Freight Forward: “We are not where we need to be.”

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 express and parcel last-mile queries.

• A huge explosion aboard a Yang Ming vessel last Friday closed the Chinese export hub of Ningbo. The port has been closed “until further notice,” according to Hapag-Lloyd. That will pile pressure on container shipping supply chains still struggling to catch up on disrupted schedules after Typhoon Gaemi blew through the region at the end of July writes Greg Knowler and Keith Wallis.
• The NRF Global Port Tracker (GPT) has again upgraded its short-term forecast for imports, saying it expects year-over-year monthly increases in imports at least through the end of the year writes Bill Mongelluzzo. ?

“Retailers are concerned by the possibility of a strike at ports on the East and Gulf coasts because contract talks have stalled,” Jonathan Gold, vice president for supply chain and customs policy at the NRF, said in a statement accompanying the GPT. “Many retailers have taken precautions, including earlier shipping and shifting of cargo to West Coast ports.”

• Ocean carriers on the trans-Atlantic have announced peak season surcharges (PSSs) for Sept. 1. The attempted price moves are the first rate increases or surcharges to be announced on the trade lane since February writes Greg Knowler.

• The International Longshoremen’s Association (ILA) is seeking an almost 80% wage increase over the life of its next six-year contract with maritime employers on the East and Gulf coasts, two ocean carrier sources familiar with the negotiations told the Journal of Commerce. The disclosure comes as the ILA sent a 60-day notice to the United States Maritime Alliance (USMX) warning that the union is prepared to strike if a new labor deal is not signed before the current contract’s Sept. 30 expiration writes Michael Angell and Peter Tirschwell.
• Greg Knowler writes that the rising volume and rates were not enough to prevent second-quarter revenue in Maersk’s ocean segment declining 3.8% year over year to $8.3 billion. EBITDA in the segment fell 38% to $1.4 billion and EBIT dropped 61% to $470 million. In addition, Maersk’s Logistics and services is the business segment reported improving profitability but CEO Vincent Clerc said “we are not where we need to be.”
• Supply chains in Bangladesh are in flux due to mass civil protests and heightened political unrest writes Bency Mathew. Sources told Mathew that inland transportation networks have hit a total standstill countrywide and the main port, Chittagong Port, closed for a period of time.
• Walmart’s Walmart Cross Border has begun offering ocean freight capacity and customs clearance services for sellers using its online marketplace. The service is initially being offered on a port-to-door basis for full containerloads from three load ports in China — Yantian, Shanghai and Ningbo writes Eric Johnson.
• Per Air Cargo Next - Another US bill was introduced to alleviate de minimis loopholes. The FIGHTING Act would bar certain categories of products from using de minimis. Per the Sourcing Journal - Customs would be required to collect more data about the de minimis shipments they inspect to bolster their ability to intercept them. The law would streamline CBP procedures for seizing & disposing of these products, increase penalties for violators & establish a $2 per-shipment fee for the use of de minimis entry.

Columns

• Transload demand from Southern California expected to pop in Q3, Larry Gross
• Ocean carriers need skillful capacity control to navigate coming rate decline, Jeremy Masters
• Logtech investment slump signals pivot from disruption to enablement, Eric Johnson

Inland

• The Port of Virginia officially opened a larger intermodal yard inside Norfolk International Terminals (NIT). Cargo owners in the Midwest will be the biggest beneficiaries of the expanded central rail yard. The Port of Virginia moves more than 100,000 pier containers to Chicago annually, while between 25,000 and 45,000 pier containers are railed inland to Cincinnati, Cleveland, Columbus, Detroit and Louisville writes Ari Ashe.
• Commodities transported on Canadian rails are not considered essential services because “reasonable alternatives” exist through long-haul trucking, the Canadian Industrial Relations Board (CIRB) ruled Friday, opening the door for a strike to occur as soon as Aug. 22 that would shut down both Canadian railroads writes Ari Ashe.
• Intermodal shippers in the US saved 25.5% under annual contracts in the second quarter compared with long-haul trucking, according to the latest Journal of Commerce Intermodal Savings Index (ISI), unchanged year over year and down just three-tenths of a point from the first quarter writes Ari Ashe. In the spot market, the average shipper saved 23.4% using domestic intermodal, a record high, up from 12.6% savings during the same period one year ago.

• Norfolk Southern Railway (NS) will join Canadian National Railway, CSX Transportation and Union Pacific Railroad by requiring trucking companies to book a reservation to drop off international and domestic containers beginning Sept. 4 writes Ari Ashe.
• A historic purge of capacity among large US truckload carriers is under way, with the carriers in the Journal of Commerce Truckload Capacity Index (TCI) slashing their collective truck capacity by 9.5% year over year in the second quarter writes Bill Cassidy.

• STG Logistics is converting its port drayage operations in New Jersey from directly hiring owner-operator drivers to instead brokering loads with other motor carriers, citing the regulatory and legal risk around the widely used independent contractor business model for container haulage writes Michael Angell.
• US shippers moving LTL freight are not just giving more freight to large LTL carriers such as Saia and XPO — they’re shifting pallets to non-asset providers as LTL costs rise writes Bill Cassidy. 3PL provider RXO increased its LTL volume 40% year over year in the second quarter. 3PLs are also uncovering new opportunities to pull more freight into LTL channels.

“In our LTL business, shipments were also up 1.5% on a year-over-year basis and 3.5% sequentially [in the second quarter], driven primarily by strength in our retail consolidation service offering,” Michael Castagnetto, president of North American Surface Transportation for C.H. Robinson Worldwide, said during a July 31 earnings call.

• Pitney Bowes Inc. sold the majority interest of its Global Ecommerce unit to Hilco Global, which will liquidate & wind down the business. The Global Ecommerce unit includes returns, fulfillment, cross-border ecommerce & domestic & international delivery services. Pitney Bowes will focus on its 2 other segments, SendTech and Presort.

That's it for now. Thank you for reading! For readers interested in reading more Journal of Commerce stories, click here to subscribe. Enter code FFNL20 at checkout to receive a 20% discount on any subscription option. (Note that this is only for first-time subscribers or for upgrading a current subscription). 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