COVID-19 Latest Updates

Georgia Governor Declares Supply Chain State of Emergency, Airlines Drop Mask Mandate After Federal Judge Ruling, Biden Administration Requires U.S. Produced Materials Be Used for Infrastructure Projects

By April 21, 2022 No Comments

Ocean

Chinese lockdowns may have lasting impacts on supply chain disruptions. The spread of COVID cases and city lockdowns in China may have massive effects on global supply chains that could have further reaching impacts compared to previous disruptions since the start of the pandemic. Shanghai, one of the largest manufacturing centers in China, home to the largest container port in the world and a major airport that serves inbound and outbound air cargo continues to be under strict lockdown. According to Freightwaves, most warehouses and plants in the city remain closed, trucks are sidelined, the port and airport are running at limited capacity, and freight is continuing to pile up, leading to extreme shipping delays. 

AP Moller-Maersk A/S has stopped shipping refrigerated containers into Shanghai. The news comes as a result of a strict Covid lockdown stalling the delivery of meat and seafood from the port into the city. Maersk says the port is reportedly running out of electric plug slots to keep refrigerated containers cool, while trucking remains limited and terminals are congested. The company has stopped all new deliveries of refrigerated goods and some hazardous cargoes into Shanghai until further notice and is waiving charges for customers to change the destination of their frozen goods already sailing to Shanghai.

Ever Forward refloated in Chesapeake Bay. Aided by two barges, five tugboats, and a full moon, the Ever Forward was finally refloated on Sunday morning after spending more than a month stuck in the muddy Chesapeake Bay. The ship’s hull will be examined by marine inspectors before the Coast Guard allows it to return to the Port of Baltimore to retrieve the containers that were offloaded during attempts to refloat the vessel.

CMA CGM notifies shippers it will no longer carry plastic scrap. According to a customer alert, CMA CGM will no longer accept plastic waste onboard any of the CMA CGM Group’s ships beginning April 15. During the One Ocean Summit in February, the carrier made the original announcement about its commitment to prohibit plastic waste. According to the February statement, the restriction on transporting plastic waste aboard its ships “will prevent this type of waste from being exported to destinations where sorting, recycling or recovery cannot be assured.”

Ports

Chinese carriers shipping more empty containers than loaded exports. According to CNBC analysis of exclusive trade data, two Chinese carriers are shipping more empty export containers than loaded exports out of the Port of Los Angeles and the Port of Long Beach, two of the largest ports in the U.S. CNBC analyzed the container data for 2020 and 2021 from the ports, as well as U.S. Customs and IHS Markit PIERS import-export data, which tracks U.S. Customs cargo shipping records. OOCL, headquartered in Hong Kong, and its parent company, COSCO, headquartered in Shanghai, are the top two carriers that transported more empty containers than loaded U.S. exports out of the ports.

Cargo volumes increase at Port of Los Angeles. The Chinese shipping backlog and rising dwell times are posing a threat to the rebound of the Port of Los Angeles. On Tuesday, port and union leaders expressed confidence in their ability to handle a potential surge. Cargo volumes were up in March, with 958,674 TEUs crossing the piers. The port ended Q1 with volumes up 3.5% YoY.

Trucking

Texas inspection order rescinded over border gridlock. After a week of heavy backlash and fears of economic losses, Texas Gov. Greg Abbott repealed his immigration order that backed up commercial trucks at the U.S.-Mexico border. The order had briefly required all commercial trucks from Mexico to undergo extra inspections with the intention of reducing the number of illegal immigrants and drugs entering the state. It ended up causing wait times of more than 30 hours for truckers to cross the border. 

Georgia governor declares supply chain state of emergency. Georgia Gov. Brian Kemp has declared a “supply chain state of emergency”, becoming the first governor to do so. Governor Kemp’s executive order goes into effect Saturday and runs until May 16. The order will ban price gouging on goods and services and will allow trucks with a gross vehicle weight of up to 95,000 pounds and with a maximum width of 10 feet to operate on Georgia’s state and local roads. The order does not apply to trucks operating on the parts of the interstate highway system that run through Georgia.

Rail

Union Pacific (UP) and BNSF addressing congestion and backlog issues. Union Pacific and BNSF are reducing the number of railcars in their network in order to reduce congestion and address problems caused by labor shortages and increased inventory levels. UP will reduce the number of its cars and plans to meter traffic beginning April 18 if shippers don’t voluntarily reduce inventory, according to a letter to customers. In a statement to Supply Chain Dive, the railroad said that potential limitations on traffic would not affect intermodal as “major international intermodal terminals remain fluid.” BNSF will instead work with private railcar owners and internal system fleet managers to reduce inventory levels. The railroad is confronting “challenges in generating significant overall velocity, inventory level, and fluidity improvement,” according to an April intermodal update.

CSX Transportation set to acquire Pan Am Railways. The Surface Transportation Board (STB) approved the acquisition of northeast US short-line operator Pan Am Railways by CSX Transportation.  STB says that “various side deals with Norfolk Southern Railway and passenger railroads allay anti-competitive and service concerns.” The ruling allows CSX to add 1,200 miles of track throughout New England to its existing 19,500 miles of track across 23 states. CSX has pledged to spend $100 million on upgrading the Pan Am tracks. Related agreements to give competitor NS access to east-west tracks “would not likely result in a substantial lessening of competition, creation of a monopoly, or restraint of trade.”

CF Industries criticizes Union Pacific’s (UP) plan to reduce rail congestion. Fertilizer producer CF Industries is saying that the plan made by Union Pacific to reduce the number of railcars on UP’s network in order to reduce congestion would result in delays to customers’ shipments during the spring application season. CF Industries said that as a result, it would be unable to accept new sales involving UP for the foreseeable future. In a service update on Monday, UP stated that it would be “removing 2% to 3% of UP-controlled cars from the network across multiple commodity groups to maintain fluidity and reduce inventories on the system,” according to Freight Waves. 

Air

Airlines drop mask mandate after federal judge ruling. After a federal judge’s ruling in Florida, various airlines including United, American, Southwest, Delta, Alaska, and others said they were dropping their face mask requirement effective immediately. The mask mandate had been set to expire Monday, but the Centers for Disease Control and Prevention announced last week that it would keep it in place until May 3 to “allow more time to study the BA.2 omicron subvariant of the coronavirus,” according to USA Today.   

Shanghai air cargo diversions causing more freight issues. Airfreight is being diverted from Shanghai’s Pudong airport as a result of lockdowns, causing China’s other major airports to become clogged, and resulting in a shortage of pallets for exports. Zhengzhou Airport (CGO) in the central Henan province has been hit the hardest by the shortage because of the volume of cargo diverted there from Shanghai.  Zhengzhou also began a two-week lockdown last weekend, causing even more freight issues.  

Silk Way West Airlines expands network with additional U.S. routes. The Baku-based freight operator Silk Way West Airlines has started a new weekly service from Baku to Cincinnati/Northern Kentucky International Airport (CVG) running one of its B747-400 freighters. Aircargo News reports that the service is operated with Crane Worldwide Logistics and is set to include 80 inbound and 80 outbound flights this year. The new operations will contribute 14,400 tons of cargo at CVG. During the summer months, activity will ramp up to two flights a week.

Cathay Pacific cargo throughput drops significantly due to capacity reductions. Cathay Pacific’s traffic figures for March 2022 report that the airline carried 97,166 tonnes of cargo last month, an increase of 16.6% compared to March 2021, but a 47.5% decrease compared with the same period in 2019 due to capacity reductions in response to Covid quarantine requirements.

International

Oman port looking to expand capacity to account for increased container volumes. Oman’s busiest cargo port is looking to begin expansion projects to handle increasing container volumes. The Port of Salalah maxed out its handling capacity last year at a record 4.51 million TEU, up 3.% from 2020. The Journal of Commerce reports that as a result, the port is “currently operating at 100 percent capacity,” according to Mark Hardiman, managing director at Salalah. Growth is expected to continue in 2022 and beyond and the port is looking to add approximately 1.5 million TEU of annual handling capacity, bringing total capacity at Salalah to 6 million TEU. 

Major African port damaged in flood. Extreme rains and subsequent flooding have halted operations at South Africa’s main port. Bloomberg reports that operations at the Port of Durban were suspended Monday night after the eastern city received 307 millimeters (12.1 inches) of rainfall within 24 hours. Durban is sub-Saharan Africa’s largest port and handles about 60% of South Africa’s shipments. The port also transports goods and commodities to and from nations in the region as far north as the Democratic Republic of Congo. 

Other

Biden administration requiring U.S. produced materials be used for infrastructure. The Biden administration has issued requirements for how projects funded by the $1 trillion bipartisan infrastructure package source their construction material. The guidance requires that materials purchased for infrastructure projects must be produced in the U.S. In anticipation of potential inflation or supply issues, the rules also set up a process to waive those requirements if necessary. AP News reports that “President Biden hopes to create more jobs, ease supply chain strains and reduce the reliance on China and other nations with interests that diverge from America’s.”

Johnson & Johnson settles opioid lawsuit for $99 million. In a settlement finalized on Monday, West Virginia will receive $99 million from Johnson & Johnson’s subsidiary Janssen Pharmaceuticals Inc. over the company’s role in perpetuating the opioid crisis in the state. West Virginia Attorney General Patrick Morrisey said that he believes the settlement is the largest in the country per capita with Johnson & Johnson’s Janssen. The drugmaker has faced litigation in dozens of communities throughout the U.S. regarding opioids. 

Amazon to implement fuel and inflation surcharge for fulfillment services. Beginning on April 28, Amazon will implement a 5% fuel and inflation surcharge on its fulfillment services for third-party sellers. The surcharge is a first for Fulfillment by Amazon and comes after Amazon raised fees in January to help offset increased operating costs. Amazon says that “It’s still unclear if these inflationary costs will go up or down, or for how long they will persist. Rather than a permanent fee change, we will be employing a fuel and inflation surcharge for the first time—a mechanism broadly used across supply chain providers.”

Recent developments amid Russia-Ukraine crisis:

EU Countries to ban Russian ships from national ports. Both Italy and Bulgaria have started to ban Russian vessels from their national ports as part of the latest round of Ukraine-related European Union sanctions against Russia. They are making exceptions for food and energy goods, among others. As of Sunday, Russian ships are banned from Italian ports, according to a statement from Italy’s Coast Guard. The Wall Street Journal reports that the sanctioned ships already in Italian ports “can remain in port until the completion of their commercial activities, at which time they will have to leave.” Bulgaria’s government said Saturday that the country had also begun implementing the port ban.