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Los Angeles and Shanghai To Build World’s First Green Shipping Corridor, Millions Mention Supply Chain on TikTok and Instagram, Freight Disrupted and Rerouted Due to Canada Protests

By February 3, 2022 No Comments

Ocean  

Suez Canal penalty adds to Indian shippers’ pricing concerns. Indian shippers, who have already been hit hard by rising freight costs, must contend with additional Suez Canal surcharges. Mediterranean Shipping Co. (MSC) has begun charging a $75-per-TEU fee for containers transported from India to North Africa via its services. Although MSC’s move appears to be the first recorded instance, industry experts predict that other liners may follow suit in the following days, given that the Suez Canal Authority’s transit tolls for boats are set to rise by 6% starting next month as part of a tariff review for 2022.

Los Angeles and Shanghai partner to build the world’s first green shipping corridor. Having followed on from the COP26 initiative to establish zero-emissions shipping “corridors” between like-minded nations, Los Angeles and Shanghai announced a collaboration of cities, ports, shipping companies, and cargo owners to establish a first-of-its-kind “green shipping corridor” on one of the world’s busiest container shipping routes. The partnership, which includes shipping giants Maersk, CMA CGM, and COSCO Shipping Lines, calls for a roadmap by the end of this year and the beginning of the transition to zero-carbon powered ships between Shanghai and Los Angeles by 2030.

Customs

Customs Business Fairness Act gains congressional support. The NCBFAA Legislative Committee’s persistent lobbying on Capitol Hill has succeeded in the Customs Business Fairness Act (H.R. 4186) receiving its 21st congressional co-sponsor. Last Monday, Rep. Kathy Castor (D-FL) became the 21st congressional co-sponsor of H.R. 4186. The full list of the 21 co-sponsors may be seen here. The Customs Business Fairness Act of 2021, H.R. 4816, seeks a technical adjustment in bankruptcy rules to safeguard customs brokers who have paid duties to CBP on behalf of importers who later declare bankruptcy.

President Bidens says he is ‘not there yet’ on lifting tariffs against China. The U.S. President is considering reducing part of the Section 301 tariffs on Chinese imports, but stated in a recent press conference that “we’re not there yet.” Biden recognized pressure from business organizations in the U.S. to begin reducing tariffs, which have cost importers billions of dollars since they were introduced in 2018. However, he stated that he wants to see China “meet… more of their promises” under the Phase 1 trade agreement signed by the two nations in 2020 before taking such action. Meanwhile, importers of products subject to China’s Section 301 tariffs have a variety of proven and legal options for efficiently avoiding or mitigating their effects.

Ports

The Port of Charleston is becoming increasingly congested. The supply chain bottleneck that has hampered other regions of the country has reached the Port of Charleston in recent weeks, with a restoration to normalcy in this age of pandemic-induced import spikes not likely for at least another month. Last week, more than a dozen container ships anchored off the coast of South Carolina, waiting for berth space at the Wando Welch Terminal in Mount Pleasant, where 27,000 import containers — more than double the average quantity — are taking up space required for inbound ships to offload their goods.

Ports of LA-LB to revisit Container Dwell Fee Feb. 4. The ports of Los Angeles and Long Beach have continued to postpone their “Container Dwell Fee,” and have stated that they would contemplate imposing it on Feb. 4. Since the fee was announced on Oct. 25, the two ports have reported a combined decrease of 67% of aged cargo on the docks. Following a week of monitoring data, the executive directors of both ports will review fee implementation. Fee implementation has been delayed by both ports since the program’s inception, but it remains a threat to the industry.

USDA supports new Oakland container yard for agricultural shipments. The U.S. Department of Agriculture (USDA) is partnering with the Port of Oakland to build a new container yard to handle agricultural loads via the port. In its latest move to boost exports of locally grown agricultural products, the agency said it would offer financing to create the yard and financial subsidies to producers who use the facility.

Long Beach and Los Angeles ports set annual freight volume records. Dockworkers and terminal operators transported a record-breaking 9.38 million containers in 2021, breaking the previous high of 8.11 million set the previous year. In all, the port transported 9,384,368 20-foot equivalent units (the average size of a shipping container). The value represents a 15.7% rise over 2020. Imports grew 14.6% each year to 4,581,846 TEUs, while exports fell 2.6% to 1,437,916 TEUs. Empty container traffic increased by 27.5% to 3,364,606 TEUs. Similarly, the Port of Los Angeles moved almost 10.7 million TEUs last year, a 13% increase from 2020, a record-breaking year. The ports transported more than 20 million TUEs in total, more than any previous year in history.

Air

FedEx increases transatlantic freight capacity with new call in U.K. FedEx Express has introduced a flight from the U.K. to the U.S. to meet rising e-commerce demand on both sides of the Atlantic. The B777 cargo trip departs four times each week from Charles-de-Gaulle (CDG) Airport in Paris, France, and connects to hubs at East Midlands Airport (EMA) in the U.K. and Indianapolis (IND) in the U. S. The aircraft adds 284 tonnes of capacity to FedEx’s transatlantic network each week, with little more than 72 tonnes allocated to the UK.

Qatar Airways is Boeing’s first client for 777X freighter. Qatar Airways has struck an agreement to be the first client for Boeing’s next-generation 777X freighter, which is still in development, committing to acquire 34 of the widebody aircraft. In addition to its commitment, the Middle East airline said that it had options for 16 more freighters and inked a deal for up to 50 737-10s, the biggest 737 MAX single-aisle passenger plane. Qatar will convert 20 of its 60 orders for 777X passenger aircraft to the 777-8 freighter as part of the deal. Qatar is also purchasing two current-production 777 freighters in order to provide customers with speedier access to aircraft and satisfy consumer demand. Boeing stated that the freighter contract is worth more than $20 billion at current list pricing and is the largest freighter commitment in Boeing history in terms of value. The new freighter is scheduled to be delivered in 2027. Additionally, Qatar Airways has placed a fresh order for GE9X engines as part of a global launch order for up to 50 Boeing 777-8 freighters.

FedEx suspends economy service in U.S. due to omicron spike. FedEx has temporarily suspended its Economy Domestic FedEx Freight service citing an “explosive surge of the Covid-19 Omicron variant,” according to the company. According to FedEx Express, the increase in Omicron cases has resulted in a temporary lack of available crew members and operational employees in the FedEx Express air network. As a result, it has halted the service, which includes FedEx 2Day Freight and FedEx 3Day Freight. FedEx International Economy Freight pick-ups, on the other hand, began on Monday, January 31, after being suspended.

January sees increase in volume of marginal air freight. According to the most recent market study by CLIVE Data Services, general air cargo volumes in Jan. 2022 registered a 0.1% rise in chargeable weight compared to Jan. 2021. While the “global airfreight supply chain remains fragile,” volumes were also 0.2% higher than the pre-pandemic Jan. 2019 level, according to CLIVE. Cargo capacity in Jan. 2022 was down 4% compared to the first month of 2019, but up 6% compared to Jan. 2021. CLIVE’s ‘dynamic loadfactor,’ which analyzes both the volume and weight perspectives of cargo flown and available capacity, was 62%, 1 percentage point higher than in Jan. 2019, but 6 percentage points lower than in the same month last year. Airfreight prices were high, at +156% in Jan. 2022 vs Jan. 2019, compared to the pre-Covid level, however, this was the first time in six months that the gap with pre-pandemic costs decreased month over month, following December’s +168% increase. Last month’s air freight prices were +41% higher than in Jan. 2021.

Trucking

Texas trucker sentenced to prison for transporting unauthorized migrants. A Texas truck driver was sentenced to federal prison for more than three years for unlawfully carrying 51 undocumented migrants in a tractor-trailer. According to the U.S. Department of Justice, Rene Garcia, 28, of San Benito, Texas, pled guilty in August to charges connected to transporting unauthorized migrants originating from a case in May. According to a statement, a U.S. district court in Corpus Christi, Texas, handed down the sentence last week after considering Garcia’s recent conviction for transporting undocumented migrants in another case.

Diesel rises 6.6% to $3.846 per gallon. According to Energy Information Administration (EIA) statistics data posted on Jan. 31, the national average price of diesel continued to climb, rising 6.6 cents to $3.846 per gallon. The cost of trucking’s primary fuel has increased by 23.3 cents in the last four weeks, after falling by 12.1 cents from Nov. 15 to Jan. 3. The price of a gallon of fuel has risen to its highest level since August 4, 2014, when it hit $3.853. A gallon of fuel now costs $1.108 higher than a year ago. According to the EIA’s weekly survey, fuel prices increased in all ten areas. The Gulf Coast had the most significant increase, rising 7.7 cents to $3.608 per gallon. California saw the smallest increase at 3.8 cents to $4.862, though they still have the highest diesel prices out of all regions.

New Jersey Department of Transportation (DOT) provides truckers with real-time traffic alerts. New Jersey has created a traffic-alert system that uses Drivewyze to inform commercial trucks of possible safety hazards on 600 miles of state roadways. Intelligent Imaging Systems (IIS), through its subsidiary Drivewyze Inc., and transportation and data analytics business INRIX formed a joint venture. New Jersey joins North Carolina in introducing the new traffic-alert system. Commercial truck drivers will receive notifications two to three miles before a slowdown using Drivewyze software through an app or in-cabin alarm system, helping to avert secondary collisions. In addition, subscribed drivers will receive notifications as they travel within the borders of New Jersey, including highways, the Atlantic City Expressway, the Garden State Parkway, and the New Jersey Turnpike.

Canadian police take action against truck roadblock at U.S.-Canada border. Officers from the Royal Canadian Mounted Police (RCMP) have started an enforcement operation against a roadblock of commercial trucks and other vehicles at the U.S.-Canada border in Coutts, Alberta, protesting COVID-19 restrictions since Saturday. The RCMP said it conducted the move after failing to reach a deal with the protestors and warned anyone who remained that they may be arrested. While the original roadblock was planned in part to protest vaccination regulations for truckers at the border, it trapped scores of cross-border drivers near Sweet Grass, Montana, and forced them to abandon their vehicles.

Freight being rerouted due to border protest between U.S. and Canada. As COVID-19-related trucker protests at one remote border crossing continue to delay freight coming from the U.S. into the province of Alberta, U.S. trucking companies are beginning to impose embargoes on freight bound for certain markets in western Canada. The international border crossing between Sweet Grass (also known as Sweetgrass), Montana, and Coutts, Alberta, is the flashpoint. It is the eighth-largest U.S.-Canada border crossing point in terms of southbound truck traffic. After five days, the vaccination mandate protest is now driving U.S. and Canadian truck shippers to reconsider how they move freight to and from Western Canada, causing supply chain delays and increasing transportation costs. Rerouting freight on the fly across border crossings in Washington state to the west or east in Washington state will be costly for shippers and carriers, adding hundreds of miles to routes and increasing overall per-mile expenses.

See exclusive photographs from Canadian trucker protest in Ottawa. When truckers and others converged on the Candian capital in the “Freedom Convoy” to oppose the government’s vaccine mandate, Nate Tabak was on location and snapped several photographs. Click here to see the images. All rights reserved by Freightswaves.

Lack of transportation capacity causes inventories to rise. The Logistics Managers’ Index (LMI), a survey assessing supply chain activity, had a rating over 70 for the 12th consecutive month, indicating a “strong increase.” The rise was driven by a buildup of inventory throughout the supply chain and a lack of transportation capacity to turn it swiftly. In January, the LMI rose 1.8 percentage points to 71.9. A score of more than 50% implies growth, whereas a reading of less than 50% suggests contraction. In January, the subindex for inventory levels increased by 9.5 points to 71.1, the fastest pace of rising since early 2018. The dataset has risen 12.3 points in the last two months. During the month, the inventory costs index increased by 3.9 points to 87.9.

Rail

Union Pacific Railways (UP) plans to build world’s largest battery-electric locomotive freight fleet. UP revealed aims to build the world’s largest battery-electric freight locomotive fleet. UP will buy 20 battery-electric locomotives from Progress Rail and Wabtec Corp. to test yard operations. According to UP officials, the total acquisitions and yard infrastructure modifications are estimated to surpass $100 million, signifying the greatest investment in battery-electric technology by a U.S. railroad.

Alabama to expand intermodal capacity in Montgomery. The Alabama Port Authority is constructing an inland container intermodal transfer facility in Montgomery to expand rail service northeast from the Port of Mobile. The port made the announcement after the Board of Directors approved a $2.042 million property acquisition. The first phase of the 272-acre complex is expected to cost $54 million and take up to two years to complete. According to the port, the project would restore regularly scheduled CSX Intermodal service to the Port of Mobile, and the Class I railroad will pay up to $12.5 million in infrastructure enhancements. In addition, among other businesses, the Montgomery facility will serve Amazon’s new 650,000-square-foot inbound cross dock distribution center and Hyundai Motor Manufacturing Alabama’s (HMMA) newly enlarged manufacturing plant.

Other

It’s Chinese New Year (CNY). The logistics sector is bracing itself for further supply chain disruption as CNY began this week. Feb. 1 marked the start of the Year of the Tiger, with the national CNY holiday being observed from Jan. 31 to Feb. 6. CNY has always provided a significant strain to supply chains, and this challenge is now being exacerbated by continued container and driver shortages, air and ocean capacity bottlenecks, global restrictions imposed by quickly changing COVID-19 regulations, the Beijing-based 2022 Winter Olympics, and China’s electricity rationing. After the holiday, the gradual return to full capacity – with people returning to work at different times – means that the speed of orders, manufacturing, and shipping takes four to six weeks to return to normal. While ports in China remain open during public holidays (albeit at a significantly reduced capacity), factory closures mean that commodities cannot be delivered to or from the port.

Such circumstances are never ideal. However, as your business adjusts, know that Navegate is always ready to assist you in making sense of it all. ​​To set processes in place to enable a resilient supply chain, or if you have any concerns or need assistance with compliance, make sure to contact our global trade experts. Navegate is here to get your supply chain moving forward, faster.

Robot-powered restaurant built to reduce COVID exposure during Winter Games in China. China has created a robot restaurant for the Winter Olympics next month to minimize contact as part of the event’s efforts to decrease coronavirus infections. Advanced robotic technology is used throughout the restaurant from the kitchen to the table for athletes and media personnel attending the Beijing Winter Games. The delivery procedure uses a system of ceiling-mounted rails to autonomously transport guests’ meals from the kitchen to their table. Video footage also shows in the kitchen where a robot prepares a burger meal and rice dishes, with a serving hatch providing another route of collecting. To see the robot-powered restaurant in action, watch the video below.

United Parcel Service Inc. (UPS) increases dividend 49% as fourth-quarter profit and revenue climb. UPS generates more money by sending fewer parcels and rewarding shareholders with a higher dividend distribution. As a result, the delivery company increased its quarterly dividend by 49%, or 50 cents per share, the greatest rise since the company went public in 1999. The $1.52 per-share distribution reflects the company’s new strategy under CEO Carol Tomé of returning half of the earnings to shareholders through dividends.

China reinforces borders with a ‘Southern Great Wall,’ citing Covid-19. According to public papers, official comments, and interviews with locals, a massive structure of barriers along China’s 3,000-mile southern border is underway, allegedly to combat Covid-19 but with likely long-term repercussions for trade and travel. In the last two years, the little Chinese city of Ruili, located in the deep south near Myanmar, has experienced a massive development project. It is a border barricade that is outfitted with barbed wire, surveillance cameras, and sensors.

Aluminum prices just aren’t keeping pace with energy costs, resulting in wave of closures. Tensions between the U.S. and Russia over Ukraine are increasing a disturbance in the aluminum industry, which rising power prices have battered in recent months. In the last six months, aluminum prices have increased by 24% to more than $3,100 per metric ton, reaching a decade high. The threat of a Russian invasion of Ukraine has exacerbated the situation. Russia is one of the world’s largest aluminum producers, and traders are concerned that a war may disrupt its shipments.

Hundreds of millions of posts on social media platforms like TikTok and Instagram inspired by global supply problems. In the fourth quarter of 2021, there were approximately 2.2 million mentions of “supply chain” on Twitter, about five times more than in any quarter in 2019 before the pandemic. From penned signs at grocery stores to hundreds of thousands of messages on social media, as supply-chain disruptions, bottlenecks, and container-shipping backlogs become part of the shared experience throughout the world, it has become a catch-all excuse. Shortages of everything from appliances to produce to critical medical equipment are giving people all across the globe a crash education in manufacturing and transporting goods.

Virgin Hyperloop One aspires to revolutionize freight transportation. Virgin Hyperloop aims to use battery-powered pods gliding through enclosed tubes at speeds of up to 670 mph to expedite the global supply chain. According to Ryan Kelly, Virgin Hyperloop’s vice president of marketing and communications, the business is in talks with airports and port facilities throughout the world to develop a pilot program for cargo transportation services. The Virgin Hyperloop pilot would most likely start by connecting airports to logistics warehouses or one airport cargo facility to another.

Qualcomm reports strong earnings as chip demand remains high. Qualcomm Inc. reported solid quarterly results and issued an enthusiastic sales forecast, indicating that demand for chips in everything from smartphones to automobiles remained robust. “Demand is high across all of our technologies and continues to outstrip supply,” Qualcomm CEO Cristiano Amon said during an analyst call. Supply constraints are easing, but bottlenecks are anticipated to continue, he added.

Sam’s Club deploys inventory-checking robots to all locations. Sam’s Club, a Walmart-owned membership retailer, disclosed in a news statement that it is introducing robotic inventory-analysis technology to all of its almost 600 locations across the U.S. The system, which is based on software created by the artificial intelligence startup Brain Corp, will be installed on autonomous floor-cleaning equipment that is currently in use at Sam’s Club sites. Sam’s Club is implementing the labor-saving technology at a time when retailers are increasing their use of automation to address persistent challenges in hiring and retaining workers.

Coffee drinker? Due to severe weather and supply chain issues, your morning cup of joe will cost more. Extreme weather and supply-chain interruptions are pushing up expenses for coffee distributors and roasters, who are passing the cost on to consumers. Arabica coffee futures finished 2021 up 76%, the highest yearly percentage increase since 2010, following a year in which drought and frost ravaged Brazil, the world’s leading coffee-growing region, all during the pandemic. The price increase is trickling down to local coffee shops, where increased charges for beans, syrups, and to-go cups are pushing menu markups. Nestlé expects to increase prices this year, and J.M. Smucker says interruptions prompted it to raise pricing for coffee sold under the Dunkin’ Donuts, Café Bustelo, and Folgers brands. Higher transportation and freight costs are also contributing to the coffee spike, with the Baltic Dry Index rising 62% in 2021, the most since 2016. Weather impacts, together with supply-chain snarls, are expected to keep prices high in 2022, according to investors.