Freight Forward - Canadian Ports Strike

Welcome to Freight Forward, where each Monday, I’ll recap what happened in supply chains the previous week through JOC.com articles and additional sources and also what to expect for the week ahead.

I’m Cathy Roberson, a supply chain writer, and researcher. For this weekly series, I serve as a research analyst for the Journal of Commerce (JOC), for whom I identify trends, provide thoughts and input into stories and assist with parcel last-mile queries.

The year of union activity continues as Canada's west coast ports strike, the Teamsters threaten to take down one of the largest LTL carriers, and possible disruption of the small parcel market if a UPS - Teamsters contract is not reached by July 31.

Longshore workers at the ports of Prince Rupert and Vancouver went on strike Saturday morning over a contract dispute.?Mark Szakonyi writes that the ports are adjusting operations to mitigate cargo buildup. The Vancouver Fraser Port Authority is adjusting how it directs and manages anchorage. For example, vessel anchorages in the inner harbor, where DP Centerm and GCT Vanterm operate, are now limited to 48 hours.?

The Canadian strike comes as shipping rates continue their descent. For example, rates from North Europe to the US East Coast are at their lowest level in more than three years, having lost about 80% of their value since Jan. 1 alone, and are only narrowly above pre-pandemic prices, according to rate benchmarking platform Xeneta. Asia-Europe rates are down 41% since Jan. 1 and are already at a level not seen since Dec. 31, 2019, writes Greg Knowler .?

The digital forwarding arm of Zim Integrated Shipping Services, Ship4wd, launched two new payment tools designed to ease cash flow burdens on small and medium-sized shippers. The tools include an instant $10,000 credit line facility for shippers and a “buy now, pay later” product that lets small businesses pay their shipping costs up to 90 days after delivery, writes Eric Johnson . “Our goal at Ship4wd is to make the freight forwarding experience less complex, especially for small and medium-sized business owners,” Ship4wd CEO Carmit Glik said in a statement.?

Inland

Yellow is appealing directly to President Joe Biden to intervene in its conflict with the Teamsters Union. Bill Cassidy writes that although Yellow’s letter doesn’t recommend a specific course of action, it raises hope for the type of direct executive action Biden took last year to avoid a nationwide railroad strike. Yellow noted that it has trained more than 3,000 commercial truck drivers through its partnership with the Labor Department. The company also pointed out that US taxpayers hold 30% of Yellow’s stock, thanks to a deal that gave the company a $700 million US Treasury loan from COVID-19 relief funds in 2020, saving it from bankruptcy.??

Rail

• Canadian Pacific-Kansas City (CPKC) signed a deal with Hapag-Lloyd that involves the ocean carrier bringing in containers to the port of Lazaro Cardenas on Mexico’s Pacific Coast, while CPKC will then move the boxes to the US via rail. The railroad said the partnership with Hapag-Lloyd is designed to attract cargo owners to Lazaro Cardenas who may want to avoid Southern California or are looking for a shorter transit for freight destined for the US Gulf Coast, writes Ari Ashe .?
• Domestic intermodal providers have lowered contract rates through the end of the year for smaller shippers, writes Ari Ashe , as they look to attract business to rail amid a weak demand environment. Union Pacific Railroad and COFC Logistics, a wholesaler for BNSF Railway, have updated contractual rates for low-volume shippers, known as the aggregate rates. UP cut rates by 3.5% across more than 200 lanes in the US for the balance of 2023, while COFC cut rates 5% on average across 32 lanes.?

Parcel

Progress was made over the weekend as UPS and the Teamsters negotiated a new contract. The existing contract expires on July 31, and the Teamsters have noted that they would not work past that date without a new contract.

According to the Teamsters, the union reached an agreement with UPS on Martin Luther King Day as a paid holiday for all union members and the end of the controversial 22.4 employees. These employees will be reclassified to Regular Package Car Drivers (RPCD), placed in seniority, and have their pay adjusted to the appropriate RPCD rate.

The formation of 22.4 employees was part of the 2018 agreement in which this newly created position was designed to provide UPS "with the flexibility to meet increased consumer demand for weekend pick-ups and deliveries while preserving the Monday-Friday schedule preferred by our full-time delivery drivers" according to UPS.?

Teamsters Local 710 reached a 5-year tentative agreement with UPS on Sunday for the Chicago local contract. Local 710 represents 7,000 full and part-time UPS members.

US Legislation

• Idaho Senators James Risch and Mike Crapo, along with Sen. Rick Scott (R-Fla.) and Sen. Ted Budd (R-NC), introduced the ”Preventing Labor Union Slowdowns Act” (PLUS) of 2023, which argues that US supply chains need to be protected from the costs of longshore labor disruptions writes Michael Angell . Under the PLUS revisions, it would be considered an unfair act by maritime workers “to engage in a labor slowdown at any time, including when a collective bargaining agreement is in effect.” Longshore unions also would not be allowed to impede “modernization efforts at a port, which thereby interferes with or otherwise impedes economic activity in relation to the national supply chain ... [or] ... interfere with or otherwise impede the servicing of any automated vessel operating without a crew.”?
• Rep. Dusty Johnson, a Republican from South Dakota, is a sponsor of a pending update to the Ocean Shipping Reform Act of 2022 (OSRA-22), writes Eric Johnson . Part of that legislation, which has yet to be formally introduced, would prevent US port authorities from receiving federal funding if they use the China-sponsored National Transportation Logistics Public Information Platform or LOGINK. “If LOGINK gained access to US carriers and ports, the [Chinese government] would be at an extreme competitive advantage, allowing them to underbid foreign competitors and further increase dependency on Chinese markets,” Johnson’s office said in a statement. “LOGINK provides massive amounts of monitoring, data, and logistics infrastructure to the CCP — it’s imperative we keep LOGINK out of American ports,” Johnson said. “China already competes unfairly in the global shipping arena. Blocking their access to American port data is one small step to keep this advantage to a minimum.”?

Europe

Europe’s two largest container shipping gateways are making a series of investments in capacity and technology to prepare the ports for increasing volumes in a more digitalized and automated future, writes Greg Knowler. The port of Rotterdam announced that one of its main terminals will be expanding its fully automated capacity and hinterland connectivity, while the nearby Belgian hub of Antwerp-Bruges has launched an extensive digital radar and camera network to manage its huge volume of shipping traffic.?

Economic Outlook

• Monday, July 3 - S&P Flash PMI for June
• Friday, July 7 – US employment for June

That’s it for this week. Please be sure to hit the subscribe button to receive the latest updates.

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What did I miss? Have a question? Let me know in the comments. I’ll be checking back throughout the week to answer questions, address comments and share additional insights.

In the meantime, here’s wishing everyone a good freight week ahead!

-Cathy?