Month in Review – August 2022
Maritime
August 3: Carrier Schedule Reliability Records First Year-Over-Year Improvement in More than Two Years – The Maritime Executive
After hitting a low point at the beginning of 2022, schedule reliability and delays among the container carriers are steadily improving. The market is showing the first signs that the supply chain is managing after the challenges over the past two years brought on by the pandemic and the surge in consumer demand. This progress comes after the end of lockdowns in China but despite labour strikes at ports and persistent reports of backlogs.
“Global schedule reliability seems to have broken the trend seen since the start of this year,” said Alan Murphy, CEO of Sea-Intelligence. “This also marked the first time since the start of the pandemic that schedule reliability improved year over year.”
August 4: Traffic Restrictions Cause Congestion Concerns for Carriers at Nhava Sheva – Container News
Maersk Line has reported a slowdown in truck flows in/out of India’s Nhava Sheva Port/JNPT as a result of new traffic restrictions imposed by local authorities.
“Traffic police have issued a notice on movements of heavy vehicles from Nhava Sheva CFS [container freight station]/yard,” the carrier said in a customer advisory. “Heavy vehicle movement from JNPT area is, therefore, leading to traffic congestion. All these restrictions are beyond our control and this may lead to delays.”
The carrier has called on cargo interests to plan their shipments in advance to avert cargo gate-in delays/roll-overs.
August 4: DP World: Inland Network Congestion Affecting Marine Terminals – DP World customer advisory
On August 4, DP World issued a customer advisory related to berthing delays on the West Coast due to inland network congestion, particularly in Toronto and Montreal.
As these inland terminals became congested, the supply of rail cars to the marine terminals was restricted/stopped, which has had a major impact on both DP World Prince Rupert and Vancouver.
August 9: Container Lines Are Set to Smash Year-Old Profit Record by 73% – American Journal of Transportation
The world’s biggest container lines are on course to post profits in 2022 that will top last year’s record by 73%, according to a new forecast, buoyed by logistics and labour strains that are squeezing capacity amid sustained U.S. demand for imports.
Net income this year will likely reach $256 billion based on the 11 carriers monitored by industry veteran John McCown, the founder of Blue Alpha Capital. That’s an increase of $36 billion from his prior estimate in April and roughly equivalent to the gross domestic product of Portugal. The figure last year hit an all-time high of $148 billion, according to McCown.
August 10: Historic Drought Threatens to Cripple European Trade – American Journal of Transportation
In the midst of an arid summer that is setting heat records across Europe, the continent’s rivers are evaporating.
The Rhine – a pillar of the German, Dutch and Swiss economies for centuries – is set to become virtually impassable at a key waypoint later this week, stymieing vast flows of diesel and coal. The Danube, which snakes its way 1,800 miles through central Europe to the Black Sea, is gummed up too, hampering grain and other trade.
Across Europe, transport is just one of the elements of river-based commerce that’s been upended by climate change. France’s power crisis has worsened because the Rhone and Garonne are too warm to effectively cool nuclear reactors, and Italy’s Po is too low to water rice fields and sustain clams for “pasta alle vongole.”
August 12: More Blank Sailings Likely as Spot Rates Tumble – gCaptain
Container spot rates are falling fast on all export routes from China in what should normally be the peak season for demand.
According to the August 12 reading of the Ningbo Containerized Freight Index (NCFI), all 21 of the routes it covers were trending in the red.
Alongside headlines of another tranche of record eye-watering quarterly profits posted by ocean carriers last week, there was a general acceptance from the lines that the supply/demand scales were shifting back in favour of the shipper. Both short-term prices and long-term contract rates were experiencing downward pressure.
August 12: Fall in Imports and New Cranes Ease Congestion at Chittagong Port – The Loadstar
An increase in cargo handling equipment and a decline in import cargo has seen Bangladesh’s prime seaport, Chittagong, significantly reduce both volumes and berth waiting times for vessels.
Less traffic at the ports is due in part to government constraints on the import of luxury items, following a severe fall in foreign currency reserves.
August 16: China’s Yangtze River Also Reports Falling Water Threatening Shipping – The Maritime Executive
While attention is focused on the falling water levels along the Rhine and its impact on Germany and Europe, word comes that China is facing a similar challenge along the Yangtze, the country’s longest river. China in recent years has invested heavily in the Yangtze, always one of the most important inland waterways in the country, seeking to enhance its role in both supplying inland regions and becoming an increasingly important pipeline to move exports to the major seaport at Shanghai located on the Yangtze Delta.
As southern parts of China endure historic heatwaves and drought, water levels at Hankou, a key monitoring point on the Yangtze River near Wuhan, dropped to 17.54 metres (57.5 feet) last week, which the authorities report is about six metres (20 feet) lower than the average in recent years. According to local media, citing Chinese disaster response authorities, this is the lowest level seen for this time of the year since records began in 1865.
August 17: Reefer Rates Bolstered by Congestion, Shortages and Drought in Key Regions – The Loadstar
Equipment shortages have helped prop up freight rates for reefers, even as dry container prices continue to decline.
According to Rafael Llerena, CEO of 3PL EasyFresh, reefer freight rates have remained high despite an apparent tail-off in demand on other trades.
He said: “Reefer rates have held up not only because of the higher trade leg demand, compared with dry cargo, but also as a result of a shortage of equipment. Reefer containers have to compete with high-priced laden dry containers on the return leg from Asia and are facing congestion, which slows boxes returning from the U.S.
“Moreover, non-operating reefers have been used to replace dry cargo units on certain trades over the past few months, but these are taking a long time to return to loading ports due to congestion problems, schedule reliability issues and blank sailings from Asia, delaying rotation and supply.”
August 18: Maersk Shifting Vancouver Calls Due to Congestion – Inside Logistics
Delays and congestion have promoted Maersk to alert customers to changes in its scheduled calls at the Port of Vancouver.
In a note to customers, the liner company said West Coast terminals have experienced berthing delays in recent weeks due to inland network congestion, particularly in Toronto and Montreal. As these inland terminals became congested, the supply of rail cars to the terminals was restricted/stopped.
This situation has had a detrimental impact on the terminals, which are not designed for storing containers. Despite the projected expansions in both Vancouver and Prince Rupert, the terminal throughput hasn’t increased. Maersk reported that Centerm is at 108 percent capacity, while the yard at Prince Rupert is at 110 percent.
To work around the congestion, Maersk informed customers it is aligning its TP9 sailings from Asia to match the cadence at Centerm. This means every TP9 vessel in the queue is being evaluated for possible changes to the rotation. This includes calling at Seattle first in the rotation.
It also means sending TP9 ships to Prince Rupert for discharge of all Vancouver rail cargo. These vessels include Tyndall 219N, Maersk Singapore 229N, Anna Maersk 226N and Maersk Laberinto 220N.
August 19: Carriers Ease Rates Ex-India as Demand Falls and Capacity Returns – The Loadstar
With export volumes slipping amid global demand growth woes, container lines serving Indian trades are putting new rate hike plans for the traditional peak season on the back burner.
MSC has pulled back from issuing its general rate increase (GRI) and peak season surcharge (PSS) notices this month on the India-U.S. trades, while other liners have, tactically, kept themselves out of the pricing race, thus far.
After carriers managed to hold rates at elevated levels over the past two months, new industry data suggests they have now begun to implement measurable contract/spot price reductions for Indian bookings to U.S. base ports, in order to optimize vessel space allocations for the region.
August 22: Strike at Port of Felixstowe Set to Upend Supply Chains – American Journal of Transportation
About 2,000 dockers at the Port of Felixstowe began an eight-day walkout on August 21, halting the flow of goods through the UK’s largest gateway for containerized imports and exports, which handles about a third of Britain’s total container volume and an even bigger share of direct trade with Asia.
Shipping lines plan to reroute cargo around the picket line, adding time and cost. A.P. Moller-Maersk A/S said last week that two ships will skip usual stops and unload Felixstowe-bound consignments at continental ports before sending them on when the strike ends. Another will switch to DP World Ltd.’s London Gateway, the UK’s third-busiest port.
The strike could disrupt more than $800 million in trade, according to Russell Group, a data and analytics company. Though it’s too soon to evaluate any wider hit to growth, companies are anticipating longer delivery times and higher expenses that can only hurt Britain’s inflation-ravaged economy.
August 22: The Sinking Price of Ship Fuel: Near Prewar Levels after Summer Plunge – American Shipper
It was yet another warning sign on inflation: The price of fuel for commercial ships spiked after Russia invaded Ukraine and hit all-time highs in May and June. But that trend has now reversed. The price of ship fuel plunged in July and August and is now back to roughly prewar levels.
According to Ship & Bunker, the average price for fuel known as very low sulfur fuel oil (VLSFO, sulfur content: 0.5%) at the world’s top 20 refueling hubs was $800 per ton as of August 19. That’s down 29% from the all-time high of $1,125.50 on May 14. Just before the war, VLSFO averaged around $750 per ton.
August 23: Congestion and Capacity Shortage in Europe Sees Barge Surcharges Soar 150% – The Loadstar
Barge surcharges in Europe have soared 150%, due to hinterland congestion and container transport’s need to compete with demand for coal following Russia’s decision to cut gas supplies.
Contargo announced it would be increasing an emergency surcharge of €10 per transport of full or empty containers to €25 from September 1, heaping new misery on shippers that faced a week of closures on the Rhine.
Contargo said: “As well as the massive problems in seaports, substantial bottlenecks continue to affect our services on the rail network and inland navigation.
“Container barge transport is having to compete with coal and grain transport for the short capacities. The continuing very low water levels on the Rhine and its tributaries are increasing the demand for additional tonnage and driving prices up to critical levels.”
August 25: German Ports and Workers Agree to Terms to End Three Months of Strikes – The Maritime Executive
Germany’s unionized port workers and the association representing the seaport operators agreed to terms for a new contract after one of the longest running labour disputes in Germany in decades. The tentative agreement came just three days before a cooling-off period imposed by the Hamburg Labour Court was due to expire and removes the threat of further strikes, which have been disrupting operations in all the North Sea Ports since June.
August 25: Volumes Dip at Chinese Ports Among New COVID Lockdowns – Inside Logistics
Import and export ocean shipment volume at Chinese ports over the past weeks has declined as strict COVID-19 lockdowns have returned in tourist towns.
FourKites reports its data show that, as several large Chinese cities have been rolling out stringent lockdown policies, volume at the Port of Shanghai has started to decrease since the peak in mid-July, down 18 percent since then.
The 14-day average ocean shipment volume is now down 11 percent compared with March 12th (the day before lockdowns went into effect) and down two percent week-over-week for shipments tracked by FourKites.
August 26: Crews Strike Seaspan’s Tugboat Operations at B.C. Ports – The Maritime Executive
The captains and other crew members aboard Seaspan’s tugboats that operate in the ports of British Columbia walked off their jobs on August 25, striking after their union failed to reach a new collective bargaining agreement with Seaspan.
The strike could impact operations at the Port of Vancouver, which has already been experiencing congestion and delays due to the increased container volumes, as well as a shortage of trucks and congestion on Canada’s rail lines.
August 29: Port of Vancouver Operations Update – provided by Port of Vancouver
The Canadian Merchant Service Guild (CMSG) commenced legal strike action against Seaspan effective August 25. Seaspan has been in direct contact with its contracted customers.
The Vancouver Fraser Port Authority is responsible for maintaining the safety and efficiency of navigation through the Port of Vancouver.
Labour action has affected the berthing, leaving berth or bunkering of four cruise ships and two bulk vessels. Activities with respect to these vessels have been resolved.
The port authority continues to work with multiple parties, including Transport Canada, toward swift resolution of operational delays.
August 30: COVID Lockdowns Return to Key Chinese Port Cities – Splash
COVID lockdowns are ticking up in China again, with neighbourhoods in key port cities such as Shenzhen and Dalian forced back home this week, and mass testing underway at other important maritime gateways including Tianjin.
There is no letup in the government’s zero-COVID policy, which has stretched global supply chains a great deal this year. The difference now is that, while outbreaks have been getting more widespread in the last fortnight, lockdowns are pursued neighbourhood by neighbourhood rather than city-wide, and quarantine times have been cut back since the middle of June, according to analysis from research firm Gavekal Dragonomics.
Nevertheless, the quickening spread of the omicron variant has some analysts concerned.
At a news conference on August 29, Shenzhen officials said the latest outbreak is mainly driven by new subvariant Omicron BF.15, which they said is more transmittable and harder to detect.
August 30: Northern Europe Port Congestion Eases as Demand Falls and Strikes and Holidays End – The Loadstar
A combination of improved labour availability due to the end of the school holidays and a reduction in Asian imports has eased congestion at North Europe’s container hubs.
A wage settlement last week at German ports is also expected to relieve the high yard density at Hamburg’s box terminals in the coming weeks.
According to new weekly data produced by supply chain intelligence company eeSea for the port of Rotterdam, congestion at the Dutch gateway and neighbouring Antwerp has declined significantly in the past few weeks.
Air
August 3: Air Canada Cargo Steps Up to 777F League as North America’s Only Combi-Carrier – The Loadstar
Air Canada Cargo has taken the next step in the expansion of its cargo business with an order for two 777-200 freighters to join the fleet in 2024.
The decision to go for factory-built freighters rather than convert passenger 777s was largely driven by the opportunity to get slots on the Boeing production line and have the aircraft available for service sooner, said Jason Berry, VP, Cargo.
At the same time, the investment reflects the outlook of the airline’s top management on the opportunities in the cargo business, he said. For a long time freighters had been anathema to the AC boardroom.
AC is in the middle of a rapid build-up of its maindeck capacity. It has two B767-300 freighters in operation and will take delivery of two more before the end of the year. These, along with three more, including two factory-built 767-300Fs, will bring the fleet to seven all-cargo aircraft by the end of next year.
August 4: Taiwan Flights Disrupted as China Shows Anger at Pelosi Visit – Inside Logistics
Taiwan canceled airline flights on August 4 as China fired missiles near the self-ruled island in retaliation for a top American lawmaker’s visit, adding to the risk of disruptions in the flow of Taiwanese-made processor chips needed by global telecom and auto industries.
China ordered ships and planes to avoid military drills that encircled Taiwan, which the mainland’s ruling Communist Party claims as part of its territory. The Hong Kong newspaper The South China Morning Post called the drills an “effective Taiwan blockade.”
August 19: Global Air Cargo Tonnage and Prices Continue Decline – Air Cargo Week
Global air cargo flown tonnages and prices continued their gradual decline in the first two weeks of August after volumes staged a brief and partial recovery in the second half of July, the latest figures from WorldACD Market Data reveal.
Looking at week 32, worldwide chargeable weight decreased 5% compared with the previous week, and the average worldwide rate decreased slightly, based on the more than 350,000 weekly transactions covered by WorldACD’s data and analysis of the main international air cargo lanes.
August 25: Edmonton International Airport Sets Up Logistics Beachhead for U.S. E-Commerce – American Shipper
At first blush Edmonton seems an unlikely destination for international air shipments bound for online shoppers in the United States.
Following some promising trial runs with e-commerce providers, Edmonton International Airport is banking on its geographic location along circumpolar routes, congestion-free facilities and Canada’s trade-friendly customs rules to advance a multibillion-dollar air logistics village and become a major cargo hub.
“Planes that typically would have stopped at another point [are using] Edmonton not just as a place to stop and get gas, but actually the ending point. And then we’re transporting the goods, by air, by road or by rail into parts of the U.S.,” said Myron Keehn, the airport’s vice president of air service and business development. “We’re seeing dramatic cargo growth because companies are realizing the efficiencies of actually using Edmonton as their jumping off point into the U.S. and then conversely, back into Asia or the Middle East.”
Rail
August 8: STB Says ‘Train Noise’ Would Be Only Negative Environmental Impact of CP-KCS Merger – Transport Topics
The Surface Transportation Board’s Office of Environmental Analysis determined the only potential adverse impacts of Canadian Pacific’s proposed merger with Kansas City Southern would be train noise, according to the STB’s draft environmental impact statement (EIS) released August 5. All other impacts were described as negligible, minor and/or temporary.
STB announced its findings as part of a 357-page document, which details its research into potential impacts caused by the proposed merger, including freight and passenger rail safety, grade-crossing safety, grade-crossing delay, truck-to-rail diversion, traffic at intermodal facilities, noise and vibration, air quality and climate change, energy, cultural resources, hazardous materials release sites, biological resources, water resources, environmental justice and other cumulative impacts.
Now that STB has announced its findings, its Office of Environmental Analysis is providing a 45-day public comment period beginning August 12 and ending September 26 to weigh in on the draft EIS.
August 15: STB Chairman ‘Not Optimistic’ about Pace of Rail Service Improvement in U.S. – FreightWaves
Surface Transportation Board Chairman Marty Oberman expressed doubt that the four major U.S. Class I railroads could ramp up rail service and reach the service targets they laid out by December.
In response to deteriorating service metrics, the STB in June required Union Pacific, BNSF, CSX and Norfolk Southern to resubmit plans detailing how they expect to improve rail service through the end of the year.
“I have to say that, if you look at the regular reporting metrics we’re getting, they are a long way from their six-month targets and we’re about halfway through that six-month period. So I’m not optimistic about the pace at which rail service can recover,” Oberman said on August 12.
August 30: Impasse in Labour Talks Continues as Possible U.S. Freight Rail Strike Looms – FreightWaves
The remaining unions that are still negotiating with the freight railroads on a new labour contract are grappling over wages and benefits, while a union coalition’s survey points to broad potential support for a strike.
Three unions – the Transportation Communications Union/International Association of Machinists, Brotherhood of Railway Carmen and International Association of Machinists and Aerospace Workers – last week reached a tentative agreement with the railways. Those unions, which represent nearly 11% of the more than 144,000 rail union members seeking a new contract, are now sending that agreement to their members for ratification.
Per the Railway Labor Act, the remaining unions would be able to legally stage a work stoppage or strike after a cooling-off period ends on September 16. That date is a month after the Presidential Emergency Board, a three-person independent panel appointed by President Joe Biden, gave the unions and the railroads a 124-page report with recommendations on how to resolve the contract negotiations impasse.
Trucking
August 2: Natural Gas Truck Sales Increase, But More Focus on Electrification – Today’s Trucking
Natural gas truck sales in the U.S. and Canada rose 11% year to date through May, according to ACT Research.
When it comes to the broader alternative-fueled-truck market, Steve Tam, VP at ACT Research, said: “We’re seeing an overall increase in electric charging stations, both existing and planned, but a continuing decline of total natural gas stations, particularly those planned for the future. That said, we still see articles about natural gas use in transportation, as well as discussions about hydrogen fuel cells and investments, but the overwhelming amount of trade industry headlines continues to focus on electric commercial vehicle development.”
August 4: Vancouver Port Truckers Delay Labour Action – Today’s Trucking
Truck drivers have decided to delay labour action at the Port of Vancouver for a few weeks after holding talks with port officials on July 30.
The Vancouver Fraser Port Authority said that officials met with representatives from the United Truckers Association (UTA) and Surrey Centre MP Randeep Sarai to hear the UTA’s perspective on operational challenges.
“No changes have been made to the Rolling Truck Age Program, which will go into effect on September 15, 2022, as previously announced. As of now, there are 15 trucks that will age out of the program on that date,” a port authority spokesperson said.
August 11: Trucking Execs See Volatile Demand as Retailers Cut Inventory – Transport Dive
U.S. trucking industry leaders are reporting mixed demand for services as retail inventories pile up with easing consumer demand.
While companies such as Landstar and Marten reported record Q2 revenue, some executives have also noted pockets of softening demand or even described future conditions as volatile and unpredictable. Many carriers are slowing, if not entirely stopping, hiring, after reporting labour shortages just months ago.
August 17: Autonomous Trucks Will Do Jobs Human Drivers Don’t Like, Panel Says – Today’s Trucking
As human drivers step back from longhaul and middle-mile work, autonomous trucks could help fill less-desirable roles.
Some might say this is going to take jobs away from drivers, but this is not so, says Stephan Olsen, Paccar’s general sales manager, fleet & specialty markets. Truckers want to be home every night and are seeking first- and last-mile jobs, he adds. Letting them choose jobs that offer more family time will keep them in an industry that is facing a truck driver shortage.
Let the machines do jobs that humans don’t want to do, he said.
August 24: PRPA Completes Fairview-Ridley Connector Corridor Project – PRPA press release
The Prince Rupert Port Authority’s (PRPA) Fairview-Ridley Connector Corridor has formally opened. Testing on the route got underway in mid-August, with container truck traffic beginning to travel to the newly opened southern gate at DP World-Prince Rupert Fairview Container Terminal, and the Corridor is set to be fully operational on August 29.
August 25: Truckers to Be Granted Access to Express Entry Programs, CTA Says – Today’s Trucking
Truck drivers will soon be eligible for participation in Express Entry Programs, Minister of Immigration, Refugees and Citizenship Sean Fraser has confirmed in correspondence to the Canadian Trucking Alliance (CTA).
“In light of an acute labour shortage and a strained supply chain, this is very welcomed news for our industry and by extension the Canadian economy,” said Jonathan Blackham, CTA director of public affairs.
“CTA has been calling on the Government of Canada to help address our sector’s growing labour shortages by working with our industry to improve access to immigration channels. This announcement is very timely and absolutely welcomed by the trucking industry.”
Express Entry is an online system that is used to manage immigration applications from skilled workers and is specifically designed for skilled immigrants who want to settle in Canada permanently.
August 31: ‘Race to the Bottom’ in Truckload Contract Rates Sets In – FreightWaves
Pressure is being let out of global freight markets as demand falls and lower volumes in a variety of modes are more easily handled by the capacity and infrastructure built up during the last two years of the COVID-19 pandemic.
Transportation rates in several modes, including truckload and ocean container, are falling as demand deteriorates and capacity loosens.
The softness started with American consumer demand, which has been wobbling and running out of momentum as the effects from fiscal stimulus faded and inflation took hold in the economy. Two quarters of negative GDP growth – coupled with very high import levels – depressed the demand for transportation capacity and caused trucking spot rates to plummet.
CIFFA Advocacy, Communications, Activities
August 8: Message from CIFFA Executive Director Bruce Rodgers Regarding Supply Chain Challenges – The Forwarder Online
Over the past few weeks, CIFFA’s Secretariat office has seen increased concerns with the ongoing challenges of the supply chain. Members are asking for help and guidance to deal with rising/additional costs, significant delays and an overall lack of information.
CIFFA has also been contacted by government officials at both the federal and provincial levels, seeking short-term solutions to the present situation. Our message has been both consistent and clear: There are no short-term wins in this situation.
Government awareness and interaction should have occurred several years ago. Many projects that remain tied up in bureaucratic red tape would have lessened the burden felt by many today. The Port of Vancouver’s Roberts Bank Terminal 2 expansion project and CN’s Milton Logistics Hub are two examples.
The situation, as most are aware, is both complex and complicated, one that involves many different stakeholders.
