Shipping Updates

Docked container ship at dusk with dock cranes in the background

Logistics Market Update – September 2022
Logistics Market Update – September 2022 1920 615 Transmodal

While the pandemic isn’t really over, in a lot of aspects, it is. Life is returning to a slightly skewed version of our pre-pandemic norms. So what’s up with the supply chain? Why are we still dealing with such widespread disruptions?

First off, little disruptions and ripples have always been relatively easy to course-correct. But the hits have just kept coming over the last few years, with no time for correction before the next hit. Add to that the state of the world—think geopolitical events such as the war. Even raising costs and an unstable economy adds to the current state of the supply chain.

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There’s been a significant increase in rail system volume on the China-Europe route. The reason behind this is mostly due to port congestion, which is pushing up demand for trucking options. The China State Railway Group reports that there was a total of 1,517 Silk Road trains running in July, a year-on-year increase of 11%. There’s also a 12% increase in volume.

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Ports in Europe faced increased wait times thanks to the situation at Felixstowe. An 8-day strike in August had a ripple effect across the region since carriers opted to avoid the port and divert to others. German ports, which were already dealing with labor issues of their own, faced significant increases in congestion, with Hamburg hitting a peak of 42 hours at Bremerhaven.

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Despite a turbulent year, the air cargo industry has seen some significant highs. Most notably, there were 23 carriers and service providers who achieved the Quest for Quality gold this year for their achievement in maintaining world-class service levels.

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Finally, it seems that the sky-high demand in container shipping is dropping. While rates are still up, this can be attributed to the general chaos in the industry and port congestion. Rates between November 2020 and January 2022 maintained a level of about 10% higher than capacity, but as of June, this number has dropped down to 2%.

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Cargo waiting to be loaded on cargo plane in the background

Logistics Market Update – August 2022
Logistics Market Update – August 2022 1920 615 Transmodal

The industry is used to hearing news about port congestion and ships loitering as they wait for berths—at least at the West Coast ports of Los Angeles and Long Beach. But the tide has shifted. As carriers try to escape the backlog in the west by moving to the east, the problem has followed along like an albatross. The Ports of Houston and New York now have as many containerships waiting for berths as Los Angeles and Long Beach combined.

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The summer saw still more lockdowns in China as COVID fears continued. Fortunately, Shanghai’s two-month-long lockdown was lifted and with it some speculation that leadership may relent—at least to some extent—on their zero covid policy. There is no escaping the impact on their economy, and manufacturers are becoming increasingly vocal about leaving the country and near-shoring production back to the US and Europe.

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According to a survey of 233 senior procurement executives done by Ivalua, nearly all procurement leaders—97% of them—say they are facing significant disruption in the direct materials supply chain. 67% say they have little to no confidence in existing technology, and 84% say modernization needs to be a priority.

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The Biden Administration is considering a relief package that will roll back some of the tariffs that were previously imposed on China during the Trump Administration—which raised prices on everything from diapers to clothing and furniture. The expectation is that a modest list of tariff suspensions will tamp down inflation.

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The FMC has a bit of a conundrum. Back in June, a vote was passed, giving them more power to handle allegedly unfair business practices carried out by ocean carriers and marine terminal operators. But now they’re saying they don’t have enough staff to enforce reforms. According to FMC Commissioner Carl Bentzel, “We have major rulemakings we’ll be starting in the short term but very few people to do the work, so we’re wrestling with that.”

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