+1.713.869.9939
[gtranslate]
Get A Quote
Menu
Industry Update Aug 2022

Tag: Labor Negotiations

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
| 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.

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