visible only on the West Coast however this is being a massive issue in several East Coast ports. Right now the ports of New York and New Jersey have hit their capacity for return containers. Most carriers have adopted the policy of duel transactions meaning that in order for you to bring an empty to the port, you must pull a full one. The fall out to this is added costs in the way of Per Diem fees which is passed along to the importer of record or beneficial cargo owner.
- Make no mistake about it, there will be a surge of exports from China to the United States, it’s just a matter of when this will happen. Right now more than 370 million people in some 45 cities within China are under some sort of quarantine process and while some manufacturing has returned, most manufactures are finding it difficult to source raw materials. Making matters worse, the world’s busiest port in terms of containerized cargo, Shanghai, has been under strict lockdown measures for over a month now and once it’s labor force and manufacturing ramp up to full speed, it will unleash an onslaught of cargo which will flood the ports of the United States. The question remains, when?
- Cargo capacity is starting to rebound, rates while still more than 140% higher than they were pre-pandemic should start to stabilize for the time being. Something to keep an eye out for, the airport of Shanghai is still hindered by the lockdown and most manufacturers who are able to produce shipments are forced to use alternative airports like Ningbo, Hangzhou and others, this is effecting the overall transit times.
- Nationwide issues are seen in airport terminals and cargo freight stations as they continue to be inundated with cargo and to ensure importers are moving their cargo as quickly as possible, most warehouse locations allocated to the airlines have continued to increase their storage fees. They call in incentivizing the importer. Places like Chicago, Dallas and other locations we’ve seen storage costs surpass $1.00 per kilo per day and these warehouse count weekends and holidays into the allowable 24 hour free time.
FULL SCANWELL REPORT:
- Our Class I railroads continue to struggle with congestion, moving available slot cars and equipment to the west coast where they are desperately needed. While the nation saw imports grow some 21% last year, container rail traffic dropped by 17%. Now some of that drop was due to the ocean carriers suspending inland movement but there are also issues with labor operation within our nation’s largest carriers.
- Just announced, the FMC has mandated that the Class I railroads provide them with an outline on improvement in order to help ease congestion, reduce excessive charges and move more capacity to where it’s needed.
- Trucking rates have declined however the cost of fuel has eroded those potential savings and due to the increase fuel costs, loads tended have dropped as it’s becoming too troublesome for truckers, especially owner operators to keep up with the changes.
- Large trucking companies are seeing the largest jettison of labor as more and more drivers are looking at smaller carriers, carriers offering loads closer to home to drive for.
- The number of coercion complaints from drivers have increased some 35% over the same time last year as more and more drivers are being threatened and harassed by their tender owners. This is a major issue the American Transport Association is looking into, more information to follow.
Infrastructure and Government:
- The US Trade Representatives are reviewing the current China tariff situation and will decide shortly if they will continue to the section 301 increase tariff.
- In mid-April the Us trade Representatives announced a new exclusion list for the section 301 tariffs, if an importer imports a particular product names on the list, that importer can file to get the section 301 tariff back for shipments between October 2021 and April of 2022. The link for the list https://www.reuters.com/world/china/us-reinstates-352-product-exclusions-china-tariffs-2022-03-23/
- The FMC is looking into excessive dwell fees imposed by the ocean terminals, while any resolution to their findings, if any, will be long awaited and their focus I’m sure will be about the overall language within the scope of carrier rights and privileges in reference to excess fees. .
National Sales Director
Scanwell Logistics International (CHI) Inc.
2455 Arthur Avenue
Elk Grove Village, IL 60007
Scanwell: The power of our innovation and imagination makes us infinite.
Leave a Reply