COVID-19 Latest Updates

Maersk Invests in Air Freight Expansion, White House to Launch Supply Chain Dashboard, Multi-billion Loan Program Approved for CA’s Ports

By November 4, 2021 No Comments

Ocean  

Crews clean up debris from Zim Kingston cargo ship as the search continues for more missing containers. Of the 109 shipping containers that fell off the Zim Kingston near the Strait of Juan de Fuca last week — up from the 40 originally reported — four of the containers washed up on Vancouver Island, British Columbia’s northwest coast. The Zim Kingston has hired crews to clean up the debris on the beach. The search for the remaining 105 shipping containers is ongoing.

Rates for container shipping are likely to remain volatile for some time. According to consultancy Vespucci Maritime CEO Lars Jensen, the global container shipping sector is entering a period of volatility that will last far beyond the present peak shipping season. Bottlenecks causing severe congestion throughout North America’s supply chain will eventually be eliminated, but Jensen predicts this will most likely happen in the second half of 2022. ​​

Bottlenecks possibly lasting until 2022 is good news for investors. Slow capacity improvement, a shortage of containers and truckers, and the ongoing semiconductor chip crisis, which has constrained new truck manufacturing for last-mile deliveries, are all likely to keep shipping bottlenecks in place until at least 2022. For shipping and logistics industries, these disruptions have caused countless issues. But, this may be good news for investors who have seen container line stock prices soar in the 18 months since the pandemic began.

Ports

Harbor Commission approves program to speed up cargo flow at LA-LB ports. The Long Beach Board of Harbor Commissioners approved the adoption of a new fee on ocean carriers, with the aim of speeding cargo movement from the Port of Long Beach’s marine facilities during a record increase in shipments. The emergency Container Excess Dwell Fee program goes into effect on Nov.1. The price won’t be charged until Nov. 15. The board of the Port of Los Angeles passed a similar measure. The cost applies to every container that has been in storage for nine days or longer and is planned to be moved by truck. If a container is traveling by rail, the price is charged if it has been sitting for six days or more. Until the container departs the terminal, the price increases by $100 per container each day. 

Gov. Newsom and U.S. Department of Transportation (USDOT) announce multi-billion loan to help California’s congested ports. Gov. Gavin Newsom and U.S. Transporation Secretary Pete Buttigieg announced a strategic partnership to support $5 billion infrastructure improvements in California. The funds most likely won’t help alleviate the severe congestion that is currently causing chaos on seaports, but the two say that updating the ports, as well as the truck and rail infrastructure that serves them, will help prevent future logistical disasters. ​​

Air

Maersk purchases Senator International to further air cargo capabilities and global footprint. With the acquisition of freight forwarder Senator International and the addition of five planes to its Star Air cargo fleet, the top ocean freight carrier, AP Moller Maersk is expanding into the air cargo sector. According to DVZ, a sister publication of Air Cargo News, the acquisition is worth eight times the adjusted operating profit (EBITDA) predicted for 2021, equivalent to a $644 million enterprise value. The merger is expected to be approved in the first half of 2022.

Top 20 air cargo hubs taking on a difficult market. According to Airports Council International (ACI) World data, global passenger traffic at the world’s top 10 busiest airports fell 45.7 % in 2020, but volumes in the top 10 cargo hubs increased 3% to 30.6 million tonnes last year, accounting for 28% of global throughput. The overall 2020 freight volumes for the top 20 cargo hubs were down 3.6% to 47.7 million tonnes. In 2021, airfreight received a modal shift bonus due to congestion in ocean freight ports, scattered empty containers, and inconsistent sailing schedules 

Air cargo increased by about 8% over pre-pandemic levels. According to the International Air Transport Association (IATA), air cargo operators are benefiting from growing consumer demand, with cargo volumes up 7.7% in August compared to the same month last year. This is a somewhat lower rate of increase than the 8.8% reported in July, but it is still a very good result.  In terms of commercial flight passenger volume, the Transportation Security Administration (TSA) reports that daily traffic is recovering after the Delta-affected summer months. Still losing half a million daily passengers compared to last year, the 50-day moving average indicates an upswing. 

As passengers return, transatlantic air freight capacity is set to grow. Forwarders foresee increased cargo volumes in the transatlantic air freight sector when U.S. authorities lift the travel restriction on Europeans and airlines add extra bellyhold space to passenger planes. This capacity growth could also help to lower rates, which were already high during the pandemic’s peak. Meanwhile, American Airlines Cargo has stated that capacity will be increased following the announcement of new services between Heathrow and nine U.S. destinations beginning next month.

Trucking

Trucking jobs in Florida in high demand. Thousands of trucking jobs in Florida remain unfilled, according to the Florida Trucking Association (FTA), and a nationwide driver shortage is adding to supply chain issues that are driving up prices and increasing delivery times ahead of the holidays. To entice applicants with commercial driver’s licenses (CDL), trucking companies are paying up to $15,000 in sign-on bonuses. All types of drivers are in high demand, but long-haul trucking has the greatest need. Some tax collectors and state agencies are offering extended hours, weekend hours, prioritizing CDL appointments, and scheduling tests directly with third-party testing providers to meet the increased demand for testing. The FTA is hoping to attract more women to fill the void left by men accounting for almost 90% of all truck drivers.

The price of trucking’s major fuel continues to climb. According to data released Nov. 1 by the Energy Information Administration (EIA), the national average price for diesel increased 1.4 cents to $3.727 per gallon. Although the price of diesel continues to rise, the increase is minor in comparison to other hikes, such as the 10.9-cent increase on Oct. 11. The cost of a gallon of trucking’s major fuel is now $1.355 higher than it was in 2020. In the EIA’s weekly survey, diesel prices rose in all ten regions, with the biggest increase of 5.1 cents in California and the smallest increase of three-tenths of a cent in the Gulf Coast.

Majority of $127 million SuperTruck 3 funding goes to Paccar, Daimler, Volvo. Paccar Inc., Daimler Trucks North America, and Volvo Group North America were awarded the majority of the $127 million in government SuperTruck 3 funding to develop innovative battery-electric and fuel-cell electric truck projects. General Motors Co. and Ford Motor Co. also received funding to develop Class 4-6 medium-duty projects. The Department of Energy (DOE) has allocated $199 million to 25 initiatives aimed at reducing pollution from vehicles and trucks on the road.

Supply chain recovery is hampered by a lack of drivers. The trucking industry is trying to get drivers into seats at a time when the supply chain most needs them, but many reasons, according to the American Trucking Association (ATA), are preventing the industry from gaining traction as the gap between the number of drivers available on the market and the number needed to meet freight demand will reach a new high of just over 80,000 in 2021. That figure has risen from the ATA’s forecast of 60,000 drivers at the start of 2020.

Rail

Norfolk Southern Railway (NS) is reducing free time to make room for international boxes. Because ocean ships are staying too long and clogging the facilities, NS will cut free time for importers in almost 30 smaller-market terminals by half next month. In addition, starting December 15, NS will increase demurrage rates in 27 locations. The price for the first two days of demurrage is $200 per day, after which it increases to $215 per day. For the first five days of demurrage, the price is $100 per day, then $200 per day after that. The bump after two days, rather than five, is intended to encourage speedier runs, according to the railroad. 

Canadian Pacific (CP) receives a CA$15 million grant for hydrogen locomotive conversions. Emissions Reduction Alberta (ERA) has awarded Canadian Pacific a CA$15 million (US$12.1 million) grant to develop its hydrogen locomotive program. The funding would double the number of hydrogen locomotive conversions from one to three, as well as expand hydrogen production and fueling facilities. The funding from ERA’s Shovel Ready Challenge program is a 50/50 match, with CP (NYSE: CP) contributing half of the funds.

Other

Dashboard to be launched by White House to track supply chain crises. The White House website is launching a new Supply Chain Dashboard that will monitor progress in reducing the import backlog that has accompanied the economy’s recovery from the coronavirus shutdowns. The dashboard will be updated every two weeks.

UPS shippers should prepare for increased surcharges in 2022. According to a source close to the situation, UPS will increase its fuel surcharges by 1% on all of its U.S. air and ground services starting Nov. 15. The updated fuel surcharges, which were included in UPS’ 2022 price tables recently announced, will be added to the company’s base cost as well as any of the 12 different delivery surcharges applicable to a specific shipment. In 2022, almost all of UPS’ surcharge levels will increase, which means that normal UPS shippers’ overall expenses might increase by double digits. 

Train or Truck? Ship or Plane? Which method of transportation should you choose? Inbound Logistics offers some solid advice on how to transport goods in both normal and unusual circumstances. Do you need some guidance or have questions regarding which mode of transportation is ideal for your freight? We’ve got you covered! Get help from a Navegate expert to help move your supply chain forward, faster.