Freight Market Updates

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Supply Chain Trends to Track for the Rest of 2021

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Supply Chain Trends for the Rest of 2021 As we approach mid-year, what remains clear is the supply chain industry has witnessed a lot of changes since last March. The...

Celebrating Women’s History Month

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Celebrating Women's History Month For Women's History Month, Navegate is taking the opportunity to honor and celebrate women leaders who have made strides in the supply chain and logistics industry....

Black Leaders Who Revolutionized the Supply Chain & Transportation Industry

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Black Leaders Who Revolutionized the Supply Chain & Transportation Industry In honor of Black History Month, we’re celebrating Black figures who revolutionized the supply chain and transportation industry — an...

What’s New in Our Navegate Emerald Software

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What's New in Our Navegate Emerald Software and What It Means for You If there’s one thing 2020 has taught us, it’s that we should always expect the unexpected, especially...

Typhoon Chanthu Hits China, Tropical Storm Nicholas Prompts Port Restrictions, & UP Raises Surcharges

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Ocean  

Typhoon Chanthu hits Shanghai and Ningbo-Zhoushan in China, causing more supply chain disruptions and more confusing shipping schedules.  In a region with two of the world’s top five ports, Typhoon Chanthu has made landfall, bringing torrential rains and causing power outages. As the typhoon approached China, it weakened, but still prompted officials to close the Ningbo and Shanghai ports, an area with the densest concentration of container port infrastructure on earth that handles more than 70 million TEU worth of container traffic every year

Vessel schedules are likely to see heavy delays as the week continues. This typhoon is the latest event to cause supply chain disruptions, after COVID-19 forced port closures at Ningbo and most notably, the Yantian International Container Terminal in Shenzhen. If you have any questions about vessel schedules out of China, don’t hesitate to contact one of our experts.  

CMA CGM halts spot rate hikes through January of 2022. As the market heads into a congested peak season with record container prices, CMA CGM has suspended all spot rate hikes until February 1, 2022. This suspension comes as an effort to prioritize long-term customer relationships in an unprecedented situation for the shipping industry. 

Unprecedented import volumes are expected to continue well into 2022. As COVID-19 continues, congested warehouses fill up, containers continue to sit at ports, a lack of vessel capacity, and a shortage of chassis, it’s expected that import volumes won’t slow down until after the Lunar New Year in 2022

Customs

Adjustments to the 2022 COBRA Customs user fees and limitations will start October 1. Customs implemented adjustments to some COBRA customs user fees in the Certification and Production environments, which will be fully implemented on October 1. Some adjustments include changing minimums and maximums for Merchandise Processing Fees and changing the fee for informal entry or release. View the list of changes in a notice from the Federal Register online.  

Ports 

Tropical Storm Nicholas prompts ports to enact restrictions. The Port of Houston is prohibiting inbound ship movements, but full port operations should be resumed. There are potential flooding and power outages in the area, which may increase hold times. As the week goes on, the storm will weaken to a tropical depression as it continues through Texas and Louisiana. 

Baltimore receives new cranes for a berth expansion project. The Port of Baltimore received four all-electric cranes last week and will put them into commission in early 2022. This is the final step that’s necessary to open a second berth and enable the port’s Seagirt Marine Terminal to handle post-Panamax vessels simultaneously.

Air

Typhoon in China forces flights from Shanghai to be canceled and cause more supply chain disruptions. Due to a typhoon that has brought heavy rain to China’s east coast, Shanghai’s two airports have canceled nearly 80% of all flights, causing more delays and disruptions to already congested supply chains and ports. 

Trucking 

Trucking rates rise in the Northeast amid a cargo shift from LA-LB. In the last six weeks, trucking rates have risen out of the Northeast, which is the result of a spike in demand from shippers using the Port of New York and New Jersey to avoid the congestion at LA-LB. The increase in demand for truckloads is to increase “supply chain velocity and move the goods inland closer to the point of consumption.” 

Rail

Union Pacific (UP) raises surcharges in Los Angeles, Dallas, and Houston. For the fifth time this year, UP raises surcharges again in Los Angeles and will implement charges in Houston and Dallas for the first time in recent years. These surcharges will be effective September 19 and are due to capacity struggles and higher chassis dwell and domestic container times.  

Other

Exporters have written to President Biden urging the administration to do more to solve the supply chain crisis. They urged the President to take steps like supporting the new Ocean Shipping Reform Act and provide federal support for the deployment of port and national data-sharing portals. Read more about this situation in an article by the Loadstar

Port of New Orleans Reopens, U.S. Ports Expect Logjams to Extend Into 2022, & Shanghai Airport Still Sees Delays

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Ocean  

Mediterranean Shipping Co. (MSC) expands connections on India-US network. The carrier had said that its Indus 2, an eight vessel premium string, will now include a direct call at the Port of Halifax, Canada. This expansion will further propel the carrier’s ability to tap growing demand and will add competitive transit times, serving customers who wish to ship cargo to Toronto and midwestern U.S. cities. 

Carriers increase capacity on the Asia-US trade routes. By deploying more extra loaders and several new weekly services, carriers are increasing capacity on Asia-US trade routes. It’s expected that there will be approximately 22% more capacity to the U.S. West Coast through December, with 14.4% more to the U.S. East Coast. However, this capacity is strained by the current level of congestion at Asian hubs and U.S. gateways, and due to ongoing demand, U.S. marine terminals may not be able to handle continued growth and future surges. 

Ports 

Port of New Orleans reopens. After Hurricane Ida shut down the port and left it without power, the port has now resumed vessel operations, with power restored to the terminal. Stay tuned for additional updates regarding the hurricane’s impacts.   

The Ports of Los Angeles and Long Beach are preparing for 20 million TEU this year. As peak season cargo arrives to the port’s complex, it is likely that the complex will hit a record-breaking 20 million TEU. Terminal operators will still handle this load despite vessel bunching, excessive container dwell times, and increasing truck turn times. The ports are also counting on the expansion of the Long Beach Container Terminal (LBCT), which will add 1 million TEU of annual capacity and more space for container storage.  

U.S. ports expect shipping logjams to extend into 2022. With record imports arriving to U.S. ports, port executives across the U.S. are expecting a crush of container imports beyond the holidays. The number of vessels waiting at Southern California’s ports is increasing, with more logjams stretching into warehouses and other distribution networks. It’s also expected that the slowdown in container volumes that usually coincides with the Lunar New Year is not expected to offer much relief. 

The Port of Philadelphia’s marine terminal suspends vessel service to clear container backlog. At the Port of Philadelphia, the main container terminal will not service ships through the rest of this week. The facility is striving to clear a backlog of containers that has caused high trucking turn times. There is also a limited number of chassis and railcars, which is stalling the ability to clear the backlog.

Air

Shanghai Pudong International Airport is still seeing delays due to COVID-19. After more than two weeks of breakout COVID cases closing one of the airport’s two terminals, disruptions at China’s largest airport are still prevalent. The Pudong Air Cargo Terminal isn’t fully operational with strict quaratine rules imposed on ground staff. Some airlines still have flights coming in, but cargo is still sitting at the port. 

Amazon will invest $125 million in air cargo facility at Newark Airport. Retailer Amazon recently announced an agreement with the Port Authority of New York & New Jersey to revitalize two existing industrial structures along Newark Liberty International Airport. While no renderings have been not been released yet, the air cargo facility is expected to generate more than 1,000 jobs and has the potential to grow the airport’s workforce by 5%. 

Trucking 

Hurricane Ida disrupted trucking capacity on a much larger scale than predicted, raising spot rates. Beyond the Gulf Coast and the Louisiana area, the storm affected unstable market conditions as holiday imports to the U.S. are on the way. This instability will likely continue and not diminish, with shippers likely to see truckload spot rates rise higher than expected as new lanes will be sought out to move goods. 

Rail

Canadian Pacific Railway (CP) gives Kansas City Southern (KCS) an ultimatum. The CEO of CP has said that the company will walk away from the merger unless a deal is reached with KCS by September 13. 

Ocean Schedule Reliability Keeps Declining, Hurricane Ida Stalls Supply Chains & Ports, & CSX Restricts Domestic Container Flows in Chicago

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Ocean  

Ocean schedule reliability keeps declining. Due to ongoing supply chain disruptions such as COVID-19, severe weather events, and ongoing port congestion, the weekly late notifications from shipping lines for shipments exported out of China rose 32% since the beginning of August. At the ports of Shanghai, Ningbo, and Yantian, delays are growing past three days, and the overall supply chain delays are growing from weeks to months. 

Meishan Island International Container Terminal (MSICT) at China’s Ningbo Port has officially reopened. Two weeks after the facility closed due to a COVID-19 outbreak, the port’s terminal has reopened, and truckers can begin picking up containers. The reopening of this port reassures shippers that the disruptions related to this closure will not be as severe as the Yantian Port closure in late June. Vessels displaced from MSICT, however, are now calling at other terminals at the port, which is also adding more congestion. 

Vietnam’s lockdown continues, stalling supply chains and slowing production. Nearly 60-70% of manufacturers have halted production in Ho Chi Minh City because they weren’t able to meet the standards to stay open as COVID-19 outbreaks continue. This has resulted in booking cancellations, and the strict lockdown in Ho Chi Minh City will continue until September 14. Severe equipment shortages are expected when these factories open up in the upcoming weeks. 

Ports 

Hurricane idea halts operations at NOLA port. Since Hurricane Ida hit the Gulf Coast, the New Orleans Port has been closed, and there is no clear indication when the port will reopen. Lack of power at the terminal continues to hinder the ability to reopen for operations.

The following ports will be closed on Labor Day (Monday, September 6, 2021): Charleston, SC; Houston, TX; Long Beach & Los Angeles, CA; Mobile, AL; Norfolk, VA; Oakland, CA; Savannah, GA; Seattle/Tacoma, WA; Wilmington, NC.  

Surges in holiday orders congest vessels at U.S. ports. At New York-New Jersey, there are some slowdowns during the pre-holiday peak as there is an uptick in berthing delays. It remains mostly free of vessels sitting at anchorage, however. At LA-LB, container lines are also struggling to find space with holiday orders congesting the port. Terminal operators at the ports say they can only accept ad hoc calls, not regularly weekly services. The number of container ships at LA-LB is nearly 5 times more than pre-COVID levels, and these capacity constraints are expected to continue until the first half of 2022.

Drayage boycott increases congestion at Port Miami terminal. At least half the drayage providers at Port Miami terminal are refusing or limiting the pickup of import boxes at one of the port’s three container terminals because of delays facing drivers. These delays come from high volumes hitting the South Florida Container Terminal.

Air

COVID causes more cancelled cargo flights at Shanghai’s airport. After the detection of more COVID cases at Shanghai Pudong International Airport, many freight forwarders are not accepting bookings for Shanghai and are diverting flights to other airports. China’s zero-tolerance policy over COVID means that these closures of airports will be likely as the pandemic continues.   

Air freight rates continue to soar and cause a ‘super peak’ after Shanghai’s terminal closes. Due to the closure at Shanghai’s airport, ground operation issues, and cancelled flights, prices have been rapidly rising by around 30%, the highest rates 2021 has seen. This outbreak is expected to bring a ‘super peak’ that was expected in October to now, with rates double than they were a year ago and the highest they’ve been since May of 2020. 

Trucking 

Hurricane Ida disrupts trucking capacity. As peak season occurs, shippers far from New Orleans will begin to feel disruptions in the aftermath of Hurricane Ida. Trucks are diverted to hauling relief and rebuilding supplies to the areas affected by the hurricane, so delays will occur across the Southeast. 

The Federal Motor Safety Commission Association (FMSCA) extends pandemic-related HOS waiver. The FMSCA has extended the pandemic-related HOS waiver until November 30. Read this article from FreightWaves to view the specifics of the extension. 

Rail

CSX restricts domestic container flows in Chicago. CSX Transportation has restricted the number of containers it will accept in Chicago as it struggles with heightened demand. This restriction comes amid a disruption to Norfolk Southern’s intermodal network. 

Railroads try metering to ease congestion at inland terminals. As rail ramps in Chicago, Memphis, Kansas City, and the Ohio Valley see unprecedented congestion, railroads are stacking containers at the Ports of Los Angeles and Long Beach, hoping that a more even flow of imports will help make congestion more manageable. Through restricting inland point intermodal (IPI) bookings to Detroit, Indianapolis, and Louisville, and urging importers to convert loads into port-to-port moves in Southern California, railroads hope that this will foster a more even cargo flow to inland terminals. 

Other

Viewpoint from FreightWaves: Global supply chains reaching a “critical moment in time.” Read this viewpoint from FreightWaves explaining why global supply chains are reaching a critical moment in time as the COVID-19 Delta variant continues to spread, container prices skyrocket, and negative impacts on human capital in supply chains occur. 

Closures at Asian Hubs Disrupt Supply Chains, Congestion Worsens at Southern California Ports, & Shanghai Airport Locks Down

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Ocean  

Closures at major Asian hubs are stalling supply chains. In China, the Ningbo Port (China’s third busiest port) partially reopened its Meishan terminal after a two-week shutdown due to a COVID-19 outbreak. While the shutdown hasn’t had as severe effects as the Yantian Port closure, there are still outbound and inbound cargo to clear, and a cascading effect of overcrowding at other major ports in Asia is likely, which will further slow down the flow of goods.

In South Korea, a typhoon has hit Busan Port, causing dozens of vessels to divert elsewhere. The world’s sixth busiest port was hit with a typhoon on Tuesday of this week, causing the port to temporarily shut down. Because of this disruption, delays may be likely, but the port has fully resumed operation since the typhoon. 

Customs  

The U.S. Trade Representative (USTR) suspends additional duties on UK and EU products under Section 301 of the Large Civil Aircraft Dispute for five years. The beginning of these suspension periods started on July 4, 2021 for the UK and July 11, 2021, for the EU. To learn more about the duties and instructions for importers, brokers, and filers for consumption during the five-year suspension, visit an online notice from Customs

Ports 

Savannah importers are urged to pick up cargo faster amid a backlog of containers. The Georgia Ports Authority is urging importers to pick up their cargo faster and tap intermodal rail until new container storage space opens in Savannah’s Garden City Terminal. This request comes as container dwell times increase to 10 days. 

Southern California ports expected to face a record-breaking second wave of containers, with congestion getting worse. As peak season arrives, the Ports of Los Angeles and Long Beach will expect record-level import surges and worsening congestion due to strong consumer demand.

As LA-LB congestion worsens, carriers return to Oakland and Pacific Northwest ports. Carriers are directing cargo to more northern ports as LA-LB continues to experience congestion. Oakland is returning to normal capacity after several months of congestion, while many terminals in the Northwest Seaport Alliance (NWSA) are filling up quickly.

Air

As airports in China lockdown due to COVID-19, Asia-US air cargo rates surge. The Asia-US air rates rose to a three-month high as seasonal demand in the U.S. intensifies. Major Chinese airports have shut down due to a “zero tolerance” approach, which further cut available capacity for international cargo exports. Most freighter activity at China’s largest airport Shanghai Pudong International Airport has been halted due to two reported COVID-19 cases, while other airports in Beijing, Xiamen, and Guangzho have cancelled many flights and drastically reduced capacity, increasing the bottleneck and delays that have already hindered airports operations around the world.

COVID-19 in Vietnam intensifies with retailers resorting to air cargo. The Ho Chi Minh City government has issued a shelter-in-place order that started on August 23 to help curb the spread of COVID-19. As lockdowns in Vietnam continue, big apparel and footwear retailers are trying to switch from ocean to air transport to make up for huge production slowdowns in Vietnam and ensure that seasonal imports arrive in time for the holiday season. Air freight rates continue to rise as capacity tightens. 

Trucking 

Chassis tire issues are hitting the Gulf Coast and worsening the national shortage of chassis and truckers. Emergency tire repairs on chassis are prolonging the national shortage of chassis and truckers at a time when demand is at record levels. According to motor carriers, this issue becomes more salient during the summer months when the heat impacts older tires. Chassis lessors and pool operators are working as fast as possible to put on more durable tires on chassis, but efforts are varying geographically.  

Rail

Intermodal congestion in the U.S. stalls peak season imports. Containers at intermodal terminals haven’t decreased lately, with importers still struggling to get containers out of these terminals with some storage prices of up to $10,000. In the Midwest, international container volume increased by 31% year over year in the second quarter of 2021. Rail ramps in Chicago are storing roughly three times the amount of ocean containers they were last year. It’s expected that this intermodal congestion will persist until at least 2022. If you have any questions about this intermodal congestion, don’t hesitate to reach out to one of our experts. 

Ningbo Port Congestion Causes Container Lines to Divert Vessels, Long Beach Terminal Completes Expansion Project, & Air Cargo Flights from China Get Canceled

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Ocean  

An update on the Ningbo Port in China: According to Maersk, only one of the port’s five terminals has closed—the Meishan Island Container Terminal (MSICT) was closed due to a COVID-19 outbreak. MSCIT has been closed since August 11th until further notice. Container lines have diverted vessels from this terminal to other terminals at the port to be called, with the average number of weekly port calls plunging 70%—from 200 to fewer than 60 vessels. The rest of the terminals are open and working normally. 

Forwarders are expecting a phased reopening of MSICT after extensive rounds of testing by Ningbo health authorities, with a resumption of full service hopefully starting September 1st. This outbreak hasn’t had as much of an effect on the industry as the Yantian Port closure, but ripple effects may continue. 

South Vietnam production stalls as COVID-19 lockdown is extended. COVID-19 lockdowns are spreading across South Vietnam’s manufacturing heartland, prompting factory production cuts and disrupting supply chains. With the Delta variant continuing to spread, cases are rising at an average of 3,000 per day. Ho Chi Minh City has been in lockdown since July 9, with restrictions extended to September 15. With more factories closing, large numbers of workers are returning to their homes and less than 30% of factories in key manufacturing areas are able to maintain production.   

Customs  

Microsoft Edge becomes the official browser for the ACE Secure Data Portal. Customs is recommending the use of Microsoft Edge as Microsoft has announced that Internet Explorer will go out of support on June 15, 2022. More information on this matter can be found on the ACE Frequently Asked Questions page of CBP.gov

ICYMI: The strike by Canada Border Services Agency ends after a deal is reached with the Canadian government. After the CBSA’s union reached a deal with the Canadian government, the work-to-rule strike by employees ended, ceasing supply chain disruptions. During the strike, trucks were lined up at border crossings across Canada for hours. The agreement includes pay increases for the workers over four years and implementing protections against excessive discipline in the workplace. 

Ports 

Long Beach Container Terminal (LBCT) unveils capacity boost with a completed phase of an expansion project. On Friday, the third phase of an expansion project at the Port of Long Beach will be completed and unveiled. This expansion will add 1 million TEU of annual throughput capacity, a much needed boost amid record import volumes from Asia. 

President Biden’s comments on congestion send a positive message to ports. Executive Director of the Port of Los Angeles Gene Seroka and other executives who serve on U.S. federal advisory committees are making recommendations to the Biden administration on how to remedy port congestion in the short term and long term. Seroka has been impressed with the attention of the administration and its willingness to offer tangible solutions, sending a positive message to ports. 

Air

As the COVID-19 outbreak in China continues, flights get canceled and rates soar. Tough measures have been implemented to curb the spread of COVID-19 in China, which has halted cargo operations at major Chinese international airports. Hundreds of flights have been canceled at Shanghai Pudong International Airport, as well as airports in Beijing and Xiamen. 

Additionally, ground handling staff in China are quitting over new COVID restrictions, which will likely bring air rates to unprecedented levels, with estimations of rates being five or six times more expensive than normal for the fall rush. According to one Chinese forwarder, export cargo handling times are two-to-three times longer than normal as well. Many flights could only load a small portion of outbound cargo, with some flights taking off with no cargo at all, creating a backlog of flights. If you have any questions about air cargo, don’t hesitate to contact one of our experts.

Trucking 

For the U.S. trucking industry, peak season arrives early. With rampant supply chain disruptions and strong demand, the U.S. trucking industry’s traditional peak season has been advanced by months. It is expected that both spot and contract truckload rates will remain strong through the end of the year, even if volumes subside. 

In Southern California, the demand for trucking capacity has increased as congestion at intermodal terminals continues and steamship lines and railroads restrict containers from flowing inland. This demand has caused spot truckload posts to jump 40% in the last four weeks from Los Angeles to Chicago. 

Rail

An influx of containers amid record international shipping demand prompts railroads to leverage additional yards. BNSF Railway and Norfolk Southern (NS) are diverting containers to other inland depots as they try to handle record import volumes to meet intermodal shipping demand across the U.S. BNSF reinstated service as its Harvard facility in Arkansas to “meet increased intermodal demand in the greater Memphis region and unlock capacity.” 

NS is making a similar move by reopening an intermodal facility in Greencastle, Pennsylvania “will handle domestic containers originating from or terminating at its Memphis ramp starting Sept. 10.”

Other

ICYMI: Supply chain concerns rise with questions about the holiday season. As COVID-19 and its variants continue to cause major supply chain disruptions, retailers, shippers, and manufacturers are quite concerned about what the holiday season will look like. Labor shortages and capacity constraints are still salient problems, and companies are finding ways to incentivize workers to be on the retail frontlines. Read more about how the holiday season may be difficult for supply chains in an article by PYMNTS.com.

 

COVID-19 & Typhoons Cause Supply Chain Disruptions, Airfreight Rates Increase, & Trucking Capacity Demand Remains High

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Ocean  

COVID-19 continues in Vietnam and spreads to China, causing more supply chain disruptions including the suspension of the Meidong Container Terminal at Ningbo. The Vietnamese government implemented a lockdown for several weeks in August for Ho Chi Minh City and many of the southern provinces. Additionally, hundreds of factories have been forced to shut down for 3-5 five weeks, with plans to gradually (and tentatively) reopen this week.

In China, the Delta variant cases are rising and spreading to 16 of the 23 provinces in China. An outbreak was detected at the Meidong Container Terminal at Ningbo, and the terminal suspended its operations early Wednesday morning. This sudden suspension will likely result in delays in planned sailings. The new outbreaks appear to be worse than the Yantian Port closure, however, more people were ordered to stay at home sooner this time. Truck transport has slowed, with truckers needing to show negative COVID tests. Historically, all local outbreaks have been brought under control through mass testing, contact tracing, and targeted lockdowns. It’s likely that there may be delays as COVID-19 and its variants continue to affect the region. 

Typhoons leave ripple effects on carriers in Shanghai. At Shanghai and Ningbo, container lines are continuing to face delays. The typhoon led to temporary port closures, however, lengthy queues of ships waiting to load and unload are rampant and causing delays. It’s likely that at the world’s busiest port in Shanghai, delays are likely to last another week. 

Customs  

The strike by Canada Border Services Agency ends after a deal is reached with the Canadian government. After the CBSA’s union reached a deal with the Canadian government, the work-to-rule strike by employees ended, ceasing supply chain disruptions. During the strike, trucks were lined up at border crossings across Canada for hours. The agreement includes pay increases for the workers over four years and implementing protections against excessive discipline in the workplace.

Ports 

U.S. ports continue to experience congestion, with Los Angeles-Long Beach nearly doubling the number of vessels waiting to berth. The number of vessels at LA-LB is now in the 25-30 range, and all large vessels continue to be limited to 4 gangs with an average port stay of 3-4 days. At Oakland, the vessel wait time improves, with 2-5 days. 

At Seattle, port yard utilization is still at capacity (120%), with labor restrictions kept in place pending availability improvements. Containers are taking an average of 5 days post-discharge before showing available. The Ports of Miami, Vancouver, and Houston are also approaching capacity. 

Air

Atlas Air buys freighters to maintain capacity. Atlas Air Worldwide will purchase eight Boeing 747-400 freighters to ensure capacity as strong air cargo volumes surge amid supply shortages. With airfreight volumes above pre-pandemic levels and with many international widebody flights unavailable due to COVID-19, Atlas is flying more hours, but charging more for space on its freighters.  

Airfreight rates out of China increase as COVID impacts airports. After new COVID cases closed the Nanjing Airport, airfreight rates are soaring. With these COVID cases spreading to other cities including Shanghai, a 14-day isolation requirement on overseas crews would likely cause a pilot shortage, further causing capacity constraints in the air sector. Additionally, with preparation for the holiday season, there has been unprecedented cargo congestion at major international and domestic airports, which is also putting pressure on air freight rates due to capacity constraints. If you have any questions about air travel, contact one of our air experts.  

Trucking 

Texas Governor extends waiver for truckers at Port Houston. Due to the ongoing import surge, longer container dwell times, and the shutdown of the port’s two container terminals, truck drivers have been struggling to move a backlog of containers. Texas Governor Greg Abbott extended the hours-of-service exemption for truck drivers serving Port Houston for another 30 days. The port will be offering extended gate hours this week, with weekend openings and subsequent extended hours up for review.   

Trucking capacity demand remains high, but demand for truck drivers is even higher. Due to elevated consumer spending, demand for trucking capacity is still high, but truck driver demand is higher as the drivers that left during the COVID-19 pandemic have yet to return. Therefore, raising the pay for drivers has been the latest effort to hire more qualified drivers, with some companies willing to pay increases of up 20-30%, and even 40%. 

Rail

Midwest rail congestion causes disruptions. According to Maersk, the import rail dwell in Long Beach has extended beyond 8 days. The seriousness of the congestion in Chicago and Memphis has led to a reduction in the number of services, with Chicago going down to 3 services compared to 5-6 per week, and Memphis going down to 2 services compared to 4-5 per week.  

Canadian Pacific (CP) revises offer to acquire Kansas City Southern (KCS), continuing to compete with Canadian National Railway (CN). CP is offering a superior stock-and-cash proposal worth an estimated $31 billion. CP states that the offer includes significantly similar elements but offers substantially higher regulatory certainty than the CN proposal. KCS will meet on August 19 to vote on the CN merger agreement.

Other

Supply chain concerns rise with questions about the holiday season. As COVID-19 and its variants continue to cause major supply chain disruptions, retailers, shippers, and manufacturers are quite concerned about what the holiday season will look like. Labor shortages and capacity constraints are still salient problems, and companies are finding ways to incentivize workers to be on the retail frontlines. Read more about how the holiday season may be difficult for supply chains in an article by PYMNTS.com.

 

Vietnam Continues COVID-19 Lockdowns, Port of LA-LB Experiences Vessel Bunching Ahead of Peak Season, & UP Raises California Surcharges

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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.  

 

Typhoons Bring Supply Chain Chaos in China, Port of Houston Experiences Hardware Failure, & Chicago Becomes New Bottleneck for International Intermodal Transportation

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Ocean  

Typhoons in China bring more chaos to supply chains. After a typhoon forced the closure of Shanghai’s container port and airport, more freight delays are expected. In China’s central Henan province, devastating floods disrupted operations at major cargo hubs. Hundreds of flights have been cancelled, large containerships had to be evacuated over the weekend, many factories were badly damaged, and production was halted, so delays should be expected until the effects of the typhoons subside. 

COVID-19 in Vietnam continues to choke global supply chains. Since the pandemic began, Vietnam is now experiencing its worst outbreak of COVID-19 infections, forcing strict lockdown measures and curtailing factory production. The situation is likely to get worse, with the hot spot for rising infections being in Ho Chi Minh City. If you’re shipping out of Vietnam, it is likely that there will be delays.

The Federal Maritime Commission (FMC) establishes a new audit program to assess carrier compliance with the FMC’s rule on detention and demurrage. Called the Vessel-Operating Common Carrier Audit Program, the FMC launched the program on July 19 and will analyze the top nine carriers by market share for how they’ve been complying with detention and demurrage practices. Other focuses of the audit may include billing practices, appeals procedures, penalties assessed by the lines, and other restrictive practices. 

Container ship schedule reliability plummets to an all-time low. The schedule reliability deteriorated to a new low in June, 21.4%, after a couple of months of gains. This decline indicates that shippers should be even more prepared as peak season looms with no end in sight to the record imports from Asia. As carriers add new services and deploy extra-loader vessels to meet peak season demand, it’s expected that container ship schedule reliability will likely fall further. 

Customs  

U.S. tariffs on Vietnam averted. The U.S. Treasury Department and State Bank of Vietnam reached an agreement on July 19 to address the concerns about Vietnam’s currency practices related to the import and use of timber that is illegally harvested or traded and the undervaluation of its currency. This matter will likely eliminate the chance of the Biden administration imposing tariffs on Vietnamese goods. The USTR and Treasury Department will monitor Vietnam’s implementation of these commitments and work with Vietnam to ensure it addresses the currency valuation raised in the Section 301 investigation. 

Ports 

The Port of Houston experiences hardware failure, closing some terminals. At the Bayport and Barbours Cut Container Terminals, a major failure of the storage devices that support the applications used to operate the terminals occurred, forcing the port to close. This is not because of a cyber-attack, and the ships that were already in progress have been able to continue working, but new vessel starts aren’t possible. The port is working around the clock to remedy the situation. Read more about the incident in a notice online from the Port of Houston

The Port of Savannah adds more capacity as record volumes continue. The Georgia Ports Authority is working to open more than 600,000 TEU of new capacity in the Garden City Terminal as more record import volumes are expected. A 60-acre lot will be opened near berths 7, 8, and 9 at the port this fall to accommodate the growing imports. 

Air

Lufthansa Cargo reduces freighter schedule. The airline will reduce its freighter schedule by 5% as an agreement with pilots over extended flying to meet COVID-19 restrictions expires. A spokeswoman for the airline had said that the continuation of the freighter schedule in its entirety is not possible as strict entry regulations continue to apply in a large number of countries. 

Trucking 

As wildfires continue on the West Coast, truckers will likely face delays. Truckers heading through the West should be ready for potential road closures, low visibility, hazy skies, and poor air quality due to the wildfires that are raging through the area. If you have goods traveling through these areas, delays may be likely.

Rail

Canadian National Railway is waiving demurrage fees for shippers during off-peak container pickups. At its Chicago and Memphis terminals, CN is waiving up to $1,050 per container in storage fees for shippers that plan to have boxes picked up at these locations during “off-peak” traffic periods. This move aims to increase cargo flow through congested hubs.   

Union Pacific (UP) increases West Coast service to Chicago. UP has resumed international intermodal train service between the West Coast and Chicago-area terminals at reduced levels after halting service for a week. The reduced-level service still aims to avoid overwhelming the Chicago hub with cargo as Chicago has emerged as a new bottleneck due to the rush of retailers and manufacturers restocking inventories.

According to UP, these supply chain disruptions within the international intermodal sector will likely continue through the end of the year. This continuation is because the capacity to move boxes from our ramp to the final destination falls short of demand. 

COVID-19 Infection in Vietnam Disrupt Supply Chains, Trucking Capacity Continues to Tighten, & BNSF Railway Meters Trains from California to Chicago

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Ocean  

COVID-19 infections in Vietnam contribute to port congestion and factory closures. Rapidly spreading COVID-19 infections in Vietnam have contributed to increased cargo congestion at the country’s top port Cat Lai, reduced manpower to clear air and ocean cargo, and forced the closure of factories. The shipping industry is closely watching the situation in Vietnam as COVID-19 outbreaks at the Yantian Port in China caused major supply chain disruptions. It’s recommended to stay updated on the situation in Vietnam. If you have any questions, don’t hesitate to ask one of our experts.

Meanwhile, major hubs in China and other South Asian countries have little capacity available. With almost all carriers accepting only premium bookings, space is still generally full until the middle of August across the board.  

The Federal Maritime Commission (FMC) will audit container lines’ detention and demurrage billing. The FMC informed the top nine container lines operating on U.S. trade routes that the Commission will audit how these carriers have been billing customers detention and demurrage charges. This audit comes as shippers, Congress, and the White House increase pressure to crack down on unreasonable storage fees. 

Additionally, efforts are underway in Congress to overhaul the U.S. Shipping Act with the Ocean Shipping Reform Act of 2021. The bill would reverse the “deregulatory trajectory of the most recent shipping law rewrites in 1984 and 1998 in placing a heavy regulatory burden on ocean carriers and strengthening the oversight role of the Federal Maritime Commission.” 

Customs  

The Census Bureau plans to issue a notice proposing requiring the specific country of origin information for all foreign goods on Electronic Export Information (EEI) filings. This change would be quite drastic for shippers as it’s only required to report whether goods exported are foreign or domestic, and many exports do not have this information readily available. The process to gather this information could also be quite difficult. The Census anticipated publishing this proposed rule in the fall of 2021. If you have any questions about this proposed rule change, don’t hesitate to contact one of our Customs experts

Ports 

The Port of New York-New Jersey lifts COVID-19 restrictions to boost workflow. The COVID-19 guidelines such as social distancing and limiting the number of workers at the port have now been eliminated. This lift isn’t expected to have a significant impact on high turn times truckers are experiencing but will help with increasing absences due to the summer season. Additionally, the port will allow more workers to return to the busiest East Coast port.  

Pacific Northwest ports continue to be at capacity. Yard utilization at the Port of Seattle is 120%, while the utilization at Vancouver is at 97% with the lineup experiencing congestion. The situation in Vancouver is expected to worsen, however, given the rail service disruptions, and the wildfires in the area. The Port of Prince Rupert’s yard utilization is at 106% but has recently received an eighth crane that will be fully commissioned by August. 

On the West Coast, the Ports of Los Angeles and Long Beach are experiencing 10-15 vessels at anchorage waiting for a berth, with yard utilization at 88% and 80%, respectively. 

Air

ICYMI: Air freight becomes more favorable over ocean freight. With ocean shipping containers skyrocketing and sometimes exceeding $20,000, air cargo has become a relative bargain to many companies — something quite unusual in the supply chain world. Before the pandemic, shipping by air was almost 12 times more expensive than by ocean, however, with ocean supply chains stretched by high consumer demand and various disruptions, air cargo has been highly entertained by companies. If you have any questions about shipping your products by air, don’t hesitate to reach out to one of our experts.

Trucking 

Trucking capacity across the country continues to tighten. In locations across North America, trucking capacity is tight, with limited availability of chassis in the Newark area, while Dallas and Houston are also experiencing reduced truck capacity. Mobile and New Orleans are in the same boat, as well. 

The I-40 bridge closure in Tennessee continues to create capacity issues in the area as well. Drivers are either declining the load through this area or charging premiums, but the bridge is still expected to open in late July. 

New U.S. trucking firms are growing, but not new capacity. In the first six months of 2021, the number of for-hire trucking firms increased by 58,000. However, this growth isn’t creating new capacity, but rather, points to a shift of “trucking capacity to smaller motor carriers that will challenge shippers who are reliant on traditional means of procuring trucking services, especially those using a limited number of carriers, most of which are larger trucking providers.” 

U.S. truckload rates appear to flatline. While U.S. truckload rates have risen by double-digit percentage numbers in the past year, the U.S. trucking network is maxed out, signaling that rates may not reach any higher levels. However, shippers shouldn’t expect a drop in rates, but a peak and stabilization of the rates are likely.  

Rail

ICYMI: Union Pacific Railroad (UP) is halting all international intermodal service from the West Coast to Joliet, IL, for up to a week starting July 18. This emergency measure aims to clear thousands of stacked ocean containers at the Joliet terminal and send them to cargo owners. The service will be suspended from the Ports of Los Angeles, Long Beach, Oakland, and Tacoma to relieve the significant congestion at inland intermodal terminals and will apply to all UP’s ocean carriers. 

BNSF Railway meters trains from Southern California to Chicago. Beginning on Sunday, BNSF Railway began rationing space on international intermodal trains between Los Angeles/Long Beach and Chicago. This effort is to assuage the surge of volumes that have overwhelmed Chicago’s rail terminals. The railway may stop rationing space as soon as August 1.

Bangladeshi Port of Chittagong Congested, Biden Issues Executive Order Promoting Competition, & Slow Vaccine Rollout Causes Port Disruptions

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Ocean  

The fight for vessel space continues. As consumer demand continues to surge, it’s expected that import growth through peak shipping season will continue through the fall as unprecedented shortages of ocean capacity intensify. U.S. retail importers from Asia are being warned by container lines, forwarders, and consultants that the situation will only worsen with peak season on the horizon.  

Additionally, major hubs in China and Asia have very little space available, with almost all carriers accepting only premium bookings. Across the board, space is generally full until the middle of August. If you have any questions, don’t hesitate to contact one of our experts

The Bangladeshi Port of Chittagong is clogged with containers carrying export goods. With sources saying that some containers have been waiting at the port for nearly 30 days, there are an estimated 14,000 TEU’s stuck at the port. The capacity crunch and limited space on vessels are fueling this congestion, with Chittagong shippers paying quadruple the rates before the COVID-19 pandemic to send US-bound containers. This ongoing congestion has forced some carriers to halt and slow bookings from Bangladesh. 

The Federal Maritime Commission (FMC) and the Department of Justice (DOJ) sign an interagency Memorandum of Understanding (MOU). This memorandum aims to foster increased cooperation and communication in their respective oversight responsibilities of the shipping industry, establishing a framework for the FMC and Antitrust Division to continue discussing issues affecting competition in the industry. This agreement was the first-ever MOU between the two agencies. You can read the memorandum in an official document online.

Customs  

The Federal Emergency Management Association (FEMA) lifts export restrictions on COVID-19 medical supplies. Former U.S. export restrictions imposed on certain medical supplies and equipment to combat the COVID-19 pandemic are now lifted after the temporary final rule (TFR) had an expiration date in late June. FEMA used the TFR to ensure an adequate national supply of medical supplies to help combat COVID-19. To learn more about the lift of these restrictions, view a fact sheet on FEMA’s website.  

CBP Virtual Trade Week is coming up. Virtual Trade Week will occur July 20-22 and will include discussions on 21CCF, e-commerce, forced labor, export modernization, CTPAT, and 1USG. To view more information, the agenda of the week, and pre-recorded sessions, visit CBP’s website.

Ports 

The South Atlantic Chassis Pool (SACP) will remain in existence until at least 2028. After three southeastern U.S. ports of Savannah, Jacksonville, and Wilmington agreed to stay in the pool in exchange for increased fleet size and enhanced chassis quality, the SACP will continue until at least 2028. The conditions of this agreement are meant to address these chronic problems of decreasing fleet size and low-quality chassis as imports surge at Southeastern U.S. ports.  

Air

DHL Express invests more than $360 million in the Americas to meet e-commerce demand. These millions of dollars will be invested into facilities and new air capacity for the Americas through 2022 to bolster parcel growth caused by increasing e-commerce demands. The new infrastructure will include technology to enhance operational efficiency and increase network capacity in the Americas by nearly 30%. 

American Airlines assists in distributing COVID-19 vaccines globally. As part of the White House’s initiative to share 80 million doses of COVID-19 vaccines, American Airlines donated cargo flights to deliver vaccine doses to Guatemala. More airlines will likely continue to donate flights to distribute COVID-19 vaccine doses, which will likely affect air cargo space.

Trucking 

ICYMI: Trucking industry sees the highest one-month gain in employment in 7 years. According to the Bureau of Labor Statistics (BLS), the overall number of drivers has returned to pre-pandemic levels. While labor shortages fueled trucking capacity issues, it is still unclear as to whether these new gains will benefit truckload carriers as seats are still struggling to be filled. 

Rail

Norfolk Southern (NS) slashes domestic containers on busy routes in Pennsylvania. To combat strong demand and a shortage of 53-foot chassis in its network, NS extended the emergency service cuts into Central Pennsylvania, effective July 8. This move comes as the recall of more than 5,000 chassis left the railroad short on wheels to move containers.

Vancouver intermodal shippers face delays. U.S. and Canadian shippers should expect rail delays as Canada’s two Class I railroads slow train speeds and share a track with the Port of Vancouver. This delay comes as a wildfire closed one of two tracks that runs through British Columbia. The Port of Vancouver is estimating delays of more than a week. 

Other

Biden issues an Executive Order promoting competition in the economy. The Order includes 72 initiatives by more than a dozen federal agencies to adequately tackle some of the most pressing issues facing economic competition in the country — including ocean shipping and unfair carrier practices (specifically detention and demurrage). You can read a fact sheet on the White House’s website summarizing what’s included in the Order or access the full Executive Order online

The slow vaccine rollout for seafarers is causing disruptions to trade and shipping. The global vaccine rollout for seafarers is going too slowly to prevent outbreaks on ships, causing more supply chain disruptions, slowing down economic recoveries, and endangering maritime workers. As the delta variant progresses and e-commerce demand keeps surging, infections may increase and more restrictions at ports may be enacted to restrict access to seafarers from countries that have not yet received COVID-19 vaccines. As this variant continues, supply chain disruptions are likely. Contact one of our experts if you have any questions. 

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