Scanwell Monthly Logistics Report | June 2022hdfadmin
The latest news in the ocean, air, rail, and trucking industries.
By Chris Donnell
Ocean Carriers, Freight Rates and Ports:
- Ocean Freight continue to slide as rates have decreased as much as 15% over the past 30 to 45 days. This decrease is attributed but multiple factors such as a slowing US economy to the 2 month long Covid-19 shutdown of the world’s busiest port, Shanghai.
- As of June 1st the city of Shanghai announced it’s opening up and trying to return back where it was prior to it’s 2 month long self-induced lock-down. The result of the lockdown could result in China not hitting their aggressive goal of 5.5% GDP growth for the year. The road to recovery for Shanghai will be slow as many economist are stating it could take the remained of the year for Shanghai to get back to where it was prior to the shutdown taking place. We’re still seeing major issues with shutdowns throughout China in cities like Beijing, Tianjin and several others.
- Congestion at the United States busiest port terminals (Los Angeles / Long Beach) has significantly dropped from it’s high mark of more than 100 vessels sitting idle off shore to just over 20 today. Terminals throughout this complex are still struggling with congestion but it’s not nearly as bad as it was just 2 months ago. How long this decline continue is anyone’s guess as we are waiting to see how quickly Shanghai bounces back.
- On a sad note, a massive fire broke out at a container depot in Chittagong, Bangladesh which claimed the lives of some 80 people including firefighters who were called to help extinguish the fire. The fire is thought to have started in several containers which contained chemicals. This situation while smaller in nature is very similar of the explosion that rocked the Beirut port a year ago where certain chemicals were in fact illegally stored in areas where they shouldn’t have been
- In a recent study of port efficiency, the biggest ports in the United States ranked near the bottom compared to the rest of the world. Los Angeles and Long Beach came in at 369 and 370th place respectfully. Several smaller ports in the United States found there way into the top 50, places like the Port of Virginia (23rd) and Miami(29th).
- The ILWU and PMA have continued talks after a brief weeklong suspension enacted upon by the ILWU however this doesn’t mean things aren’t being done. It’s still my stance that we will not see the same issues we all saw back in 2015/16 and both sides are promising that any type of slowdown is the furthest thing from their mind right now.
FULL SCANWELL REPORT:
- Rates are on the decrease as well, with Shanghai’s PVG airport opening this is take a lot of the pressure off of places like Ningbo, Hangzhou and other local airports in the Shanghai region and with additional capacity rates should continue to decline.
- Congestion and storage issues are still plaguing our airports and airline terminals but we are seeing driver wait times diminished compared to what they were in the first quarter of 2022.
- Rail traffic for the month of May dropped some 5% versus the same time last year which contradicts the numbers posted by the ocean terminals which are saying they have more than 200,000 containers sitting at the Southwest port terminals awaiting railcar allocation. How could the rail volume drop but the number of containers at our ports awaiting rail movement increase?
- 4 of the United States largest Class I railroads have submitted their 6 month recovery plan to US regulators – each carrier outlines measures which they will enact which will aid to the efficiency and costs to the rail carriers and importers.
- One of the main issues that crippled the Shanghai shutdown was the lack of available truckers but as Shanghai opens drivers are slowly coming back but there are still hurdles they must go through to pick-up and delivery goods from the ports and specific locations through the region.
- New truck driver jobs have risen for the 3rd time this year. In May, some 13,000 new drivers came on line and is one the largest increases in the past 12 years. This is a good sign but the industry is still woefully short on drivers nationwide.
- Driver coercion claims are still continuing to climb even though the load rejection levels drop.
- Diesel fuel continues to climb, in several states the average cost per gallon is over 6 dollars and in 3 states the cost is over 7 dollars per gallon.
Infrastructure and Government:
- US cracks down on forced labor and manufacturing in China – this is something that’s been a conflict between the US and China for months. This will be a major obstacle many importers especially in the garment and textile industries are going to have to go through to maintain their supply chains.
- US Commerce Chief thinks its best that we lift some of the section 301 tariffs on China – her thought process on this will be to lower the costs of goods to the American consumers.
- With China’s strict Covid-19 policy and the section 301 tariffs many importers are looking at moving manufacturing to places throughout the Southeast Asia and Indian Sub-Continent.
- The global economy is in dire straits as countries limit their exports especially in the food sector where countries try to keep runs on food minimal.
National Sales Director
Scanwell Logistics International (CHI) Inc.
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Elk Grove Village, IL 60007
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