Tianjin placed under partial lockdown due to Omicron crisis. Over the weekend, the Omicron variant broke out, causing the port city of Tianjin, near Beijing, to go into partial lockdown. Exit restrictions have been implemented, and extensive testing is currently ongoing throughout the city. Ningbo, the world’s largest port, has had three partial lockdowns in the last six months. MSC is anticipated to further solidify its position as the world’s largest container line throughout the course of 2022, with a confirmed vessel orderbook of nearly exactly 1 million TEU, the largest of all carriers. Maersk reported in China that vessel calls and departures from Covid-19-affected Ningbo are regular, although trucking activities near the port are still disrupted due to a partial lockdown of the city.
ONE container ship loses containers in the Atlantic Ocean. While on way to New York, a containership operated by Ocean Network Express (ONE) experienced a container collapse in the Atlantic Ocean. The incident occurred on board the M/V Madrid Bridge, according to ONE. The disaster occurred on Jan. 7, about 0800 UTC, while traveling from Singapore to New York, USA. According to the ship’s owner, Kawasaki Kisen Kaisha Ltd (K Line), there were no casualties and no containers with dangerous goods were lost. It is uncertain how many containers were lost overboard or collapsed on deck. The ship is currently on its way to New York.
Taiwan’s major liner operators raise capacity ahead of the Chinese New Year. Following in the footsteps of its South Korean equivalent, the Taiwanese government has urged domestic ocean liners to secure adequate container shipping slots for local exporters. Evergreen, Yang Ming, and Wan Hai, the island’s three major liner operators, will increase capacity this month to accommodate increased demand as exporters scramble to transport products before the lunar new year holiday begins on February 1.
International Trade Administration’s (ITA) new trade chief takes charge. Marisa Lago was sworn in as the undersecretary of commerce for international trade on December 28. In this position, she will lead ITA, which assists U.S. businesses in entering or expanding into international markets, enforces fair trade laws, promotes U.S. products and services abroad, conducts in-depth trade analyses, develops strategies that will shape the future of international trade, and engages in commercial diplomacy around the world.
As Omicron rises, America’s busiest port complex struggles. Infection rates are fast climbing among dockworkers at the ports of Los Angeles and Long Beach, just as marine facilities are attempting to ramp back up following worker absences over the holidays. According to the Pacific Maritime Association, which arranges terminal labor, some 800 dockworkers were off ill for Covid-related causes at the start of this week. This equates to around 10% of the roughly 8,000–person daily workforce required for container moving in Southern California. Terminal operators claim that with such low personnel levels, they will struggle to reduce the backlog of around 100 container ships waiting to offload at the ports.
Congestion Dwell Fee for Ports of LA, LB postponed again. The 10th delay comes as the ports of Los Angeles and Long Beach have again delayed their “Container Dwell Fee,” this time until Jan. 17. The fee was earlier scheduled to go into play on Monday, Jan.10. Since the fee was announced on Oct. 25, the two ports have reported a 45% decrease in aged cargo on the docks. After another week of monitoring data, the executive directors of both ports indicated they will continue to examine the rollout of the fee.
Flight cancellations delay airfreight deliveries. Canceled flights have dramatically cut aircraft capacity and interrupted expedited shipment operations, giving airfreight forwarders a rocky start to the New Year. Though cancellations have decreased in recent days, airlines have suspended thousands of flights in recent weeks due to winter weather and personnel shortages caused by an increase in Covid-19 cases. The cancellations have caused delivery delays and increased transportation costs for merchants and manufacturers looking to fly products across congested maritime ports around the world.
Asia’s air freight demand remains strong. The Asian air freight market remained resilient in November, with volumes continuing to rise compared to levels in 2019. According to the latest data from the Association of Asia Pacific Carriers (AAPA), cargo demand at the region’s airlines climbed by 16.5 % year on year during the month and remained higher than in the pre-pandemic months of 2019. After accounting for an 11.8 % year-on-year increase in provided freight capacity, the international freight load factor remained “elevated,” averaging 73.2 % for the month.
FedEx air shipments delayed as Omicron variant leads to staff shortages. The spike in COVID infections caused by the omicron variant, as well as adverse weather that has prompted passenger airlines to cancel thousands of flights, is now impacting FedEx Express operations. The package and freight carrier warned on Friday that staffing issues in its aviation network due to increased illness rates among pilots and ground employees, coupled with harsh winter weather events, are impeding deliveries.
Canada requires all truck drivers and essential workers be fully vaccinated starting January 15. Prime Minister Justin Trudeau is moving forward with a vaccine mandate for foreign truckers, despite mounting criticism that it would worsen driver shortages and raise the cost of products imported from the U.S. As part of its effort against COVID-19, Canada will begin requiring all truckers coming from the U.S. to produce proof of immunization starting on Jan. 15. According to the Canadian Trucking Alliance (CTA), this might force 16,000, or 10%, of cross-border drivers off the road.
Diesel prices rise by 4.4% to $3.657 a gallon. According to Energy Information Administration (EIA) data released Jan. 10, the national average price of diesel increased 4.4 cents to $3.657 per gallon following seven consecutive reductions. The main fuel used by trucks today costs 98.7 cents higher per gallon than it did in 2021 at this time. Diesel prices increased in nine of the ten regions covered by the EIA’s weekly study. The West Coast, excluding California, saw the greatest rise of 7.5 cents. Gains of at least 5 cents were also recorded on the Gulf Coast and Lower Atlantic. Only the Rocky Mountain area fell, by 2.1 cents.
Companies increasingly relying on long-distance trains. Long-distance railway freight shipments between China and Europe, which were once uncommon, have become considerably more popular during the pandemic as businesses looking for alternatives to congested and expensive air and sea routes. Rail shipments are especially popular among businesses that need to transport perishable or time-sensitive items but do not want to pay for air freight. Containers can travel by rail between Europe and China in as little as 20 days, but a voyage by sea might take up to 70 days due to pandemic disruptions.
Union Pacific (UP) eliminating peak-season rail surcharges. According to a company advisory reported by JOC.com, Union Pacific Railroad will cancel peak season surcharges on excess domestic intermodal contract loads that were as high as $5,000 per container, beginning Sunday, Jan. 9. The move indicates that domestic intermodal congestion in theuU.S. has significantly improved in recent weeks.
Rail unions ‘disappointed’ with vaccination requirement judgment. Efforts to block the adoption of a COVID-19 vaccine mandate on Chicago’s commuter train system were unsuccessful last week when a federal court denied two rail unions’ pleas to suspend it. The U.S. District Court for the Northern District of Illinois, Eastern Division, denied a preliminary injunction sought by the Brotherhood of Locomotive Engineers and Trainmen (BLET) and the Transportation Division of the International Association of Sheet Metal, Air, Rail, and Transportation Workers (SMART-TD) to halt Metra’s vaccine mandate. The court ruled that instead of going on strike, the unions must reach an agreement with Metra on the vaccination.
China enforcing shutdowns due to Covid-19 surge. With Covid-19 spreading across China, key industries are closing plants, ports are congested, and personnel is in short supply as the government enforces city lockdowns and mass testing on a scale not seen in nearly two years. The likelihood of further disruptions in the world’s second-largest economy, which has adopted a zero-tolerance approach to tackling the virus, is raising concerns that the disruptions will spread across the global economy. Companies such as memory chip producer Samsung Electronics Co., German automaker Volkswagen AG, and a textiles firm that supplies Nike Inc. and Adidas AG are already experiencing production delays.
New global supply meter indicates some relief on the horizon. Bloomberg reported on Jan. 5 that the Federal Reserve Bank of New York has developed a new Global Supply Chain Pressure index that pulls together 27 variables that measure everything from cross-border transportation costs to country-level manufacturing statistics in the euro area, China, Japan, South Korea, Taiwan, the U.kK., and the U.S., to assess the effect of supply chain disruption events. The gauge also indicated that supply chain stresses are expected to ease in the future.
White House announced new plan for fair and competitive supply chain for meat and poultry. The Biden Administration recently produced a fact sheet describing its proposal to promote a more equitable, competitive, and resilient meat and poultry supply chain. The White House intends to facilitate meetings between stakeholders and the Administration, to commit $1 billion of American Rescue Plan funds to expand independent processing capacity, to strengthen rules to protect U.S. agriculture and consumers, to promote competition through efforts such as a new joint initiative between the DOJ and the USDA, and to increase market price transparency.