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...

Yantian Port Reopens, Container Rates Skyrocket, and Knight-Swift and Union Pacific Partner Up

By | COVID-19 Latest Updates | No Comments

Ocean  

Operations at Yantian port slowly improve after reopening. After a surge of COVID-19 cases forced the Yantian International Container Terminals (YICT) to shut down, the port is now operating at 75% of normal levels. After operating at around 45% last week, YICT reopened a fourth berth at the East Port area, which helped reduce yard density by 70%. YICT has also been able to raise the number of trucks in the terminal to 8,000 daily instead of the previous 6,000. Congestion is still continuing at the port, as well as other Chinese ports, so the lasting effects of this congestion will still ripple through supply chains for the next coming weeks. 

New feeder service along the St. Lawrence Seaway gives exporters a trucking alternative. An Ontario-based terminal operator started a new container feeder service along the St. Lawrence Seaway, offering shippers another option to transport goods besides the 377-mile truck route between Canadian ports of Hamilton and Montreal.  

Container rates and GRIs increase. For shippers, rates are continuing to intensify at an alarming rate, with both Asia-West Coast and East Coast rates increasing by around 200% over the past year. Additionally, trans-Pacific carriers are pushing GRIs more often, implementing them every two weeks as opposed to every month as they have in the past. As strong demand and capacity constraints surge at Asian ports, these rates will likely continue and are indicative of how critical supply chains are right now. 

Customs  

The Senate passes key trade provisions in the U.S. Innovation and Competition Act. To help compete with China, the Senate passed a key bill that would invest more than $200 billion over the next five years into scientific research and technology. The bill reinstates the expired Generalized System of Preferences program (GSP) and the product exclusion process for some Section 301 tariffs. Additionally, the bill is supposed to bolster efforts to prohibit goods with forced labor from reaching the U.S. through strengthened CBP efforts. The timing of approval from the House is unclear. Read more about the provisions of the bill online.  

The U.S., Canada, and the EU develop sanctions against the government of Belarus over the forced landing of a passenger jet and the arrest of a journalist last month. These sanctions will likely involve freezing assets and involving travel bans, and industry groups warn that air and rail transportation could be affected if tensions continue between Belarus and Western allies. Belarus is a key artery for East-West transport, so if sanctions extend to the closure of land routes, more supply chain disruptions may occur. 

Oral arguments are scheduled for Section 301 tariffs. On Thursday, the U.S. Court of International Trade (CIT) will hold oral arguments for the plaintiffs’ motion for a preliminary injunction, seeking to suspend the liquidation of entries involving the Section 301 duties challenged in the court cases.

Ports 

Hapag-Lloyd implements measures to improve NY-NJ truck flow. At the Port of New York and New Jersey, free time for returning empty containers will be extended by Hapag-Lloyd. The carrier will also pay truckers a congestion fee and find off terminal storage as it strives to improve truck flow and expedite the return of empty containers. These efforts come as drayage capacity at the port has become strained by record import volumes. 

Long Beach terminals clear clogging rail containers. At the Port of Long Beach, terminal operators have begun using the Pier S overflow facility to provide short-term storage for rail containers that would otherwise be stuck in marine terminals and further contributing to congestion in Southern California. This move comes as containers are dwelling at marine terminals and the Ports of LA-LB for more than 11 days — above the 3.65 day average — because of intermodal railcar shortages. 

Air

Alliance Ground International (AGI) opens up a new warehouse operation at Chicago O’Hare International Airport. The new facility is located on the western boundary of the airport and is connected to major thoroughfares that call for easy access to the facility. It will serve many of the airlines that AGI handles in the Chicago area. In close proximity to the forwarder community, the facility will hopefully improve pickup experience by avoiding congested airport roadways.

LATAM advises customers that they will be imposing a temporary embargo. In a customer advisory, airline LATAM said that they are imposing a temporary embargo — effective immediately — due to an excessive backlog of cargo to Bogota, Colombia. The embargo is anticipated to end on July 31st, 2020. 

Trucking 

Truckload freight shipments reach record levels. In May, North American freight shipments reached the second-highest monthly level recorded in 31 years of data. Driven by a strong rebound from the pandemic, shipments grew 35.3% from May 2020, indicative of a stronger-than-expected economic recovery and the unprecedented freight volumes being transported throughout the country. 

Rail

Knight-Swift Transportation will terminate its agreement with BNSF Railway to partner with Union Pacific (UP). Effective January of 2022, Knight-Swift Transportation and UP will partner up in order to handle Knight-Swift’s container business. The decision for this merger was based on UP’s intermodal network strength in key U.S. markets. Knight-Swift also sees an opportunity to provide more capacity to shippers on the Interstate 5 between Los Angeles and Seattle-Tacoma. 

Norfolk Southern (NS) and Union Pacific (UP) are tight on 53-foot chassis. As volume surges and shippers take longer to unload containers, U.S. eastern rail terminals are rationing chassis, causing NS and UP to run low on 53-foot chassis. Therefore, delays are expected, and it’s recommended that customers with 53-foot chassis should return them to the nearest DCLI or NS ramp immediately.   

Class 1 railroads address supply chain congestion. In an analysis by FreightWaves, learn how class 1 railroads are addressing supply chain congestion through increasing train speed, communicating more closely with U.S. ports, and more. However, it won’t be clear as to how successful these tactics will be until executed, so stay vigilant and don’t hesitate to reach out to one of our experts with questions.

Other

A review of supply chain vulnerabilities by the White House is now available online. Last week, the Biden Administration launched a supply chain task force to review supply chain vulnerabilities in the U.S. A full supply chain report by the White House is now available in a PDF online, so be sure to take a look and see what’s underway.

Yantian Port Worse Than Suez Canal Blockage, Carriers Reroute Cargo From Oakland, & Biden Launches Supply Chain Task Force

By | COVID-19 Latest Updates | No Comments

Ocean  

The COVID-19 outbreak at the Yantian Port continues, causing congestion issues to spread across Southern China. COVID-19 outbreaks are getting worse at Yantian, further disrupting port operations, with delays expected to stretch into two weeks. This congestion at the port is spreading throughout Southern China as well, creating a scale of disruption greater than the Suez Canal blockage that lasted for six days. Paired with eastbound Trans-Pacific demand outpacing vessel capacity and low ocean reliability, supply chain experts are warning of serious ripple effects to come. 

Due to this increased delay, container lines are adding more alternatives to the congested Yantian port by increasing the number of load ports. Shippers are also looking to ship via Hong Kong, Shanghai, and Ningbo, and other ports like Nansha and Da Chan Bay. If you have any questions regarding congestion at the Yantian port or are looking for other ways to go around this port, contact one of our experts

A crane collapsed at the Port of Kaohsiung in Taiwan, damaging containers. An empty vessel struck a laden cargo ship, causing the collapse of a crane that damaged between an estimated 30 to 50 containers and injured one worker. The cause of the incident is under investigation. If you had containers at this port, they may be affected. 

Customs  

The University of Houston published an assessment of the Customs-Trade Partnership Against Terrorism (CTPAT) Program. The CTPAT Program was established in November 2001 to enhance border security via strengthening international supply chains. This assessment addresses tangible and perceived member benefits, return on investment for the participants, and cost savings for the U.S. government and trade partners. You can read the full report online at the University’s website

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) implemented sanctions on Myanmar (Burma). In response to the military coup in Myanmar (Burma), sanctions have been implemented on the country. OFAC will supplement the sanctions in the future, but to view the existing sanctions and see what’s already in effect, check out the Federal Register’s website.  

Ports 

Carriers reroute cargo and suspend trans-Pacific calls in Oakland. Zim Integrated Shipping Services will reroute its premium service from China to Oakland to call only in Los Angeles, citing backlogs and congestion at the Oakland port. With vessel delays of 10 to 12 days at Oakland, this service can no longer maintain its original standards of guaranteeing vessel space in Asia.  

Additionally, Hapag-Lloyd will join Zim in dropping its trans-Pacific westbound calls in Oakland for the same reasons. There is a plan to return to those services in Oakland around mid-August if congestion clears. According to the CMA CGM website, trans-Pacific Oakland calls were dropped and others scheduled through August will be left out. 

Air

The International Air Transport Association (IATA) released data for global air cargo markets for April 2021. From this data that IATA released, it was found that air cargo demand continued to surpass pre-pandemic levels with demand up by 12%. Read more about the statistics of how the COVID-19 pandemic impacted air cargo levels in a report by the IATA online

European air cargo carriers open up more flights, creating more capacity for ocean-shy shippers. Emirates SkyCargo and Qatar Airways will resume flights from Birmingham, UK, pleasing forwarders. Opening up more space at the Birmingham Airport will allow forwarders to avoid congested routes and gateway airports, and work around the unprecedented ocean capacity and congested ports in China. 

Trucking 

Trucking companies run out of capacity as imports and drayage demand surge. In the U.S. Southeast, trucking companies are warning that they are low on capacity as a year of imports from Asia creates record-breaking drayage demand. National and regional drayage providers in the Southeast are all booked and are unable to serve new clients, which leaves importers and ocean carriers to find smaller trucking companies and paying extra to move import containers from Charleston, Savannah, and Norfolk. 

Truckers raise fees on excessive dwells for containers and trailers. J.B. Hunt Transportation Services and Schneider National are raising fees for shippers who hold onto trailers beyond their allotted free time. Trucking executives say that this problem has worsened over the year and is part of the reason for congestion at rail ramps. 

J.B. Hunt is raising fees from $50 to $100 each day for the first three days that equipment is held after the three free days, and then $150 after four days, and $200 per day for nine days. Schneider is taking a similar approach, raising fees from $50 to $125 per day once the two-day free clock expires. 

Rail

BNSF Railway and Union Pacific Railroad (UP) combat congestion issues in Chicago. Amid another import surge over the last eight weeks, the two railroads are struggling to find space in Chicago, and in turn, frustration amongst truckers, importers, exporters, and port officials is growing. To combat congestion, BNSF announced it would eliminate track to create more storage space in Low W within its Logistics Park Chicago facility. UP will continue its “no ‘cherry picking’ policy, but has also begun ‘grooming’ stacks with the longest dwelling containers on top to speed the mounting and pickup of import boxes once chassis becomes more available.” 

Other

Biden will launch a task force to address supply chain bottlenecks. After a 100-day review of supply chains, the Biden Administration will form a supply chain task force to address the bottlenecks in the semiconductor, construction, transportation, and agriculture sectors. With this task force, the goal is to increase domestic manufacturing, decrease shortages of vital goods, and try not to rely on geopolitical competitors like China. 

Port of Yantian Disrupted by COVID-19 Cases, Withdrawal of Troops from Afghanistan Creates Air Transport Shortages, and U.S. Railroads Tighten Free Time at Inland Ramps

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Ocean  

Ocean capacity continues to be tight. Ports across the board in China continue to be extremely tight on space, with no space guaranteed even if booked through premium services. Additionally, equipment shortages continue with ocean carriers, further contributing to the congested network. 

With rising COVID-19 cases, the Port of Yantian in China will take at least a week to clear. The terminal remains heavy with disinfection and quarantine measures continuously being implemented by local authorities to curb the spread of the coronavirus. Maersk expects continued terminal congestion and vessel delays of up to eight days. As of Monday, there were around 40 ships waiting to berth at the Yantian International Container Terminal, with the terminal carrying out operations as much as possible with 30% of full capacity. Yantian will only accept export-laden containers via an appointment app and within three days of a vessel’s scheduled arrival until June 6. 

ICYMI: The National Industrial Transportation League (NITL) urges Congress to make changes to U.S. shipping laws. Because of the unprecedented and ongoing congestion, NITL is calling on Congress to take action by shifting the burden of proof onto carriers to show that their practices are reasonable and in compliance. Other demands include carriers providing more clarity on detention and demurrage fees, abiding by booking agreements, and allowing aggrieved customers to file complaints. These urges come as the Shipping Act of 1984 doesn’t address the challenges shippers are facing today in the supply chain industry. 

Customs  

The Regional Comprehensive Economic Partnership (RCEP) Agreement may impact negotiations on China-U.S. tariffs. The RCEP Agreement is a massive trade agreement between 15 countries in Southeast Asia and Oceania, designed to eliminate as much as 90% of the tariffs on goods between its signatories over the next 20 years. The agreement is currently being ratified, and with ratification from three-fifths of the deal’s 15 signatories, the agreement will enter into force in 60 days. If ratified, this agreement may impact negotiations on trade between the U.S. and China, and our Navegate team will keep you updated on how this may affect importing.  

ICYMI: Aluminum import licenses will be required for entry for covered aluminum products starting June 28, 2021. On May 21, 2021, the U.S. Department of Commerce published a notice in the Federal Register confirming this regulation. The application system is available at https://www.trade.gov/aluminum, and for a list of the aluminum products required for the license, view the list on the International Trade Administration’s website

Ports 

Shippers are turning to the U.S. East Coast for port transloading options due to congestion on the West Coast. Because the congestion issues are significantly worse on the West Coast than on the East Coast, shippers are transloading on the East Coast to better get their freight inland and into stores. Ports like NY-NJ and Savannah have more transloading options, however, NY-NJ continues to experience capacity constraints. 

Massive congestion continues at the Port of Oakland, with Seattle-Tacoma lacking railcars. According to Maersk, Oakland has surpassed the ports of Los Angeles and Long Beach in terms of vessel traffic. Wait times at Oakland are up to three weeks, while LA-LB is averaging between one to two weeks. Imports from Asia at Seattle-Tacoma are up 40.3% from January through April compared to one year ago. The ports are working with terminal operators and the International Longshore and Warehouse Union (ILWU) to address these congestion issues.  

Air

Forwarders shift volumes to secondary airports due to overwhelming demand at major U.S. air hubs. Big air gateways like Chicago and Los Angeles are overwhelmed with air cargo, so forwarders are diverting their cargo to smaller airports not traditionally used as the main entry points for the U.S. Industry experts are saying that these smaller airports are good alternatives to transport goods as they do not face the same challenges as traditional gateways. 

NATO and U.S. Military withdrawal of troops and equipment from Afghanistan may create temporary air transport shortages. Large commercial jets are being used to assist with the withdrawal of troops and equipment which could cause even more capacity issues for companies seeking airfreight space. Airlift support from the Air Force and commercial cargo carriers have already helped the drawdown be one-quarter complete. If you’re using air freight to transport shipments, delays are likely and space is limited due to this withdrawal. 

UPS Air Cargo will be required to comply with TSA screening regulations for U.S. exports starting July 1, 2021. This requirement means that UPS Air Cargo will need to ensure that all U.S. exports bound for international destinations are screened before departing the U.S. If you have any questions regarding the details of this requirement, please contact one of our air experts

Trucking 

Truckload rates may extend to 2022. As the U.S. economy recovers and COVID-19 vaccinations continue, so too are volatility and difficulties for supply chains. With a shortage of materials and sufficient staff and high freight demand, the current truck pricing cycle will likely extend into late 2021 and even 2022, so shippers should expect high rates to continue for the foreseeable future. 

Rail

Union Pacific (UP) will raise intermodal surcharges again. For all domestic intermodal customers in California who ship more than their contractual limits from June 13, UP will raise surcharges on these customers, the second time the railroad has increased its fees. The charge will be $3,000 per container on low volume shippers and $1,500 on all other shippers. This hike in surcharges indicates UP is concerned about having enough containers to service its core contract customers through this peak season.  

U.S. railroads on both coasts tighten free time at inland terminals. To expedite the pickup of record import volumes flowing through busy terminals, U.S. Class I railroads tighten free time, narrowing the window for many domestic and international shippers. This move is intended to encourage quicker turns of containers and chassis to relieve inland ramp congestion. As of June 7, BNSF Railway will eliminate the industry standard 5 p.m. cutoff for calculating free time at all its facilities. Learn more about how railroads are tightening free time in an article by JOC.com

Dallas intermodal ramp recovers after February winter storm. After the unprecedented February snowstorm in Texas disrupted supply chains in the area, shippers are now experiencing quicker delivery times because there are sufficient chassis that are available. Importers and chassis providers also say this turnaround is due to slowing container volumes from Southern California, allowing chassis providers to turn equipment faster. 

Other

Biden Administration reviews that may affect freight markets: a power index by FreightWaves. Take a look at the top 10 Biden regulatory reviews and their effects on freight markets, their statuses (whether they are in effect, proposed, or under review), and why it matters to shippers and supply chains. 

ICYMI: Stay updated on logistics and supply chain trends for the rest of 2021. As mid-year approaches, our Navegate experts identified key supply chain trends to watch for the rest of 2021. From continued capacity constraints to ongoing industry disruptions, learn how to manage and respond in our latest blog and how we can help. 

NITL Urges Congress to Change U.S. Shipping Laws, Shenzhen Yantian Terminal Operations Halted, & Aluminum Import Licenses Required in Late June

By | COVID-19 Latest Updates | No Comments

Ocean  

The National Industrial Transportation League (NITL) urges Congress to make changes to U.S. shipping laws. Because of the unprecedented and ongoing congestion, NITL is calling on Congress to take action by shifting the burden of proof onto carriers to show that their practices are reasonable and in compliance. Other demands include carriers providing more clarity on detention and demurrage fees, abiding by booking agreements, and allowing aggrieved customers to file complaints. These urges come as the Shipping Act of 1984 doesn’t address the challenges shippers are facing today in the supply chain industry. 

COVID-19 cases confirmed at the west port of Shenzhen Yantian terminal in China cause the terminal to close and halt all cargo operations. The Yantian terminal has stopped accepting containers at the gate from May 25-27, and will continue accepting containers on May 28, but only for containers planned for sailing within four days before an estimated arrival time at the Yantian terminal. Because of this restriction, some shipments will be affected and may be loaded onto the next sailing. 

A cyclone in India forced ports to suspend operations last week. Already suffering from COVID-19 lockdowns and capacity shortages, a cyclone in India forced the Jawaharlal Nehru Port Trust and Mundra Port, the busiest cargo gateways in the country, to halt operations. Ocean carriers have been working to revive affected shipping schedules, and the ports have been working to restore power that was lost from the storm. If you have goods traveling from this area, they will most likely be affected. 

Customs  

Aluminum import licenses will be required for entry for covered aluminum products starting June 28, 2021. On May 21, 2021, the U.S. Department of Commerce published a notice in the Federal Register confirming this regulation. The application system is available at https://www.trade.gov/aluminum, and for a list of the aluminum products required for the license, view the list on the International Trade Administration’s website

Ports 

Congestion and import surges continue at Port of NY-NJ. As cargo volumes show no signs of slowing down and drivers leave the industry due to increasing hassles, drayage operators expect limited trucking capacity to tighten even further. This driver turnover is causing rate increases to attract and keep new drivers, as well. 

Terminals at LA-LB are concerned about increasing rail container dwell times. Operators at the port are concerned that these rising times will hinder their ability to handle import volumes during an early peak season. While the Port of Los Angeles has made a dent in the backlogs, this ongoing congestion shouldn’t be ignored.  

The largest container ship to arrive on a North American East Coast in Elizabeth, New Jersey highlights growing Southeast Asian volumes. The vessel discharged nearly 3,000 containers out of the 7,000 that it was carrying and underscores the growing volumes of imports from Southeast Asia through New York and New Jersey, which have been growing 10.3% each year on average. 

Air

LATAM Airlines Group expands its fleet with Boeing 767 converted freighters. The South American carrier will nearly double the size of its fleet by 2023, bolstering air cargo capacity in the Americas. These new aircraft will increase capacity from Colombia, Ecuador, and Chile to North America and Europe to support the flower industry and meet the demand for salmon exports and other goods.  

Air cargo capacity is expected to be strained until mid-2022, according to DHL. Shipping bottlenecks and increased consumer spending will help drive increased demand for air cargo until mid-2022, with capacity constraints continuing to push up prices, according to DHL Global Forwarding. Capacity in 2022 will be scarce as well due to slow vaccine rollouts, dissuading people from traveling in the meantime. 

Trucking 

U.S. drayage drivers are quitting as congestion decreases pay. In the Midwest and South Central U.S., an alarming number of drivers who dray ocean containers are quitting this year because rail terminal congestion has lowered daily productivity, and thus, decreased their pay. While trucking companies have increased rates for drivers, it hasn’t been enough to compensate drivers for completing fewer jobs each day, and the average local drayage driver pay has fallen about 20%. Because of this labor shortage, delays and disruptions to supply chains are expected. 

Forwarders should keep California Law AB-5 on their radar. A recently adopted California law known as AB-5 would make it illegal for most industries, including the trucking industry, to hire independent contractors to perform tasks that the company does in the normal course of business. While the law was signed in September of 2019, it has been tied up in the courts from various industry groups, but it appears that the law will likely take effect soon. It is warned that the impact of this law may be severe as it will affect standard business model structures for trucking firms. More information on how this law will affect the trucking industry can be found in a document by Ex Works, Inc. online

Rail

Kansas City Southern (KCS) makes a deal with Canadian National Railway (CN), abandoning a deal with Canadian Pacific. KCS has chosen the deal proposed by CN, which was nearly $8 billion more than the CP proposal. However, the final deal will be decided on which proposal will maintain and increase competition, particularly in the intermodal market. It is also unclear as to whether the U.S. Surface Transportation Board will allow the transaction to proceed; if it doesn’t, CP would try to strike a new agreement with KCS.

Other

ICYMI: Stay updated on logistics and supply chain trends for the rest of 2021. As mid-year approaches, our Navegate experts identified key supply chain trends to watch for the rest of 2021. From continued capacity constraints to ongoing industry disruptions, learn how to manage and respond in our latest blog and how we can help. 

Cargo Rollovers Continue to Climb, Air Carriers Expand Destinations, and Train Derailments Cause Supply Chain Disruptions

By | COVID-19 Latest Updates | No Comments

Ocean  

Trans-pacific rates and cargo rollovers continue to climb, with capacity constraints at Asian hubs also continuing. Spot rates from Asia to the United States have increased by up to 15%, and shippers will have to continue paying higher prices to secure space and equipment. These spiking rates are causing increased cargo rollovers, serving as a sobering reminder that under-capacity and volatility are new normals of the industry. 

Meanwhile, Asian ports continue to be tight on capacity and equipment, with space being full until mid or late June. If you have any questions regarding these issues, don’t hesitate to reach out to one of our experts. 

More countries and ports impose restrictions on Indian seafarers. As COVID-19 cases continue to rise in India, vessels from India are being denied entry into nearby countries, affecting shipping schedules and disrupting global supply chains. The spread of the virus has prompted the government to curb the use of oxygen for non-medical uses, so the supply of empty containers to India could be impacted. Our Navegate team will continue to stay updated on the situation in India and how it may affect supply chains. 

Customs  

U.S. Department of Commerce rules that an anti-dumping duty on Chinese-made marine and domestic chassis will remain unchanged. The Commerce Department determined that China Intermodal Marine Containers (CIMC), the world’s largest chassis manufacturer, illegally dumped chassis to artificially lower prices. These findings will be reviewed by the International Trade Commission (ITC), and if the commission finds “material injury” then chassis costs may triple what they were three years ago. This decision will have implications on cargo and trucking owners who depend on chassis to keep goods flowing. More information on the case can be found in an article by JOC.com

USTR Katherine Tai appears in back-to-back hearings with Congress. On May 12-13, Tai testified in Congress highlighting the Biden Administration’s Trade Policy Agenda. She highlighted the administration’s goals for closing racial inequities and combating climate change but did not spend much time talking about new trade agreements, indicating that this area isn’t a focus of the administration. Tai is also reviewing the China tariff policies and is only having discussions with trading partners related to the Section 232 tariffs on aluminum and steel, not the Section 301 tariffs. 

Ports 

The Port of Los Angeles makes a dent in backlogs. According to the Port of LA’s Executive Director, all key performance indicators are pointing in the right direction in Southern California. Terminal operators are further clearing out the backlog that was built last fall with reduced dwell times. 

Air

Air carriers CMA CGM and DHL expand air routes and destinations. CMA CGM’s new air cargo division announced that it will be expanding destinations into the Middle East in the next several weeks. The division will add destinations in Beirut, Istanbul, and Dubai, adding air freight capacity to an already congested network. 

DHL Express has announced that it will replace its Hong Kong Ho Chi Minh City-Penang route with a direct flight from Hong Kong to Penang, Malaysia five times a week. This new route will add cargo capacity and shorten transit times to accommodate the increased shipment volumes. 

Air cargo surcharges increase. Due to a rise in parcel demand and less reliable container shipping services, as well as retailers vying to replenish depleted inventories, FedEx Express and UPS are increasing air cargo peak surcharges on the Asia-US trade route. These carriers expect that pricing will be elevated for at least the next year; the air cargo rates are still far above pre-pandemic levels due to ongoing increased demand. 

Trucking 

The Southeast recovers from fuel shortages due to the Colonial Pipeline outage. Shippers in the Southeast may still face days of disruptions to trucking services, with the potential for missed deliveries and pickups. The Colonial Pipeline outage caused a shortage of gasoline, which tightened the already limited capacity of the trucking industry. Spot prices will most likely increase as fuel shortages persist and shippers find difficulty securing trucking space. 

Rail

Kansas City Southern (KCS) declares Canadian Railway (CN) proposal superior. Upon reviewing a revised acquisition proposal from CN, KCS has decided that CN’s proposal was better than Canadian Pacific’s (CP) original proposal. CP has no plans to counterbid CN’s offer, and KCS has notified CP with its intentions to terminate the agreement. The merger will create the first railroad with operations in Canada, the U.S., and Mexico.  

There were train derailments in Iowa and Minnesota this week. A 47-car pile-up occurred in Sibley, Iowa. The train derailed on a Union Pacific railroad and released ammonium nitrate, causing an evacuation within a five-mile radius. The railroad is working with authorities through an investigation. 

In Albert Lea, Minnesota, another Union Pacific train derailed. The train was carrying mixed commodities, but leaked hydrochloric acid, and prompted a shelter-in-place order for the area. There were no injuries in either of the incidents, but if you have goods moving through the area, delays may be expected. 

Other

A major bridge in Memphis is indefinitely closed and causes supply chain disruptions. The Hernando de Soto Bridge on Interstate 40 in Memphis, Tennessee closed down and halted traffic last week after inspectors discovered a crack in the bridge. The interstate connects Tennessee and Arkansas and is above a waterway that allows crops to be transported to export markets. It could take up to a couple of weeks for a full inspection of the bridge, so if you have goods moving through the area, delays may be likely. 

Stay updated on logistics and supply chain trends for the rest of 2021. As mid-year approaches, our Navegate experts identified key supply chain trends to watch for the rest of 2021. From continued capacity constraints to ongoing industry disruptions, learn how to manage and respond in our latest blog and how we can help. 

India’s COVID-19 Situation Worsens, Protests Approved for Tariff Exclusion Refunds, and Colonial Pipeline Outage Restored

By | COVID-19 Latest Updates | No Comments

Ocean  

Retailers are upping their forecast for imports for the next several months. As U.S. imports are expected to rise, this forecasting suggests that shippers will have an even more difficult time trying to find vessel space in Asia. Additionally, ports in the U.S. West and East Coasts may face increasing congestion and import surges in the peak season between summer and fall.   

Container shortages make it difficult to secure space at Asian hubs. Ports across the board in China are strained and short on containers, so it will be difficult to secure space in the next coming weeks. Additionally, the premium services are likely unavoidable, so shippers should be prepared to continue booking with the premium services.

India’s COVID-19 cases and restrictions affect supply chains, congestion, cargo slowdowns, and crewing. Restrictions in India following the surge of COVID-19 cases and deaths are resulting in labor shortages — particularly for the trucking industry in the country. Even though demand remains relatively steady still, if COVID-19 cases and deaths continue, this disruption could affect port congestion, delivery times, and the country’s export prospects. 

Additionally, the Chinese coastal city of Zhoushan is banning vessels that have passed through or changed crews in India in the last three months, citing concerns about India’s COVID-19 situation. Meanwhile, Singapore and Fujairah in the United Arab Emirates are preventing ships from changing crew members that passed through India, causing even more complications for crewing. While cargo ships are still calling at Indian ports, dock workers are also falling ill from the virus, further hampering port operations. Our Navegate team will keep you updated about the ongoing COVID-19 situation in India and how it may affect your business.

Customs  

The Food and Drug Administration (FDA) eliminates a portal where industry members can request a DUNS number. This portal will end on May 24, 2021, so importers will have to gather that information from suppliers directly to obtain a DUNS number when submitting an FDA entry. While the DUNS number isn’t a mandatory data element, it is highly recommended to still include it in entries. 

The FDA opens a portal for importers of human and animal food into the U.S. Called the FSVP Importer Portal for FSVP Records Submission (Portal), the portal allows food importers to electronically upload FSVP records directly to the FDA for program compliance if they choose. More information on the new portal can be found on the Code of Federal Regulations website

More protests are being approved for tariff exclusion refunds. After several months, our team is starting to see some movement for refunds for the Section 301 tariffs. Due to the unprecedented number of protests being filed, the protest process is taking longer than usual; it is also unclear as to how long it will take for Customs to review the outstanding protests. Therefore, your broker will notify you of any updates as they are received from Customs. 

Ports 

Port terminals at NY-NJ up capacity amid a surge of imports. As a wave of imports coming into the U.S. shows no signs of easing, marine terminals at the Port of NY-NJ plan to increase container handling and reduce the time truckers spend at port facilities. The plans include implementing new yard equipment and ship-to-shore cranes, more efficient gates for truckers, and ways for shippers to quickly retrieve more containers. 

Air

High rates and capacity constraints continue for the air freight sector. With equipment and labor shortages, import surges and record volumes for shipping, finding air space capacity will be difficult. More shippers are also turning to air for cross-border transport, which is also increasing air cargo rates, and the market is already running at peak levels five months before peak season normally starts, according to FreightWaves 

Trucking 

Cyberattack shuts down Colonial Pipeline, causing diesel outages. A major pipeline system that transports fuel across the East Coast has been breached by a cyberattack, halting pipeline operations to deal with the threat. It’s been nearly a week since the attack, and there is an increasing number of outlets with no diesel supplies, affecting routes from New Jersey to Texas and lanes from Nashville to north Florida. Our team has been also seeing reports of truckers only being able to fill up to 50 gallons at once. As of Wednesday evening, the pipeline was restored, but it will take several days for the product delivery supply chain to return to normal, so delays should be expected. If you have questions regarding the pipeline outage, don’t hesitate to reach out to one of our experts

ICYMI: Constraints on trucking capacity are expected to last through the end of the year. According to freight industry experts, the ongoing squeeze on the trucking industry isn’t going away anytime soon, so prices for shippers will continue to increase. Combined with a shortage of trucks and drivers and a strong demand in a rebounding economy, there’s more freight than the industry is able to handle. More information on the trucking industry capacity can be found in an article by the Wall Street Journal Logistics Report

Rail

ICYMI: Union Pacific (UP) will build a transload facility in the greater Chicago area. In an effort to give exporters more capacity, UP will be opening up a transload facility in the fourth quarter. The facility will provide more capacity for agricultural shippers and their commodities as container lines add capacity in the Pacific Northwest amid rising demand. Additionally, the “facility will offer exporters greater access to ocean containers and faster turnaround of the equipment for container lines,” according to JOC.com

Other

New Southern California pollution rules will hike warehouse costs. A Southern California regulatory agency has approved new air pollution rules that will increase warehouse operations costs. These rules are expected to reduce total emissions from warehouses themselves and the millions of truck trips that generate harmful emissions. These new rules are not expected to stymie growth in the area or result in cargo diversion in Southern California.

Container Shortages and Shipping Rates Increase, Port of Montreal Workers Return to Work, and Air Cargo Supply Chain is Maxed Out

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Ocean  

The CMA CGM Group announces the order of 22 new vessels. Last week, CMA CGM signed with CSSC Group for an order for 12 LNG-powered containerships and 10 VSFO-powered containerships. The order aims to accommodate market growth for the carrier and is expected to join the group’s fleet between 2023 and 2024. 

Container shortages make it difficult to secure space at Asian hubs. Ports across the board in China are strained and short on containers, so it will be difficult to secure space in the next coming weeks. Additionally, the premium services are likely unavoidable, so shippers should be prepared to book with the premium services (with the port of Xiamen applying the premium service on a case by case basis). 

Container shipping rates increase as demand surges. The rate for a 40-foot container from Los Angeles to Shanghai reached $4,403 last week, the highest since 2011. Caused by stimulus payments and COVID-19 vaccinations increasing, the consumption of goods has inundated supply chains around the world, indicating that high seaborne freight rates and stretched capacity will continue into its second year. Therefore, shippers should expect high rates and constrained capacity for the foreseeable future.  

Customs  

India continues to experience mass COVID-19 infections and deaths. India has been experiencing very high levels of COVID-19 infections, with a seven-day average of approximately 330,000 cases. Due to these high levels of COVID-19, businesses and ports may be affected in the country. Our team is still monitoring how this will affect business out of India and keep you updated. 

ICYMI: Our team is seeing more bond insufficiencies. We’re reminding importers to actively monitor their import volumes. Bond values are based on a 12-month rolling duty and fee total, so monthly changes in import volumes could have a large impact on your bond requirements. Therefore, it’s recommended to be proactive in adjusting bond values before you receive a mandated increase from Customs. If you need help navigating these bond insufficiencies, don’t hesitate to reach out to one of our experts

Ports 

Delays and labor constraints continue at major ports on the U.S. West Coast. According to an update from Maersk, the Ports of Vancouver and Seattle are now operating at 120% of yard capacity, and the average vessel wait time for Vancouver is seven days and four days for Seattle. In Vancouver, there is limited terminal capacity, so containers are only discharged off vessels when other on-terminal containers exit the gates. 

Further south, labor constraints at the Ports of Los Angeles and Oakland continue to strain capacity. The Port of Long Beach has an average of 20-25 vessels at anchor with an 8-11 day wait time. At Oakland, there’s an average of 15-20 vessels at anchor with a 10-15 day wait time.

The Port of Montreal workers are returning to work. After Canadian lawmaker’s voted for legislation mandating the workers to come back to work, the longshore workers’ five-day strike was defeated. The port has said that it will take several days to restore normal cargo flow as the terminal operators handle 10 vessels waiting at the port. Therefore, shippers should expect delays in the next several weeks.  

South Carolina ports are expanding at inland rail terminals to accommodate growing volumes. The South Carolina Ports Authority is adding space for more containers and chassis at Inland Port Greer after the hub received more cargo in March than any other facility at South Carolina ports since 2013. The new space will accommodate longer trains carrying containers to and from the port, and construction is expected to wrap up in 2023. 

Hapag-Lloyd identifies a new yard to store NY-NJ containers. As part of the ocean carrier’s two-month plan to relieve a backlog of empty containers piling up due to record import surges, Hapag-Lloyd has stated that a new container yard will start accepting these empty containers. Experts say that finding storage for containers has been difficult and only contributed to bottlenecks in port trucking. 

Air

Air cargo supply chain is “maxed out.” As demand for personal protective equipment (PPE) and e-commerce increases, port delays forcing urgent cargo into the air, and manufacturers building buffer stocks, the air cargo industry is overstretched. It’s likely that this capacity strain won’t slow down anytime soon and will continue through the rest of the year and perhaps 2022. If you have any questions about air freight capacity, don’t hesitate to reach out to one of our experts

Trucking 

Constraints on trucking capacity are expected to last through the end of the year. According to freight industry experts, the ongoing squeeze on the trucking industry isn’t going away anytime soon, so prices for shippers will continue to increase. Combined with a shortage of trucks and drivers and a strong demand in a rebounding economy, there’s more freight than the industry is able to handle. More information on the trucking industry capacity can be found in an article by the Wall Street Journal Logistics Report

Rail

Union Pacific (UP) will build a transload facility in the greater Chicago area. In an effort to give exporters more capacity, UP will be opening up a transload facility in the fourth quarter. The facility will provide more capacity for agricultural shippers and their commodities as container lines add capacity in the Pacific Northwest amid rising demand. Additionally, the “facility will offer exporters greater access to ocean containers and faster turnaround of the equipment for container lines,” according to JOC.com

Carriers Suspend Services to Inland Points Including Minneapolis, Bond Insufficiencies for Importers, and Port of Montreal Workers Go On Strike

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Ocean  

Some ocean carriers are suspending services to inland points including Minneapolis. While not all carriers are suspending services to Minneapolis, some are, and so this suspension comes on a case-by-case basis. Our Navegate team will attempt to do a booking on behalf of our customers where we will then find out if carriers will accept the booking, and we will relay the information to our customers. Whether this suspension applies to your company, we will work with you to find the best way to receive your shipments. 

Congestion and delays will continue through the month of May. Due to ongoing congestion and strained capacity, shippers will have to consider booking via premium services again in May rather than on standard services. High ocean rates and a lot of rolled shipments are continuing, and importers should book shipments 6-8 weeks in advance. 

South American exporters to North America face delays and cargo rolling. Due to trucker shortages and congestion at U.S. ports, exporters from South America have been encountering delays and cargo rolling. This congestion and delays have led Hapag-Lloyd to temporarily halt bookings for all cargo due to ports on the West Coast from Latin America. 

Customs  

Our team is seeing more bond insufficiencies. This notice is a friendly reminder for importers to actively monitor import volumes. Bond values are based on a 12-month rolling duty and fee total, so monthly changes in import volumes could have a large impact on your bond requirements. Therefore, it’s recommended to be proactive in adjusting bond values before you receive a mandated increase from Customs. If you need help navigating these bond insufficiencies, don’t hesitate to reach out to one of our experts. 

As India experiences a mass COVID-19 surge, goods coming out of the country may be affected. India has been experiencing very high levels of COVID-19 infections, with a seven-day average of approximately 330,000 cases. Due to these high levels of COVID-19, businesses and ports may be affected in the country. Our team will monitor how this will affect business out of India and keep you updated. 

Ports 

Dockworkers at the Port of Montreal go on strike. This week, Montreal longshore workers began an indefinite strike to protest a schedule change that the maritime employers imposed on the workers. This strike undoubtedly will disrupt supply chains, and the Canadian government has already introduced legislation to force the workers to go back to work. On the other hand, workers at the port have said that federal intervention would disrupt their collective bargaining process, and they would go back to work if the maritime employers agreed to withdraw the schedule change that prompted the strike. Canada’s parliament is expected to debate a bill as early as this weekend that would require the 1,150 dockworkers back to work

Delays at Oakland and Pacific Northwest ports continue, but the gateways remain fluid. Cargo owners who have chosen to divert goods from the congested LA-LB ports to Oakland and Seattle-Tacoma have been experiencing delays, with vessel bunching as the major issue at Oakland. However, the gateways remain fluid, indicating that diverting vessels from LA-LB to Oakland and Seattle-Tacoma haven’t overwhelmed these ports.

Air

Hong Kong relaxes COVID restrictions for cargo pilots. On Friday, April 16, the Hong Kong government relaxed COVID restrictions for fully vaccinated cargo pilots, eliminating the measure that mandated Hong Kong-based aircrews to quarantine after returning home from duty. This measure removes the operational burden for all-cargo airlines. 

Trucking 

Trucking load volumes increase by more than double, straining trucking capacity. In the past week, 1.63 million loads were processed in one 24-hour period. According to Brent Hutto, chief relationship officer at Truckstop.com, the load volumes averaged around 1.4 million all week, contrary to the used-to-be normal amounts of 400,000 to 500,000 daily load volumes. “Historic low inventories combined with high retail demand and a manufacturing recovery are straining capacity across all modes of freight transportation,” according to JOC.com

Rail

Canadian National Railway (CN) discusses merger with Kansas City Southern (KCS). CN will soon be meeting with the board of directors of KCS over its acquisition proposal to construct a rail network that would extend from Canada through the United States and to Mexico. More information about the proposal, as well as the competition between CN and Canadian Pacific (CP) can be found in an article from FreightWaves 

Delays, rail storage fees, and congestion increase as imports move inland via intermodal terminals. Due to a nine-month supply of imports moving from busy U.S. ports to inland terminals, shippers are experiencing more delays and rail storage fees. In major inland hubs such as Dallas, Chicago, Memphis, and Kansas City, record volumes have overwhelmed the chassis supply, further exacerbating the already congested networks.

Asian Container Availability Tightens, Hong Kong-North America Air Rates Soar, and Kansas City Rail Terminals Overwhelmed With Containers

By | COVID-19 Latest Updates | No Comments

Ocean  

Asian container availability tightens and is expected to intensify. As demand builds through May, container lines warn that equipment will become even scarcer, with purchase and rental costs continuing to soar. This increased demand for containerized shipping is expected to deteriorate the current equipment imbalance. Shippers should expect container shortages to intensify over the next few weeks. If you need help navigating these congestion issues, don’t hesitate to reach out to one of our experts

Customs  

K-Line America, Inc. has been experiencing a system-wide global outage due to a cyber attack for nearly a month, so Customs has approved for all K-Line shipping lines to be exempt from the 24-hour rule. K-Line shipping lines have been allowed to load cargo on vessels and not be penalized for failure to comply with the 24-hour rule and Importer Security Filing requirements. This exception continues to be in effect. 

Ports 

Atlantic and Pacific ports set TEU records. In March, the nation’s ports continued their record pace for container volumes, fostering supply chain kinks and more warehouse space shortages. The Port of Los Angeles saw a 113% increase in 20-foot-equivalent units moved, which was the busiest March in the port’s 114-year history. The Port of Long Beach saw a 62.3% increase, while the Port of Oakland saw a 27% year-over-year increase. More information on how the nation’s ports became busier since the pandemic started can be found in an article from Transport Topics online

The longshore labor availability for the Ports of LA-LB significantly improves. In recent months, the West Coast longshore employers’ association and union have hired and trained hundreds of dockworkers to ease the burden of growing cargo volumes. However, officials say that more hiring is required to handle the growing congestion at the ports.  

The Port of Oakland surpasses LA-LB’s congestion problem as vessels pile up in the San Francisco Bay Area. While the Ports of LA-LB have seen improvements in their congestion, the Port of Oakland had around 25 vessels waiting to enter the port as of last week Friday. There is talk of congestion lasting until the summer.  

U.S. Gulf ports will implement a new all-water service coming in the second quarter. Amid an ongoing boom in regional import distribution capacity, the new service will start, while ports also look for opportunities to capture cargo headed to inland areas by increasing intermodal reach. More information can be found in the article by JOC online.  

Air

Hong Kong-North America air rates soar as capacity continues to tighten. The average air freight rates on services from Hong Kong to North America have increased as stronger demand and stricter quarantine rules hit the market. This increase in rates comes as Hong Kong aircrew members on most international journeys were required to isolate upon returning to Hong Kong due to strong quarantine measures. While these measures have reduced capacity, demand coming into the U.S. remains strong. 

The rising price of jet fuel further burdens companies with air freight shipments. The average price for jet fuel has increased this month, which may reduce limited capacity if passenger airlines decide to eliminate cargo-only flights that were temporarily started since the beginning of the pandemic. 

Trucking 

U.S. truck freight tonnage rises. According to data released by the American Trucking Association, actual truck tonnage hauled by for-hire U.S. motor carriers increase by 8.9% from February to March. This increase reinforces how strong consumer and industrial demand are this spring, indicating that there could be an early peak season for shippers, brokers, and carriers.

Rail

Kansas City Rail terminals are overwhelmed with containers. Railroads serving Kansas City are struggling with the pressure of high import volumes into the U.S., creating chassis shortages and shippers spending more on rail storage fees. These difficulties are a result of the severe winter weather that disrupted intermodal rail networks in mid-February. 

Canadian National Railway (CN) seeks to break up the Kansas City Southern (KCS) and Canadian Pacific Railway (CP) merger. In an effort to break up the KCS-CP merger with a larger bid, CN offered to acquire KCS with a $33.7 billion bid, which could indicate a bidding war for a US-Mexico railroad. While CN’s bid is larger, their proposal is massively complex and may likely fail, according to CP officials.

Suez Canal Impacts Linger, the Port of Charleston Receives its First Imports, and Union Pacific Raises Surcharges for Shippers

By | COVID-19 Latest Updates | No Comments

Ocean  

Suez Canal blockage leaves lasting effects on the supply chain industry, causing container shortages, spot rate increases, and a surge in demand. Carriers are warning that the heavily used 40-foot boxes will be in short supply from mid-April to well into May — a result of the Suez Canal blockage. The congestion from the blockage has slowed the return of containers back to ports in China.  

Additionally, spot rates on the trans-Atlantic westbound trade have increased as carriers have introduced substantial rate increases at the beginning of April. These rate hikes are also due to the Suez Canal blockage; carriers are struggling to recover lost schedules from the six-day blockage, hence the rate hikes. However, initial indications show that port hubs in North Europe and Asia are managing rising inbound vessels without major delays. 

Several shipping lines are expected to implement a general rate increase (GRI) into Asia on April 15. More carriers are expected to follow on May 1.

Customs  

K-Line America, Inc. has been experiencing a system-wide global outage due to a cyber attack for nearly a month, so Customs has approved for all K-Line shipping lines to be exempt from the 24-hour rule. K-Line shipping lines have been allowed to load cargo on vessels and not be penalized for failure to comply with the 24-hour rule and Importer Security Filing requirements. This exception continues to be in effect. 

Ports 

The Port of Charleston receives its first imports, offering much needed capacity relief to congested U.S. ports. The new Hugh K. Leatherman terminal officially opened on April 9th, welcoming the Hapag-Lloyd Yorktown Express. This new port opening marked the addition of 700,000 TEU of capacity to a U.S. port system that continues to experience surging import volumes. The facility will increase overall annual handling by 30%. 

The railcar shortage at the Ports of LA-LB eases, but terminals are still far from operating normally. After winter storms disrupted rail networks in February, weekly intermodal rail service at LA-LB is gradually recovering. However, terminal operators say that a return to normal will not suffice to curb the existing rail container backlogs at facilities.

Air

Air freight delays and costs continue to increase. Due to expensive ocean freight rates and unreliable container schedules, shippers are turning to air cargo for their shipments. This healthy demand has pushed global air cargo volumes back to pre-COVID levels but combined with limited capacity from passenger jets, these volumes are likely to keep rates elevated for a while. If you have questions about air freight capacity or rates, don’t hesitate to reach out to one of our experts

Trucking 

Truck manufacturers warn the Biden Administration of inability to meet freight demand. The world’s leading heavy-duty truck and truck engine manufacturers have warned the Biden Administration that a significant shortage of semiconductors is inhibiting their ability to produce enough trucks to keep up with freight demand. The Truck and Engine Manufacturers Association (EMA) has urged the administration to prioritize “automotive-grade semiconductors for medium- and heavy-duty truck components and aftermarket parts.” 

Rail

Union Pacific Railroad (UP) is raising surcharges for shippers. Starting April 25, the surcharge will be raised from $250 to $1500 for low-volume shippers, while medium-volume shippers will have to pay a $1000 charge. It is the first time that UP has instituted a peak season fee before the summer.  

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