Border States Supply Chain Update - January 2025

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In this newsletter?

• Ports and dockworkers reach a new six-year contract deal.?

• Commodity prices are seesawing on the global market.?

• U.S. labor market is stable exiting 2024.?

Lead time trends?

Lead time changes over the last 12 months:?

• Natural gas/PVF: -37%
• Utility: -49%
• Industrial: -43%
• Construction: -22%

Ports and dockworkers reach a new six-year contract deal?

The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) reached a tentative deal on a new six-year contract, avoiding another strike.??

Zoom in: The agreement covers approximately 25,000 union dockworkers at 14 East Coast and Gulf Coast ports and maritime cargo centers. Terminal operators and ocean carriers will receive broader rights to introduce semi-automated cranes and other technology needed to improve efficiency in container-handling, while the union will receive some protections of existing positions and guarantees of new jobs related to the addition of new automation equipment.??

Review of the ILA and USMX negotiations?

• September 30, 2024: Six-year master contract expires.?

• October 1, 2024: Union dockworkers go on strike.?

• October 3, 2024: Parties agree to extend negotiations until January 15 with a 62% wage increase, ending the three-day strike.??

• November 13, 2024: Negotiations cease on the master contract.?

• January 7, 2025: Negotiations resume on the master contract.?

• January 8, 2025: Parties reach a tentative deal on a new six-year master contract.?

By the numbers: As shippers and carriers anticipated the labor dispute, container rates spiked nearly 13% in December 2024 in preparation for a potential work stoppage. December 2024 saw continued strong import volumes in the U.S. with 2.37 million TEU (20-foot container equivalent). Rates remain elevated nearly 50% over the prior year, driven by ongoing Red Sea and Suez Canal shipping disruptions. Diesel fuel prices remain stable, even as ongoing conflicts in the Middle East and Ukraine persist.??

Commodity prices are seesawing on the global market?

The metals market experienced fluctuations in prices, global supply and demand brought on by the Federal Reserve’s (Fed) decision to cut interest rates in December 2024, President Biden’s decision to block the purchase of U.S. Steel to Nippon Steel, anticipation over China’s economic recovery plan and the upcoming transition of U.S. presidential administrations.??

More commodity news:?

• PVC suppliers expect to recover from a one-week delay in lead times due to maintenance and begin preparing for a strong construction season.?

• While U.S. pending home sales rose 2.2% month over month in November 2024, the demand rebound has yet to boost lumber prices.?

• Crude oil prices have increased by over 5% month over month, driven by cold weather, a tightening global market and potential sanctions and trade conflicts surrounding President-elect Trump’s return to office.?

U.S. labor market is stable exiting 2024??

The Fed lowered interest rates by another one-quarter point in December 2024, marking its third straight rate cut. The Open Market Committee will meet again Tuesday–Wednesday, January 28–29.??

• The U.S. labor market added 256,000 jobs in December 2024, up from the 160,000 economists had predicted.?

• Unemployment remains relatively stable with a slight decline from 4.2% to 4.1%.?

Why this matters: December 2024’s strong employment market figures suggest the labor market is stabilizing, which could influence a slowing of rate cuts into 2025.??

By the numbers: The Consumer Price Index, which measures price changes across commonly purchased goods and services, increased more than predicted in December 2024, rising 2.9% on an annual basis. The Producer Price Index, which tracks average price changes experienced by producers and manufacturers, rose 3.3% over prior year, with a one-month increase of 0.2%.?

News roundup?

In California, wildfires have swept through more than 40,000 acres in the Greater Los Angeles area, destroying more than 13,600 structures and killing at least 27 people. Our thoughts are with all of those impacted by these devastating events.??

We continue to work with our suppliers to understand potential risks and impacts across our supply chain. All suppliers with operations in the impacted areas have reported their employees are safe and there are no known impacts to production at this time.??