Ocean
Container rates and volatility in the supply chain industry continue. The average price for a container under standard FAK pricing from Asia to the U.S. West Coast exceeded $10,000, while the rate for the East Coast exceeded $13,000. As the second half of 2021 continues, shippers on major trade routes from Asia will not see any space relief or decreased air or ocean freight rates, according to the CEO of DSV Panalpina. If you have any questions about trends in the market, don’t hesitate to contact one of our experts.
Vietnam continues to combat COVID-19 with lockdowns, halting supply chains. Due to a COVID-19 outbreak, truck delays, factory closures, and disrupted sailing schedules are becoming more rampant. The lockdown in Vietnam has been extended to the end of August. In Ho Chi Minh City at the Cat Lai port, authorities have suspended operations and stopped handling all transship cargo. This suspension is expected to last for at least two weeks. Yard density at the port has also been at capacity with lower operational productivity because port staffing and truck capacity is at 50% capacity. More than 80 vessels are waiting for berth right now outside the port, and shipments out of the Cat Lai and Cai Mep ports are seeing delays between 3 to 5 days.
Due to this outbreak in Vietnam, there are fears that similar situations could be spread across China where the COVID-19 Delta variant has now spread across 15 provinces with mass virus testing closing off major parts of cities. While there currently aren’t major factory closures, if outbreaks aren’t brought under control, there could be even more lasting impacts to the supply chain industry.
Customs
CBSA Border Service Officers go on strike in Canada. As a result of an impasse in negotiations between Canada and CBSA’s union, the officers are in a legal strike position. However, 90% of officers are considered essential, meaning that they will still perform work as the strike takes place. Because of the strike, businesses may experience an increase in border wait times, but CBSA has plans in place to mitigate any disruptions.
Customs will not impose restrictions on wooden cabinets. After a recent investigation, CBP has found that there’s no substantial evidence that Chinese-origin merchandise has been shipped through Cambodia through evasion, which is what prompted the investigation. As a result, CBP will reverse any actions taken with entries covered by the Enforce & Protect Act (EAPA) investigation.
FMC Commissioner Rebecca Dye presents eight recommendations to improve supply chains. These recommendations can be found in a PDF document online and include ways to improve supply chains amid port congestion and the ongoing COVID-19 pandemic. Dye has said these recommendations will help the FMC minimize barriers to private party enforcement of the Shipping Act, clarify commission and industry processes, and encourage shippers, truckers, and other stakeholders to assist commission enforcement actions.
Ports
Port of LA-LB experiences vessel bunching, excessive dwell times, and chassis shortages ahead of peak season. Terminal operators at the port have said that bunching has begun as ships delayed during the Yantian port closure finally arrived at the West Coast port at the same time as ships from other routes arrived. Terminals are also rapidly filling at capacity because of excessive dwell times and rail containers awaiting sufficient trains and cars to move them out of Southern California. Due to congestion at inland terminals, railroads have been forced to meter shipments from the area, further contributing to the congestion.
At the Port of Seattle-Tacoma, the Northwest Seaport Alliance (NWSA) prepares to open a second surge yard. This second surge yard will be for shippers, importers, exporters, and terminal operators who require space in the harbor area for the temporary storage of containers and chassis. West Coast ports have developed a dire need for more space like this as imports have reached record or near-record volumes.
Air
Korean Air flies 10,000 cargo-only flights on pax planes as COVID-19 closes borders. As of August 1, Korean Air has operated 10,000 cargo-only flights on former passenger planes, carrying approximately 40 tonnes of goods each trip. The airline has increased its capacity to carry cargo, currently operating 800 cargo-only flights a month and mainly transporting equipment for the COVID-19 pandemic.
Trucking
LA-Chicago truck rates soar as imports surge. As intermodal delays and port congestion generate more truck demand, outbound truckload spot rates from Southern California rise above national averages. With a robust retail environment and port volumes that are expected to stay high for the remainder of 2021, truck rates are likely to continue rising steadily and strongly as well.
Rail
Union Pacific (UP) raises California surcharges for the second year in a row and tar-0gets Portland shippers. Over the next two weeks, UP will increase spot rates for hundreds of lanes in the western U.S. and Mexico, including raising charges out of California to $5,000 starting August 8. This hike is the second year in a row UP has implemented such an increase for low-volume shippers. UP has said these rates increases are necessary because the railroad continues to “see increasing demand for domestic container capacity.”
Additionally, UP also increases surcharges for shippers out of Portland. The railroad will levy additional fees ranging from $500 to $1,000 per container. A high-volume shipper will be charged $500 if it exceeds volume commitments and $1,000 for a high-volume shipper. This move comes once again as shipper demand for capacity increases. Like the California surcharge, this rate increase will be effective August 8.
Norfolk Southern Railway (NS) unveils an incentive for easing congestion in Chicago and Kansas City. NS is issuing a $200 incentive per container for customers that plan to reduce the heavy backlog of freight the railroad is seeing at two of its largest intermodal terminals: Chicago and Kansas City. In a customer advisory, NS outlines that the incentive will be effective September 1 for customers who retrieve a container after dropping one off on at least half of the truck visits made over a three-month period.
