5 Ways Current Events Are Re-Shaping Global Trade • UTC Overseas

March 24, 2022

What you need to know:

- Bottlenecks at the Ports of LA and Long Beach have eased, but delays are shifting elsewhere
- China's targeted lockdowns are in flux due to Omicron
- The Russia-Ukraine conflict has resulted in many trade lanes being diverted or cancelled across all modalities
- Recent cyberattacks have crippled operations of several transportation firms
- Looking ahead: Upcoming union negotiations threaten to strain the supply chain further

Bottlenecks at the Ports of LA and Long Beach have eased, but delays are shifting elsewhere.

There were 109 ships waiting to berth at LA/LB in early January; now there are just 43. This is partly due to the annual slowdown during the Lunar New Year holiday and recent COVID lockdowns in China. (FreightWaves)
Ports on the East and Gulf Coast are starting to experience backlogs, with 63 ships waiting to berth, with another 8 waiting in Freeport, Bahamas.
Services from Shenzhen and Shanghai to the Ports of NY/NJ in January and February had an average wait time of 20.9 and 14.5 days, respectively.

On March 21, Shenzhen operations resumed after a weeklong lockdown. However, COVID test and quarantine requirements have led to a workforce shortage in all modalities – trucking, dock workers, etc. Ongoing disruptions in the region have caused shipping carriers to omit certain ports to keep schedule disruptions at a minimum, leading to a backlog of 65 ships waiting to berth at the Port of Shenzhen. (Port Technology)
Additional lockdowns have been imposed over the past two days in major industrial hubs. There are rumors of an impending city-wide lockdown in Shanghai as daily case numbers rise; the city currently has targeted neighborhood and building quarantines in place. (Reuters)

Closed airspace has forced airlines to rethink their routes, and artillery fire and sanctions have handicapped heavy lift fleets and cargo freighters, tightening airfreight capacity worldwide.
- - The AN-225 is destroyed; nine other planes remain grounded at Hostomel. Russian forces have also shelled Antonov’s manufacturing and storage facility holding the second, 70% completed, AN-225 hull. Five AN-124s are operational outside of Ukraine. (Aviation 24)
  - Volga-Dnepr Group has effectively shut down, folding two subsidiaries and grounding all aircraft but two AN-124s. (The Loadstar)
Over 1.5M TEUs of rail freight that transit the New Silk Road between China and Europe annually are looking for alternate routes, likely resulting in a shift to ocean freight. (Rail Freight)
Sanctions against Russian goods will impact a wide range of businesses: Russia and Ukraine account for one-third of global wheat exports, Ukraine is a major producer of heavy metals used in semiconductor manufacturing, and Russia is a major exporter of titanium, which is used widely in the aerospace industry. Russia is also a critical exporter of natural gas and crude oil.

In November 2021, a cybercrime intelligence firm, Intel 471, reported that cybercriminals were trying to sell network access to multiple transportation, shipping, and logistics firms. Since then, Hellmann Worldwide was targeted in December, Expeditors International in February, and Hapag-Lloyd in March. (Duo)
Cyberattacks in the maritime industry that lead to ransom payment average $3M USD. (Container News)

Formal contract negotiations between the International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA) will begin in the spring. The current contract expires July 1, 2022, and experts anticipate negotiations will be contentious. (JOC)