Scanwell Monthly Logistics Report | August 2022hdfadmin
THE LATEST NEWS IN THE OCEAN, AIR, RAIL, AND TRUCKING INDUSTRIES.
Provided by Chris Donnell
Ocean Carriers, Freight Rates and Ports:
READ FULL AUGUST NEWSLETTER:
Ocean Freight / Congestion / ILWU News
- Ocean rates continue to slide, this trend should continue unit at least September. While the rates haven’t reached their pre-pandemic levels they have dropped in excess of more than 50% since January. I don’t anticipate the carriers are in a hurry to get back to the rate levels of 2018/19 but I’m sure everyone will take any reduction that can get at this point.
- Europe continues to struggle with congestion and the Port of Felixstowe, UK has been shuttered due to strike for the past 2 weeks. Felixstowe is Great Britain’s largest and busiest port and is impacting imports to North American already as vessels are bypassing this port.
- With Nancy Pelosi wrapping up her visit with Taiwan, China decided to commence with live fire military drills around Taiwan, one of the strongest shows of force to date which included ballistic missiles which touched down around the small island nation. Due to the military exercises most ships avoid the Straits of Taiwan, one of the worlds busiest shipping corridors.
- With each passing day, more and more ships are sitting idle at any number of US ports. As of this newsletter, we have eclipse the previous container vessel record which now stands at 153. This is a startling figure considering that means there at least 1.5 million containers of cargo waiting to birth in the United States. Making matters worse, there’s a misconception that congestion is getting better, it’s not.
- 6 years ago the Panama Canal went through a widening makeover and in July it welcomed the largest vessel to very venture through the canal at 16,000 TEUS. The canal itself is quite the marvel but it’s amazing how far the shipping industry has come considering just 15 years ago, the average size capacity of vessels transitioning the canal was around 3000 TEUS.
- While we’re in what some call a recession, the global ocean port throughput indices show no signs of slowing down. Most major ports global showed signs of growth in July. So much of volumes going down.
- Negotiations between the ILWU Longshoremen and the PMA are ongoing. The relationship between the two parties continues to remain close and recently they just passed a major milestone when the engaged in an agreement involving healthcare benefits for the union.
- Rates continue to slide and capacity is open throughout the Pacific Rim but this trend should start to come to a close around mid-September when importers are moving their late holiday merchandize.
- Airline Terminals are taking advantage of the downward trend as they play catch up. They are still holding firm with their allocated free time rules but congestion has eased and drivers aren’t sitting at the terminals wracking up driver detention time like they were months ago.
Rail / Intermodal:
- If I could sum up the current status of the rail / intermodal it would be “a mess”. Idle time for rail containers from our ports on the West Coast to inland (IPI) points has grown to 4-7 weeks and in some instances we’ve seen 3 months. There are many factors that play into the delay’s such as the on-going contract negotiations between the Rail Unions and the Railroad Owners. They also have significant man-power issues, lack of available rail car capacity and equipment. This has been a major issue over the past three years but it’s really coming to a head.
- The threats of a potential US Rail Strike is real and everyone should be keeping an eye out for is, should one take place in mid-September it will have a major impact on the ocean, trucking and transloading market. Biden stepped in and was able to advert a strike in July, giving both parties an additional 30 days to work out a contract but I’m hearing they are miles apart in negotiations. On the 15th of August, the rail workers union will go through a 30 day cooling off period and come September 15th, they can elect to strike. In the meantime, importers can expect slowdowns, man power issues and continued delays.
- The AB5 law in California continues to cause issues but the Port of Oakland is operational after a week of being shutdown due to striking truckers blockading the entrance to the port. The impact of the AB5 lax will have a short term impact on trucking throughout California, at least until it can be amended or wording revised, making the law more clear for the trucking industry.
- The cost of diesel fuel has dropped below $5.00 per gallon and this trend looks to continue, this is a good sign as rates for drayage, local of OTR should start to come down slightly.
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