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Industry Update Aug 2022

Category: Issue Briefing

Industry Update Aug 2022

August 11, 2022
| No Comments
| Categories: Issue Briefing
UTC Overseas Industry Update August 2022 (white UTC logo and text over semi-transparent dark blue overlay). Background image: pink & purple sky in background, four men in reflective vests are on the back of a ship. two men stand aside while two men are adjusting a piece of equipment being loaded onto ship.

August 2022 Industry Update

Inflation, strikes, military drills and droughts are making it more difficult to navigate the international supply chain.

Here's what you need to know today.

    • Escalating strikes in the UK among transportation workers; union calls for 8-day strike at Felixstowe
    • China’s military drills disrupt trade in Taiwan Strait
    • US efforts to reduce transportation costs and delays
    • Critically low water levels exacerbate European energy crisis & transportation woes
Get in touch with UTC today to talk about your shipping needs

The summer of discontent in the UK

Labor negotiations in the UK remain tense, with disputes over pay and inflation playing a key role.

    • Rail workers walked off their jobs on several occasions, airports and airlines are experiencing labor shortages resulting in canceled flights and delays, and now, the union at Felixstowe, the UK's largest container port, has called for an eight-day strike beginning August 21. (AJOT)
    • Talks broke down between Unite Union and Hutchison Ports UK, with each side blaming the other for the stalemate. The dispute is over pay. The initial offer presented to the union was for a 7% increase, which the members would not agree to since inflation in the country is 11.9%. The port upped its offer, but it still was not enough to satisfy the union, which is threatening a full shutdown. (The Loadstar)
    • Felixstowe is a key hub, accounting for half the UK's container trade. A strike will have an impact on international maritime trade beyond the UK. Liverpool is viewed as an alternate port if the strike moves forward, and the union at that port will vote next week on possible strike action if their pay dispute is not settled. (JOC)

China's military drills disrupt the Taiwan Strait

    • Shipping in the Taiwan Strait is returning to normal, but risks remain as China is still carrying out military exercises. The Taiwan Strait is a key route for supply chains and commodities and is one of the world's busiest waterways. Bloomberg data shows close to half the global container fleet transiting through the Strait this year. (Bloomberg)
    • The military drills were in reaction to US House Speaker Nancy Pelosi's visit to the region last week. Ships were warned to avoid certain areas by local branches of China's maritime safety administration. Some carriers rerouted their vessels, taking longer routes to reach Taiwan, while others navigated around the drill zones. Exercises were slated to be done by Sunday, but were still ongoing until Wednesday, Aug 10. They are now completed, but China will conduct “regular patrols” moving forward. (Reuters)
    • China is also conducting drills in other areas along the coast, but the Taiwan Strait is an important shipping lane that will have a strong impact on global supply chains. (AJOT)

US making efforts to reduce transportation costs & delays

    • The Inflation Reduction Act provides promising investments for offshore wind development, port infrastructure.
        • The legislation would push nearly $3.5 trillion into new American energy supply infrastructure over next the decade, supporting the ambitious goal to deploy 30 gigawatts of offshore wind power by 2030 to reduce the country’s carbon emissions. (MarineLog)
        • Billions of dollars are slated to be invested in domestic clean energy manufacturing and shipbuilding; supporting domestic production of offshore oil and natural gas.
        • Grants and rebates will be available to ports to purchase and install zero-emission cargo-handling equipment, providing that the equipment is not used to automate container terminals. Automation is a major factor in the current negotiations between the ILWU and USWC marine terminal operators. (FreightWaves)
    • Diesel prices are finally dropping – below $5 for the first time since March. (FreightWaves)
    • FMC Chairman says shipping lines should compensate shippers, truckers when forced to store containers due to port congestion.
        • In an effort to mitigate detention and demurrage costs as supply chains shift to avoid port congestion, delays, and more, the FMC is investigating reports of carriers charging per diem container charges, despite shippers and truckers being unable to return empty containers due to terminal congestion. (Splash 24/7)
        • Port of NY/NJ will implement a container imbalance fee for ocean carriers as part of its effort to handle record cargo volumes, effective September 1. The fee will target empty containers that have been stored at the port for long periods. (FreightWaves)

Low water levels exacerbate European transportation woes and energy crisis

Critically low levels throughout Europe’s waterways are impacting the continents’ trade and energy production.

    • Rhine water levels at key chokepoint, Kaub, are forecast to drop below 40cm (just under 16 inches) early on August 12. At this level, most barges hauling goods like diesel and coal are effectively unable to transit the river. Levels are set to continue dropping – another 3cm the following day, to 37cm.
        • Some shallow-water barges will still be able to navigate the Rhine at Kaub. With chronic rail congestion and more than 110 trucks needed to carry the same load as the average barge coupled with rising gas prices, switching modes of transportation can be complicated.
        • Many companies rely on the river to supply major industrial plants with fuels and raw materials. Shipments have already been hampered for weeks, with surcharges and load limits.
        • Further downriver, steelmaker Thyssenkrupp is closely monitoring water levels at Duisberg, near Cologne. The depth there is currently 173cm, with 150cm seen as the level that makes it uneconomical to transport heavier raw materials like coking coal and iron ore. (Bloomberg)
    • France and Italy are facing their own energy crises. In France, the Rhone and Garonne are too warm to effectively cool nuclear reactors. The crunch has led to commercial and residential water restrictions and limited the 52M tonnes of cargo that annually transit French waterways. In Italy, severe drought has caused the Po River to fall to its lowest level in 70 years, impacting much of the country’s hydroelectric power generation and agricultural production.
    • Water levels on the Danube, connecting central Europe with the Black Sea, are also dropping, hampering grain and other trade. (Bloomberg)

With international and local expertise, diligent risk assessment, and multi-modal capability, our teams will work with you to keep your cargo moving. Contact UTC today to develop a transportation strategy that works best for you.

UTC's experts are dedicated to providing you with the most innovative and cost-saving logistics solutions.

Contact us today!

Read More

July 2022 Industry Update

July 14, 2022
| No Comments
| Categories: Issue Briefing
UTC Overseas Industry Update July 2022 (white text over semi-transparent dark blue overlay). Background image: three tugboats directing a containership in waterway off the dock of port terminal.

July 2022 Industry Update

Worldwide labor negotiations and port congestion are taking hold as the peak shipping season approaches.

Here's what you need to know today.

    • Ongoing global labor negotiations affecting multiple forms of transport are already causing ripples through the supply chain
    • North America port congestion: major shift taking place
    • USWC facing crunches from rail, ocean & trucking sectors
    • OSRA 2022 goes into effect
Get in touch with UTC today to talk about your shipping needs

Ongoing global labor negotiations

India: the strike is over, but backlogs remain and capacity is tight.

    • Transportation workers at ports in Adani Kattupalli, Chennai, and Kamarajar went on strike July 4, demanding an 80% hike in fees due to rising fuel costs. Over 4,000 vehicles participated, resulting in a steep container backlog. The strike was called off on July 8 after port-user associations agreed to raise fares. (Crisis 24)
    • Fuel shortages and economic pressures are impacting operations at Sri Lanka’s Port of Colombo, which handles over 40% of Indian transshipment cargo. Truckers have reduced fleet capacity, and air and ocean carriers have diverted to alternate Indian destinations, where capacity is already tight. (The Loadstar)

Germany: Labor slowdowns and strikes affecting rail, port, and airport transportation personnel have resulted in an escalating backlog of cargo that is spreading throughout Europe.

    • German labor union, ver.di, and the Central Association of German Seaport Companies (ZDS) have gone through six rounds of negotiations with no agreement in sight. Among other issues, ver.di is negotiating with ZDS for an increase in wages of €1.20 ($1.27) per hour for nearly 12,000 employees, as well as a yearly automatic inflation adjustment. (Port Technology)
    • Dockers are planning a 48-hour strike starting at 6am on July 14, halting work at Hamburg, Bremerhaven, and Wilhelmshaven ports. Private terminal operators are participating based on their union affiliation, and shipper/consignees will be invoiced for detention and storage charges. (The Loadstar)
    • The union has previously held brief 8- and 24-hour warning strikes, contributing to the current build-up of cargo, rail congestion and low availability of containers. (CNBC)
    • Carriers have diverted ocean freight to the ports of Rotterdam and Antwerp to avoid delays. Experts anticipate the growing backlogs will take months to clear. (CNBC)
    • In recent weeks, ver.di has also called on technical workers at German airports to go on warning strikes, leading to thousands of canceled flights and adding to an existing airfreight capacity crunch. (Reuters)

North America port congestion

Backups at US ports continue, but the longest queues are no longer off the West Coast.

    • Backlogs have shifted to the East and Gulf Coasts, with Savannah, GA leading with the highest number of ships waiting to berth. Right behind Savannah is the Port of NY/NJ, with wait times upwards of 20 days, and yard utilization anywhere from 72% to 92%. Gulf Coast ports, compounded by chassis shortages, are seeing an increase in their number of offshore ships.
    • Canada's Vancouver port is seeing container dwell times increase due to record import volumes, intermodal delays, and forest fires in British Colombia. Yard utilization has reached 113% at the port resulting in ship dwell times increasing by 50%. (The Loadstar)
    • There are a total of 125 ships waiting to berth at North American ports - lower than January's number but higher than a month ago. It is estimated that a whopping $40 Billion in freight is sitting on these ships.  (FreightWaves)

USWC facing crunches from rail, ocean, & trucking sectors

Rail bottlenecks are building in California, and impending strikes and shutdowns could cripple the supply chain.

    • Class I freight railroads and rail unions have been tensely negotiating contract adjustments for nearly 115,000 workers since January 2020. Parties are currently in a 30-day “cooling off period” which will end on July 18. If they are unwilling to resume negotiations and the president does not intervene before 12:01am EDT on July 18, railroads and unions could opt for shutdowns or strikes. (Reuters)
    • The US Chamber of Commerce and business groups representing retail, food and fuel industries, have called on President Biden to step in to keep the supply chain moving smoothly. (FreightWaves)

Import container dwell time at Ports of LA/LB has increased, and the number of dwelling boxes has doubled since February.

    • The culprit? The number of long-dwelling containers moving by rail has been rising since March 2022 - just over 60% of long-dwell containers at LA are rail-bound. Container wait for rail is a little over 8 days for LA/LB resulting in a shift of volume to the East Coast to avoid delays. (CNBC)
    • A proposed $100/day fee for dwelling containers that has been threatening to go into effect since Nov 2021 has been delayed yet again, due to reports from LA/LB of a combined 31% drop in aging containers since Oct 2021. However, the total number of containers at the ports remains almost exactly the same (48,905 in Oct 2021; 48,932 in July 2022). (FreightWaves)

California's controversial AB5 law requiring companies to reclassify independent contractors as employees may upend the trucking industry.

    • Some companies have reacted by reducing the number of contractors, while others have started recruiting independent drivers as employees. California is home to 70,000 independent owner-operators. (FreightWaves)
    • Experts anticipate the port drayage sector may see the most disruption: more than 70% of the truckers serving Ports of LA/LB are owner-operators. (The Loadstar)
    • Hundreds of drayage drivers participated in port-wide protests and highway traffic slowdowns on July 13. (Supply Chain Dive)

As the peak holiday shipping season approaches, contract negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) are ongoing, and both parties have committed to continuing cargo operations without any stoppage.  (Logistics Management)


OSRA 2022 goes into effect

In June, Congress passed OSRA (Ocean Shipping Reform Act), the first overhaul of container trade regulations since 1998.

    • This gives the FMC more jurisdiction in monitoring unfair business practices by ocean carriers and marine terminal operators. (FreightWaves)
    • The legislation aims to curb improper invoicing by carriers for demurrage and detention, addresses equipment shortages, and prohibits carriers from declining export bookings. Several other topics are included in the ruling. There are questions about implementation that need to be clarified for parties to comply. (FreightWaves)

With international and local expertise, diligent risk assessment, and multi-modal capability, our teams will work with you to keep your cargo moving. Contact UTC today to develop a transportation strategy that works best for you.

UTC's experts are dedicated to providing you with the most innovative and cost-saving logistics solutions.

Contact us today!

Read More

Industry Update June 2022

June 16, 2022
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| Categories: Issue Briefing
UTC Overseas Industry Update April 2022: Global trade is shifting, and it's getting more difficult to transport cargo from Point A to Point B. Here's 5 things you need to know today.

Labor negotiations, looming energy crunches, and more lockdowns? Current events are changing the landscape for tomorrow's supply chain.

Here's 5 things you need to know today.

    • USWC labor negotiations
    • Freeport LNG explosion will have major ripple effect on global energy supply
    • China’s COVID-Zero policy & ongoing lockdowns
    • Uyghur Forced Labor Prevention Act: US CBP will start enforcing June 21
    • German labor negotiations
Get in touch with UTC today to talk about your shipping needs

Labor negotiation déjà vu: Are we in for a repeat of 2014-2015?

Contracts for over 22,000 port workers employed at 29 US West Coast ports will expire on July 1. Originally negotiated over nine tense months in 2014-2015, the negotiations resulted in work slowdowns and lockouts that sent a ripple effect through the supply chain. In late Nov 2021, the ILWU rejected an extension.

    • The ILWU and PMA have been negotiating since early May, with a brief 10-day break Both organizations have agreed to a media blackout. (The Loadstar)
    • In a joint statement on June 14, ILWU and PMA stated that they are both committed to reaching an agreement and keeping cargo moving without disruption during the negotiation process, as they expect talks to extend beyond the July 1 expiration date. (JOC)
    • Experts say that automation is the hot-button issue during these negotiations. The ILWU is opposed to automation, stating it will take jobs away. PMA advocates for automation to improve efficiency: in 2021, the ports of Long Beach and Los Angeles were ranked 369 and 370 out of 370. (World Bank Container Port Performance Index 2021)
    • Just before negotiations, PMA released a report on the benefits of automation, finding that automated terminals processed containers twice as quickly as conventional ones, while paid worker hours rose by almost one-third. (Supply Chain Brain)
    • Existing supply chain issues, like disruptions in rail service and shifting vessel schedules, along with the possibility of upcoming congestion, shortages, and slowdowns has led to more ships avoiding the USWC in favor of East and Gulf Coast ports. USWC ports handle over 40% of containerized trade with East Asia. (Supply Chain Brain)

As Summer Comes into Full Swing, Energy Crises Loom

    • After an explosion in an over-pressurized pipeline on June 8, Freeport LNG reported on June 14 that the facility is entirely offline, hoping to resume partial operations in 90 days. The plant expects to have completed all repairs and be fully operational by the end of 2022. Freeport LNG represents almost 20% of the US’ LNG processing capacity. (CNBC)
    • The plant had been operating close to full capacity, forgoing regularly scheduled maintenance to maximize output. The explosion impacted the pipe racks that transfer LNG to storage and dock facilities. No liquefaction trains, storage tanks, dock facilities, or LNG process areas were damaged. (NYT)
    • This will result in widespread energy crunches in Europe, where buyers have been seeking alternatives to Russian gas. In recent months, ~70% of Freeport’s exports have gone to the European Union and Britain. (Reuters)
    • The June 14 announcement that Freeport LNG would be offline until September was compounded by news of reduced LNG shipments to Germany via Russia’s Nord Stream pipeline due to planned maintenance. Europe previously relied on Russia for 40% of its gas supplies. (NYT)

China’s COVID-Zero policy continues to cause disruptions

Less than two weeks after lifting lockdowns, Beijing and Shanghai are imposing new restrictions and mass-testing measures, raising concerns that stricter lockdowns may once again be on the way.

    • Shanghai briefly placed the majority of the city on lockdown to conduct mass testing, causing residents to rush to stock up on basic supplies. (Bloomberg)
    • A survey of 130 US businesses with operations in Shanghai has revealed that many have resumed operations, but activity levels are far below normal (Bloomberg)
    • Truck flows in Shanghai had recovered by almost 80% since lockdowns were eased on June 1. However, many truckers are still cautious about traveling to certain regions, facing rigid requirements to produce a negative COVID test and traffic permit, (FreightWaves)
    • Experts anticipate USWC port congestion ahead and are already seeing measures taken to shift deliveries to East and Gulf Coast ports to avoid potential delays. Once Shanghai fully reopens, drayage rates in China will increase, resulting in a wave of cargo that could overwhelm the Post of Los Angeles and Long Beach. As logistics managers are moving more containers to the East and Gulf Coast, ports are adjusting for the anticipated increase with additional gate hours and pop-up container storage lots. (FreightWaves)

Uyghur Forced Labor Prevention Act: Imports from Xinjiang not welcome after June 21

Starting June 21, US Customs and Border Protection (CBP) will begin enforcing the UFLPA, banning all imports from Xinjiang Province, China from entering the US.

    • The UFLPA establishes a “rebuttable presumption” that all products imported from the region were produced using forced labor. (Material Handling & Logistics)
    • On June 13, CBP released Operational Guidance for Importers to prepare for UFLPA enforcement. The guidance specifies that all enforcement actions will be taken on a case-by-case basis; CBP will review each shipment to determine any ties to the Xinjiang Uyghur region or other use of forced labor. (JD Supra)
    • Prior to the June 21 enforcement deadline, CBP issued “known importer letters” to several importers who have previously imported merchandise subject to the impending presumption and ban to encourage them to take steps to address their supply chain before enforcement goes into effect. (Material Handling & Logistics)
    • Several Chinese manufacturers have responded to the crackdown by creating supply chains outside of Xinjiang to cater to the US market. However, this has been met with skepticism as it is well-known that Uyghurs are transported to various locations throughout China to work in factories as contracted labor and that other Chinese people outside of Xinjiang are also working under forced labor conditions. (Material Handling & Logistics, S&P Global)

German ports enter into contentious labor negotiations

Port employer Central Association of German Seaport Companies (ZDS) and ver.di, the union representing dock workers, are negotiating to hold off a strike that would disrupt already stressed operations.

    • Talks broke down over the weekend as the union was not satisfied with the offer ZDS brought to the bargaining table. In light of the rising cost of living in Germany, ver.di felt the offer was inadequate, while ZDS felt it was extensive. A new date for negotiations is expected to be announced in the next few days.
    • A warning strike was held for several hours on June 9. Given global supply chain disruptions, ZDS called the short strike “absolutely irresponsible.” Any further action by the union will impede the already strained supply chain in Northern Europe. Delayed ships are expected to arrive at German ports in the coming weeks, which will put further pressure on operations, and other European ports are heavily congested and unable to accept transshipped cargo.
    • The negotiations affect 12,000 workers at the ports of Hamburg, Bremerhaven, and Lower Saxony. (GCaptain)

With international and local expertise, diligent risk assessment, and multi-modal capability, our teams will work with you to keep your cargo moving. Contact UTC today to develop a transportation strategy that works best for you.

UTC's experts are dedicated to providing you with the most innovative and cost-saving logistics solutions.

Contact us today!

Read More

Industry Update April 2022

April 22, 2022
| No Comments
| Categories: Issue Briefing
UTC Overseas Industry Update April 2022: Global trade is shifting, and it's getting more difficult to transport cargo from Point A to Point B. Here's 5 things you need to know today.

Global trade is shifting, and it's getting more difficult to transport cargo from Point A to Point B.

Here's 5 things you need to know today.

    • Shifting port congestion & backlogs
    • Trucking in the US
    • KwaZulu-Natal Flooding
    • China's COVID lockdowns continue
    • Looking ahead: German Rhine water levels critically low
Get in touch with UTC today to talk about your shipping needs

Shifting port congestion & backlogs

As COVID restrictions, labor shortages, and consumer spending dominate the headlines, port congestion is not  disappearing – it is just shifting. A sobering report from Windward, the maritime AI company, indicates that 20% of the world’s containers are currently stuck in port congestion (Maritime Executive).

Congestion has eased on the USWC, but has shifted to Gulf and East Coast ports.

    • The slowdown in China is providing temporary relief to US ports on both coasts, as well as in Europe, but will likely be followed by a tsunami of deferred cargo once the lockdowns are lifted. (FreightWaves)

Sanctions against importing Russian goods have strained the European supply chain.

    • European ports, railroads and trucking junctions are seeing increased congestion since mid-February. Isolating, storing, and inspecting containers carrying Russian goods, has resulted in a backlog of over 4,500 containers.
    • Of all containers passing through Rotterdam, about 10% are linked in some way to Russia. About 30% of Russian crude oil, 25% of LNG, and 20% of oil products and coal are imported via Rotterdam. (Fortune)
    • Russia’s invasion of Ukraine and the EU’s resulting sanctions have led to production halts and components shortages for many companies, particularly automotive manufacturers and their suppliers. (Bloomberg)

Capacity remains tight and unpredictable in India; lockdowns in China are hampering local manufacturing and global trade.

    • The economic crisis in Sri Lanka is causing a severe shortage of container trucks (due to fuel scarcity) at Colombo Port, which handles the bulk of cargo transshipped in and out of the region. Several carriers are skipping the port, or will only accept shipments “Freight Prepaid,” due to a shortage of USD and the devaluation of Sri Lankan Rupee (LKR). Alternate ports of Mumbai and Vallarpadam are seeing increased volume due to diverted ships. (JOC, Logistics Update Africa)
    • Lockdowns in China are impacting manufacturing, production, and global trade. Windward, a maritime AI firm, estimates that 25% of all container ships are waiting offshore at Chinese ports (Maritime Executive). Import dwell times for containers at Shanghai marine terminals has increased nearly 75%. Export storage time has fallen. (FreightWaves)
    • More than 90% of trucks supporting import/export deliveries are out of action because of the restrictions. Slow cargo pickup has resulted in long container dwell times, leaving less room to place arriving import boxes. Decreased terminal efficiency is causing container vessels to wait at anchor to berth while others skip the port altogether.
    • Manufacturing hubs in Vietnam and Cambodia are suffering a shortage of Chinese components for manufacturing industries. Pharmaceutical companies in India, which source 70% of their active ingredients from China, are facing limited supplies. (FreightWaves)

Flooding in southern Africa has led to a backlog at the Port of Durban, with several carriers attempting to redirect to alternate ports. Alternate ports of Cape Town, Port Elizabeth and Ngqura handle significantly lower volumes and will likely suffer congestion as more ships are being redirected. (FreightWaves)


Trucking in the US

Several factors have contributed to a high spot truck rate: clean energy initiatives, increased diesel prices, increased salaries to attract truck drivers, maintenance and repair, and new purchase orders. In addition to the above, many carriers signed contracts in the first quarter at high rates to guarantee capacity. However, many experts state that we are at a peak and will see a trucking capacity glut in the second half of 2022.

    • Market volatility and higher fuel prices make it unclear how far or for how long truckload spot rates might drop. Declines in rates have been met by increases in fuel costs and surcharges that could affect truck capacity moving forward. (JOC)
    • Operating expenses have increased and the price of diesel is rising (FreightWaves, CNBC, FreightWaves)
    • March saw soft truckload volumes, an oversupply of trucking capacity, and a low rejection rate. (FreightWaves)
    • Consumer spending and operating costs are key factors in how this will play out. Experts anticipate that people will spend more on experiences than material goods as restrictions lift. However, even if consumer spending on physical goods decreases, if operating and maintenance costs continue to rise, it will cut into the anticipated spot rate decrease.

KwaZulu-Natal Flooding

Torrential downpour in KZN province triggered massive flooding and mudslides that have disrupted services at South Africa’s largest port, Durban. Several areas reported as much as 13 inches of rain in less than 24 hours, resulting in a devastating loss of life and wiping out critical infrastructure.

  • Port of Durban has resumed operations, but the 36-hour closure of the port resulted in a backlog of more than 23 cargo ships waiting at anchorage outside the port, and a backlog of between 8,000-9,000 containers, which will take between 5-9 days to clear. In addition to wiping out critical infrastructure providing access to the Port, floodwaters brought a variety of natural, household and industrial debris into the harbor, which was cleared after 72 hours of dredging. (US News)
  • Floods caused extensive damage to Bayhead Road, which handles 13,000+ heavy vehicles per day and links the port operations to the rest of the country. The damage to roads leading to the port, railroads, and warehousing facilities, is estimated to total 10 billion rand ($675m). Damage to the rail system could take up to eight weeks to repair fully. (M&G South Africa)

China's COVID lockdowns continue

With many cities in China experiencing the most extensive lockdowns since the initial outbreak in early 2020, carriers are shifting strategies to keep on schedule. The ripple effect of the lockdowns is being felt throughout the world:

    • COVID lockdowns are spreading as surges of new cases are affecting more cities. Guangzhou, Kunshan and Ningbo have all initiated partial lockdowns, mass COVID testing and/or other low-level restrictions.
    • Truck rates have soared. Due to restrictions, more than 90% of trucks supporting import/export deliveries are out of service. Special permits and negative COVID tests are required to get in and out of cities or enter certain zones, resulting in huge traffic jams at ports. There are reports of truckers waiting up to 40 hours at certain highway entrances to pick up cargo.
    • Lack of labor and cargo has caused air carriers to announce widespread cancellations, along with some ocean carriers skipping port calls to avoid delays. Experts anticipate ocean carriers may temporarily idle vessels or cancel outbound Asia sailings.
    • Many carriers are unloading temperature-controlled and dangerous goods containers at other ports due to lack of warehousing capacity in Shanghai; others are not accepting new bookings.
    • Rerouting cargo has become challenging as scattered outbreaks have led to a virtual ban on truck drivers transporting cargo from low-risk areas to medium- or high-risk areas. No cargo will be accepted if the driver has been to or picked up cargo from medium- or high-risk areas within the last 14 days.

 


Looking ahead: German Rhine water levels critically low

Barge transportation on the Rhine River is critical to Europe’s supply chain, linking German and Swiss industry with Rotterdam. Without significant spring rainfall, water levels may drop dramatically in late summer, causing a repeat of the crisis of 2018.

    • At the end of March, the water gauge stood at just 95cm at Kaub, a major chokepoint for barge transportation connecting north and south Germany. Typically, the river carries twice as much water at this time of year. Waterway traffic is already beginning to slow down due to unusually low water levels for this time of year after a mild and dry winter. (Bloomberg)
    • Energy plants are reporting shortages due to shipping restrictions on the Rhine. Current levels mean that a typical 110m barge carrying diesel fuel or chemical products can only transport about one-third of its capacity to avoid getting grounded.
    • A low water surcharge is imposed when water levels drop under 150cm, increasing the cost of freight significantly. An “extreme low water” alert is issued if it drops under 80cm. Traffic must stop if the water drops below 40cm.
    • Over 100 trucks would be required to replace the transportation capacity of a barge. With diesel prices rising and potential shortages looming, this could have an even larger impact than in previous years.

 

With international and local expertise, diligent risk assessment, and multi-modal capability, our teams will work with you to keep your cargo moving. Contact UTC today to develop a transportation strategy that works best for you.

UTC's experts are dedicated to providing you with the most innovative and cost-saving logistics solutions.

Contact us today!

Read More

Industry Update: 5 Ways Current Events are Re-Shaping Global Trade

March 24, 2022
| No Comments
| Categories: Issue Briefing

“Supply chain issues” has become a household buzz phrase. Ships waiting to unload cargo, workforce shortages and negotiations, capacity and warehousing issues – but what does it all mean when it comes to your cargo?

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
Get in touch with UTC today to talk about your shipping needs

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.

China's targeted lockdowns are in flux due to Omicron

  • 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)

The Russia-Ukraine conflict has resulted in many trade lanes being diverted or canceled across all modalities

  • 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.

Recent cyberattacks have crippled operations of several transportation firms

  • 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)

Looking ahead: Upcoming union negotiations threaten to strain the supply chain further

  • 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)

The bottom line: Getting your cargo from Point A to Point B is not as simple as it used to be. UTC can help. With international and local expertise, diligent risk assessment, and multi-modal capability, our teams will work with you to keep your cargo moving.

UTC's experts are dedicated to providing you with the most innovative and cost-saving logistics solutions.

Contact us today!

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Shipping Delays

June 29, 2021
| No Comments
| Categories: Issue Briefing
Featured image showing an jet airliner wing flying over several cargo ships

SHIPPING DELAYS CAUSING

WORLDWIDE BACKLOGS

The supply chain is strained, Back-to-School is here, & peak season is right around the corner.

Things will only get worse before they get better – which they will, just not this year. Orders keep increasing, and consumers keep buying, which would be great news if manufacturers, distributors, and retailers could stock enough goods to meet the demand.

Import Volumes Set New Records

  • The Port of Los Angeles will exceed 10 million TEU's this year, the largest volume ever recorded. They processed 1,004,222 TEU's in May, a 70% increase from last year, making it the busiest month in the Port's 114-year history.
  • Added volume is creating backlogs with ships waiting up to 16 days to berth. When a ship leaves port later than expected and arrives at the next destination late, it causes ongoing service disruptions.
  • National Retail Federation (NRF) VP for Supply Chain and Customs Policy Jonathan Gold commented in Lloyd's Loading List -  "There's no shortage of demand from consumers, but there continue to be shortages of labor, equipment, and shipping capacity to meet that demand. Supply chain disruptions, port congestion, and rising shipping costs could continue to be challenges through the end of the year."
  • US ports covered by the NRF Global Port Tracker reported 2.27 million TEU's in March, a record for the most containers imported during a single month since they began tracking in 2002.
Vessel Houston Express

Shenzhen's Yantian Terminal is wreaking havoc on the supply chain

  • The ports of Yantian, Shekou, and Nansha have all been impacted by Covid outbreaks. This resulted in reduced handling capacity at terminals since late May, when a 6-day stoppage on export containers was imposed.
  • With containers backing up at the Chinese ports, it is causing a trickle-down effect throughout China, Europe, and North America.
  • According to a Maersk advisory, some terminals in Yantian were operating at 30% capacity while others had to suspend service. As a result, ships were waiting up to 16 days to dock.
  • Demand for trucking increased as shippers looked to Shanghai and Ningbo as alternate ports. Some carriers bypassed Yantian only to find delays and equipment shortages at the alternate ports.
  • Yantian opened at full capacity June 24. But, as cargo begins to move off the docks, the backlogged volumes hitting European and US ports will strain their resources.
container imbalance

Container imbalance getting worse – where is all the equipment?

  • Equipment shortages will continue, and costs will rise for the rest of 2021 for containers and chassis.
  • Increased volumes are also straining the surrounding logistics infrastructure creating truck, rail, and warehouse shortages.
  • Port congestion in China, Southeast Asia, and the US is delaying container ships for weeks taking loaded containers out of service.
  • Container rates are surging because demand is outstripping the availability of the 20- and 40-foot boxes.
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After a brief reprieve, costs are increasing at higher frequencies

  • During the first few months of 2021, rates stabilized, although at a high level.
  • Rates are now increasing, and where carriers previously filed GRI's with the Federal Maritime Commission to take effect the first of a month, they are also applying for GRI's mid-month.
  • Carriers are offering premium service at a cost. The extra charges are assessed to guarantee loading and on-time delivery, but many times, cargo is still rolled, and schedule guarantees are unmet.

Widespread international delays are unprecedented in the industry

UTC Overseas is working hard to keep your cargo moving. Our representatives will work with you to find the most expedient methods of moving your cargo to its destination.

We offer these tips:

  • Plan ahead and book as early as possible
  • Consider using less congested ports
  • Stay in constant contact with UTC for updates on availability and rates
Download the full report here

We value the trust you have placed in us and are committed to working hard to service your business. Please contact us so we can assist with your transportation, customs, and logistics needs.

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