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Logistically Speaking - HOT SHEET - Week 42

Imports into LA/LGB

On Wednesday, the Port of Los Angeles reported its lowest import total for September since 2009, amid the Great Recession. The day before, the neighboring Port of Long Beach posted its weakest import total for September since 2016.

  • Loaded imports to Los Angeles totaled just 343,462 TEUs, down 26.6% y/y.
  • Imports to Southern California ports are falling fast because shippers have shifted volumes to East and Gulf coast ports, fearing disruptions from West Coast port labor negotiations. Simultaneously, volumes are now pulling back nationwide due to falling demand.
  • Gene Seroka, executive director of the Port of Los Angeles, said, “concern over the dockworkers’ labor contract negotiations is a major factor contributing to volume declines.” He believes the shift “is likely to continue until a West Coast labor contract is in place.” When speaking to October’s volumes, he said it would be the same or a little bit lighter.

 

Mississippi River Reaching Lowest Point in 34 Years

Up and down the Mississippi, waters have dropped to levels approaching the record low set in 1988. Meanwhile, companies are not loading as much cargo onto ships, so they can travel safely and not bottom out, while fewer barges are included in each tow.

  • According to the American Commercial Barge Line, the industry has agreed to a 25-barge tow max size, which translates into around a 17-38% reduction in capacity.
  • The Army Corps estimates that the Mississippi carries 589 million tons of freight a year, which creates a $12.5 billion annual transportation savings, according to USACE spokesperson Lisa Parker.
  • The cost of sending a ton of corn, soybeans, or other grains southbound from St. Louis to southern Louisiana reached $105.85 on Oct. 11, according to data compiled by the U.S. Department of Agriculture. On Sept. 27, the cost was $49.88. On Oct. 5, 2021, it was $28.45.
  • About 60% of the grain and 54% of the soybeans for U.S. export are moved via barge. Barges touch more than a third of our exported coal as well.

 

US Diesel Supply Crunch

Diesel demand is surging in the U.S. while supplies remain at the lowest seasonal level ever, according to government data released yesterday. The shortage of the fuel used for heating and trucking is a key worry for the Biden administration heading into winter and ahead of the November election.

  • According to the Energy Information Administration, the U.S. has just 25 days of diesel supply, the lowest since 2008.
  • National Economic Council Director Brian Deese said that diesel inventories are “unacceptably low” and “all options are on the table” to build supplies and reduce retail prices.
  • In New England, where more people burn fuel for heating than anywhere else in the country, stockpiles are less than a third of typical levels for this time of year.

 

Labor Strike Back on the Table

The Brotherhood of Maintenance of Way Employees Division (BMWED) announced on Oct. 10 that more than 56% of its membership voted against ratifying the tentative national agreement that it had reached with the Class I freight railroads on Sept. 11.

  • Six other unions have already ratified their agreements, the NCCC said.
  • The union and the railroads have until Nov. 14 to negotiate a new labor agreement. After that, BMWED could go on strike, per federal law.
  • So why are the workers still mad? A lot of it has to do with employers’ “no-fault” attendance policies, where workers are penalized under a points system for missing shifts until they’re eventually fired or punished.
  • In addition, the new agreement requires workers to request sick leave 30 days in advance.

 

California law

Gov. Gavin Newsom last week signed Assembly Bill 2406, which prohibits intermodal equipment providers and marine terminal operators from imposing per diem detention or demurrage charges except in some instances. A partial list of the circumstances includes:

  • When a loaded container is not available for pickup when the motor carrier arrives at the terminal.
  • When the intermodal marine terminal is too congested to accept the container and turns away the motor carrier.
  • When the intermodal marine container provider decides to divert equipment from the original interchange location without notice.
  • When the motor carrier documents an unsuccessful attempt to make an appointment for either a loaded or empty container transaction.
  • When a return or delivery of an intermodal container is delayed because a booked vessel’s receiving date changes, and when the obstacle to the cargo retrieval or return of equipment are within the scope of responsibility of the carrier or their agent and beyond the control of the invoices or contracting party.

The law goes into effect on Jan. 1

 

Ningbo port hit by Covid policies

The Port of Ningbo, the world’s largest port and the third-largest container port, is the latest Chinese trade hub to see the impact of the government’s “Zero Covid” policies.

  • A Covid outbreak was detected on Thursday of last week and spread to Beilun, the area with the most terminals for the Port of Ningbo, leading to a decrease in productivity, according to analytics provider MarineTraffic.
  • “A large number of warehouses and container yards are located in Beilun, so since Oct. 16, the Beilun District temporarily closed management,” said Joe Monaghan, CEO, and president of Worldwide Logistics Group.
  • “A large number of Ningbo warehouses cannot open to receive cargo and can’t pick up empty containers from container yards, and truckers need to apply for a special pass for delivery to the Ningbo dock area. The situation in Ningbo may last for a week.”
Posted by Katie Elizabeth Carpenter at 08:12