Freight Forward - Union Concerns Grow

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.

After ten months of no progress in West Coast labor negotiations, a coalition of 238 US shippers and transportation interests, including the National Retail Federation (NRF) and the Agriculture Transportation Coalition (AgTC), signed a letter asking the Biden administration to name a new point person for the contract talks following the departure of former Secretary of Labor Marty Walsh and to offer “mediation services” to move negotiations along writes JOC’s Bill Mongelluzzo.

The letter comes as delays hit some marine terminals at the ports of Los Angeles and Long Beach- Longshore workers represented by Local 13 of the International Longshore and Warehouse Union (ILWU) have refused to stagger their meal breaks as required, resulting in periods when no work is being done on the docks.?

Meanwhile, according to JOC’s Mark Szakonyi, Michael Angell, and Teri Errico Griffis, a federal appeals court in June is expected to hear arguments in an appeal filed by the South Carolina State Port Authority (SCSPA) as it seeks to block the International Longshoremen’s Association (ILA) from suing container lines who call on Charleston’s Hugh K. Leatherman Terminal. The fast-track hearing schedule came after the SCSPA told the court the port could become “bottlenecked” if ships can’t call the terminal.?

In Canada, just after two weeks into formal negotiations, the ports of Vancouver and Prince Rupert have asked the Canadian federal government for help in reaching a new contract with maritime employers, citing a lack of “meaningful progress”. The International Longshore and Warehouse Union (ILWU) Canada’s existing contract expires at the end of March.

Europe is also not immune, according to JOC’s Greg Knowler. Access to marine terminals in Hamburg via the Elbe River closed to container shipping because harbor pilots have been caught up in a 36-hour “warning strike” by German union Verdi in a dispute over public sector wages that began with the night shift last Wednesday and ended on Friday.

Labor concerns are widespread throughout supply chains.

1. The Teamsters rejected the change of operations proposed by Yellow Corp.
2. Negotiations between the Teamsters and UPS continue. The contract expires on July 31.
3. FedEx Express pilots were granted a strike authorization vote in February as the pilots and FedEx continue negotiations since May 2021. An interesting commentary from a pilot penned last week via Supply Chain Dive online publication.

Breakbulk

1. New emissions regulations are further complicating an already-difficult decision-making process when it comes to ordering multipurpose and heavy-lift vessels, JOC’s Janet Nodar writes.?The International Maritime Organization’s (IMO's) energy efficiency existing ship index (EEXI) and carbon intensity indicator (CII) regulations are in force as of Jan. 1, 2023, although they remain in a data collection phase only until early 2024.?

• Mammoet, the world’s largest heavy-lift, and engineered road transport provider, has been put up for sale, according to a March 14 statement from Netherlands-based parent company SHV, writes JOC special correspondent, Keith Wallace.
• Webinar – Available on Demand - Rebalancing the Project and Breakbulk Market: Expectations for 2023 – JOC’s Janet Nodar and Susan Oatway discuss?expectations from the multipurpose and heavy-lift shipping segment through 2023 and into 2024.

Air

JOC’s Greg Knowler writes that Maersk Air Cargo launched scheduled service between Billund in Denmark and Hangzhou in China last week in response to increasing customer demand. The carrier’s internal airline will operate three flights a week between Scandinavia, Northern Europe, and Asia-Pacific.?

The latest from Maersk Air Cargo follows CMA CGM Air Cargo which earlier increased its air freight operations to 15 scheduled flights per week that connect Europe, Asia, and the US, while MSC began its round-the-world service after taking delivery of the first of four Boeing 777-200 freighters earlier this year. MSC has expanded its focus beyond China with the service connecting Mexico City, Indianapolis, and Seoul in addition to Xiamen.?

But the additional space is hitting the market as demand weakens and amid the?sharp decline of ocean freight rates and high inventory levels in the US and Europe.

Air cargo analyst World ACD noted that global air freight capacity was up 15% in March year over year, with double-digit percentage increases across all regions. That has dragged rates down from the record levels recorded at the end of 2021 and in early 2022 despite the effects of higher fuel surcharges. But prices remain far above pre-pandemic 2019 levels.?

Inland Distribution

In a move that will increase its revenue by as much as 30%, Knight-Swift Transportation Holdings will acquire U.S. Xpress Enterprises, a truckload provider, for approximately $808 million, excluding transaction costs, Knight-Swift?announced last week.?

JOC’s Bill Cassidy writes that the deal is?the largest acquisition of one publicly owned trucking company by another since TFI International?acquired UPS Freight?for $800 million in 2021 and is likely to echo across a trucking landscape where many smaller carriers are squeezed for cash and ready to sell.?

Intermodal

Domestic intermodal shippers sending freight from Chicago to the West Coast are facing delays on Union Pacific Railroad, which the company blames on a combination of higher volumes and an equipment imbalance related to weather, according to JOC’s Ari Ashe.

Intermodal providers have told the?Journal of Commerce?they are struggling to bring 53-foot containers into UP’s terminals in Chicago and nearby Joliet, Illinois, causing delays of several days to move cargo to the West Coast.?

“We are seeing strong demand in the Chicago to Southern California lane,” the railroad said in a statement Thursday. “Weather issues, including those in the West and Midwest, have impacted our car cycle times. Union Pacific has ample intermodal well cars running in the network to support the demand.”?

Economic Outlook

• Tuesday, March 28 – Monthly Advance Economic Indicators Report - trade in US goods, wholesale inventories, and retail inventories
• Tuesday, March 28 – US Confidence Index – Expected to come in lower than February.
• Thursday, March 30 – GDP 2nd revision for Q4 – Expected to remain the same as the first revision, which was 2.7%.

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

For readers interested in reading more JOC stories, click on CATHYR20 to receive a 20% discount (Note this is for first-time subscribers.).

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