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Logistically Speaking - HOT SHEET - Week 21

China Update

Shanghai ended its city-wide shutdown on Jun 1. The trucker shortage in the Shanghai region has been greatly improved but still hurting the flow of freight.

  • Road freight traffic indexes for Shanghai were 81% lower in the first three weeks of May compared to 2021.
  • The backlog from disruptions at the port and factories will likely cause congestion down the supply chain.
  • Vessel delays are still common, averaging 3 to 7 days.
  • There is already a backlog of cargo equivalent to 260,000 twenty-foot containers, which weren’t shipped from Shanghai in April.
  • Because of the lockdown, the rush to catch up will cause another bullwhip effect.
  • Solution: Let Dunavant look at your supply chain to plan ahead and develop a creative way to bypass the congestion when it comes.


US Rail Infrastructure

The Biden administration is awarding millions of dollars to expand and improve the nation’s rail tracks to reduce freight congestion and speed up the supply chain as shippers decry what they see as poor service.

  • The Transportation Department announced it will spend almost $370 million in grants for 46 projects in 32 states and Washington, D.C.


Oil Inventories

There has been an increased focus regarding the oil inventory squeeze on the East Coast.

  • Inventories of ultra-low sulfur diesel in the region declined to 19.375 million barrels from 20.4 million barrels a week before.
  • The latest figures are some of the lowest in five to eight years.
  • The spread between the Gulf Coast and the East Coast is a good indicator of the tightness of inventories.
  • Historically, the New York price is a few cents more than the Gulf Coast, but the recent squeeze drove it up to astronomical numbers that swung between about 50 cents and 65 cents at the start of the month.
  • A report from the Financial Times overnight suggested that Saudi Arabia told the West it was prepared to raise oil production if Russia’s output fell substantially under the weight of sanctions. Another report from the Wall Street Journal on Tuesday outlined that OPEC+ could suspend Russia from a supply deal due to economic fallout from the invasion of Ukraine and its ability to pump more crude.

BCO Inventories

According to the U.S. Census Bureau, total U.S. retailers’ inventories in March were $686.4 Billion, up 2.3% from February and 11.4% ahead of March 2021.

  • As retail stocks build with orders arriving that had been held up due to lockdowns in China, we will see an increase in demand for warehousing.
  • With consumer demand likely to slow because of inflation, this flood of inventory will cause a massive backlog and congestion at ports and warehouses.
  • Solution: Be looking ahead to maintain the flow of your goods. If warehousing is needed, reach out to Dunavant so we can get ahead of the wave.


U.S. Port Queues

“This appears to be a much-needed respite for some ports that have seen significant delays over the course of the year to date,” said S&P Global Commodity Insights.

  • This could change as China reopens and peak season is upon us.
  • Only 25 ships were waiting to call LA/Long Beach this week, way below the all-time high of 109 on Jan 9.
  • MarineTraffic showed 45 ships waiting compared to the 70 in February for the East Coast and Gulf ports.

 

Dwell Times

 

Posted by Andrea Wiley at 13:22