Scanwell – July Supply Chain Issues

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The latest news in the ocean, air, rail, and trucking industries.

Provided by Chris Donnell

Ocean Carriers, Freight Rates and Ports:

Everyone;

I wanted to send out a quick note about the current state of the global supply chain as there are a lot of things happening which can / will affect how cargo moves throughout this amazing country.

Ocean Freight / Ports:

Ocean rates have dropped significantly over the past month and a half. While the rates are still high compared to those pre-covid, they have dropped in excess of 50% or more depending on where your shipping from and to. This should continue to at least mid-August.
As of today, the negotiations between the ILWU and PMA are still on-going even though the contract officially expired on June 30^th. There hasn’t been any announced work slow downs and I’m hearing the talks are progressing. Let’s all cross our fingers this works out and we don’t suffer what we all went through in 2015/16.
The ports along the West Coast have seen a steady decline in the amount of cargo vessels sitting idle off the coast, Los Angeles and Long Beach still are showing more than 20 vessels but that fails in comparison to what it was back in January where we saw more than 100 sitting idle.
As for the ports of the East Coast and Gulf, they are seeing a record number of vessels sitting idle and congestion is crippling the ports. To put things into perspective, container volumes moving through the East Coast ports are up some 56% compared to a year ago as many importers are fearful for a West Coast slowdown and diverted a lot of cargo away from the West Coast.

Air Freight / Airline Terminals:

Air Freight rates continue to slide as cargo demand has softened some. Unfortunately fuel costs are up and off-setting some of the reduction importers would see. This trend should continue until at least mid-August.
Airline terminals are reporting a steady decline in cargo however they aren’t willing to extend free time just yet. Most are still holding strong at their 24 hour rule which makes matters difficult when trying to pull the cargo from the terminal without having to pay storage.

Rail / Intermodal:

Many of you have heard the news that President Biden squashed a potential strike from the Rail Unions last Friday. The strike was scheduled to start today however with his injunction and the infusion of a mediator, they now have 30 days to finalize a contract which has been expired for the past 3 years. If an agreement can’t be agreed upon by all parties in the time, a 30 day cooling off period would begin and around Mid-September the rail industry could grind to a halt due to strike. Something to keep in mind, more than 30% of all cargo moves by rail today and the shutdown would send ripple effects through the global supply chain.
As of today, there are more than 200,000 containers sitting at port right now that need to move by rail inland. If a strike would occur it would send congestion at ports to all-time highs, warehouse and transload facilities would just be inundated with cargo, trucking would grid to a halt as chassis’ and other equipment would be tied up and this would result in importers paying hefty demurrage and detention fees to the carriers and ocean / rail terminals.

Trucking / Drayage / Long Haul:

The AB5 labor law is sending nightmares throughout California as more and more truckers are concerned about their well-being. As of July 14^th, California Gov. Gavin Newsome is looking into the concerns raised by the California Trucking Association and trying to help mitigate the uncertainty of this however with each passing day, more and more independent drivers are joining forces with the work slowdowns or strikes. If California proceeds with mandating AB5 in it’s current state it will effect some 70,000 truckers in California.

We will keep you posted as this progress. Have a wonderful day.

Kind Regards,

Chris Donnell

National Sales Director

Scanwell Logistics International (CHI) Inc.

2455 Arthur Avenue

Elk Grove Village, IL 60007

Tel: 847.228.6789

Fax: 847.228.0451

Mobile: 630-532-4561

E-Mail: chrisdonnell@scanwell.com

Web: www.scanwell.com