Logistically Speaking - HOT SHEET - Week 9
March 3, 2022
Suez Canal
The Suez Canal Authority will increase tolls for the second time this month after a 6% increase.
- Depending on the vessel type, the 5%, 7%, or 10% tolls will affect both Northbound and Southbound ships no matter their status (Full or Empty).
- The International Longshore and Warehouse Union rejected a contract extension in late '21, setting the stage for volatile negotiations and carriers looking to the east coast as an alternative.
- Over the past two years, we have seen this shift escalate, with Suez traffic increasing 68% compared to pre-pandemic times.
- With rising crude prices, the option to round the Horn of Africa seems less likely.
- Solution: At Dunavant, we are cognizant of these price increases and are investigating ways to manage rates. If fuel prices do recede, routing around the Horn of Africa might be the most cost-efficient and an avenue we would take.
Ukraine-Russia War
Global Supply chains already strained by the pandemic have been dealt another blow with Russia's invasion of Ukraine.
- E.U. airspace closed to Russian planes
- FedEx and UPS suspended operations in Russia and Ukraine.
- Maersk, CMA CGM, and MSC have suspended all Ukraine-bound shipments and discharging at neighboring ports.
- Some carriers have a temporary booking suspension for all inbound/outbound shipments for Russia: Maersk, Hapag-Lloyd, MSC, CMA CGM, ONE, and Yang Ming. Exempted from this suspension are foodstuffs, medical, and humanitarian supplies.
- More than 130 countries have at least one commodity import predominantly sourced from Russia, Ukraine, and neighboring Belarus, such as nickel, copper, iron, platinum, palladium, oil, natural gas, and many agricultural products.
- Expeditors International said it had shut down most operating systems due to a cyberattack.
- Solution: Different sourcing will help alleviate some of these problems; we continue to explore solutions with the ideal equilibrium of cost and timeliness. Dunavant has procedures to protect our systems from cyberattack.
Ocean Pricing
During the State of the Union, President Joe Biden announced an agreement between the Department of Justice and the Federal Maritime Commission in response to the exorbitant pricing between China and the U.S., among other things.
- The top three global alliances control 80% of the global Container shipping capacity.
- The FMC and DOJ partnership facilitates cooperation against anti-competitive behavior and price gouging.
- POTUS is also calling on Congress to pass reforms on the shipping industry to address the current antitrust immunity that the shipping alliances stand behind.
- Solution: We continue to watch regulations that are released or in the pipeline with contacts in D.C. and employees who serve on boards and committees within our industry.