News

Logistically Speaking - HOT SHEET Week 29

California Truckers Strike
Truckers servicing some of the U.S.’ busiest ports are staging protests as state-level labor rules that change their employment status begin to go into effect, creating another choke point in stressed U.S. supply chains.

  • Trucking companies and truck owner-operators are trying to figure out how to operate under the measure known as AB5.
  • The law seeks to limit the use of independent contractors and classify them as employee drivers. The owner-operator model allows truckers to be their own bosses while taking advantage of a company’s permits and insurance discounts.
  • Transport workers are demonstrating at the Los Angeles, Long Beach, and Oakland ports. Executive Director Gene Seroka said that the protests had had no impact on operations at the Los Angeles complex.
  • The law has forced many drivers to switch markets or leave the business entirely, switching to a new profession. The LA/LGB protest took place this past Wednesday while the Port of Oakland truckers have planned a three-day demonstration, beginning Monday the 18th.
  • Solution: Dunavant is monitoring the situation as it develops and identifying if our customers have freight in these markets.

 

Ocean Spot Rates
In the fall of 2021, ocean spot rates had jumped to $20,000 per FEU, which everyone saw as unsustainable leading to a drop in demand or allowing competition regulators to intervene. Thankfully prices have come down off their peak, but what is the new normal?

  • On Thursday, Drewry’s weekly assessment for Shanghai-to-Los Angeles spot rates came in at $7,480 per FEU. That’s down 23% year on year and down 1% week on week, yet still 5.3 times higher than rates at this time of year in 2019.
  • The container shipping team at S&P Global has been reporting lower-than-expected Asia-U.S. demand ever since the end of the Chinese New Year holiday in February.
  • Downward spot-rate pressure continues, given ample space availability out of China and smaller carriers with chartered tonnage undercutting freight pricing of larger mainline carriers.
  • Finally, we see competition. George Griffiths, managing editor of global container freight at S&P Global Commodity Insights, sees it as “The market is just in wait-and-see mode at the moment.
  • There are rumors of more lockdowns in Shanghai coming up and some concerns that delays across the U.S. East Coast will begin to spread to the West Coast once more, but nothing concrete.”
  • Solution: The pricing department at Dunavant is constantly looking at rates at multiple ports to find the best combination of capacity and pricing to ensure your freight arrives in a timely manner at a reasonable price.

 

West Coast Labor Unions
The White House is monitoring labor talks in the logistics industry as unions representing 115,000 rail workers and 22,000 West Coast dockworkers negotiate new contracts.

  • Dock and railroad worker unions are currently negotiating contracts with employers, with the latter threatening to strike this past Monday.
  • The White House eventually jumped in with a federal panel appointed by President Biden.
  • The appointment of the panel comes at the tail end of a 30-day countdown to a possible strike after federal mediators could not broker a settlement in June.
  • The panel has 60 days to develop an agreement before the unions are allowed to strike.

 

Energy Prices
Flagging economic growth and higher prices are weighing on demand for crude, while sanctions on Russia are having less impact on oil production than expected.

  • As a result, U.S. and Canadian producers are leading an increase in global output, while Russian supplies prove resilient.
  • That has helped drive crude prices after prices were nearing $130 a barrel earlier this year. Meanwhile, AAA measured the national average cost for diesel this week at $5.535 a gallon, down about 28 cents a gallon from a month ago, and the price in Texas has slipped below $5 a gallon.
  • Still, prices remain far higher than a year ago.

 

Dwell Times

 

DIRECT CONTACT

Mark Genereaux
Senior Vice President, Customer Experience 
901.369.1522

Posted by Andrea Wiley at 14:00