Logistically Speaking - Hot Sheet Week 8


Logistically Speaking - Hot Sheet Week 8

FedEx Pilots Call for Strike Authorization

The FedEx unit of the Air Line Pilots Association (ALPA) has passed a resolution that authorizes its chair, Captain Chris Norman, to call for a strike authorization vote at an appropriate time during the ongoing contract negotiations with FedEx management. The move comes after more than 18 months of negotiations have failed to reach an agreement between the two sides. The FedEx pilots are seeking quality-of-life improvements such as updated pensions that will benefit their lifestyle, especially in the current Covid-19 pandemic. According to a FedEx statement, a strike would only happen if legally mandated steps are taken. If safeguards against it, like presidential or congressional intervention, a strike does not take place.

The resolution passed by the FedEx Master Executive Council has been endorsed by ALPA president Jason Ambrosi, and a strike vote is far from certain. Both parties must pass through legally mandated steps, and after a 30-day “cooling off period,” either the pilots or FedEx could take further action. The pilots could go on strike, or the company could implement a lockout. Although a strike vote has been called, FedEx has said that it is committed to bargaining in good faith with its pilots and reaching an agreement that is fair to them, its other team members, its customers, and all FedEx stakeholders. The pilots have publicly ramped up pressure for FedEx to reach a new agreement, as this is not the first time they have taken steps towards this goal. They have also taken to picketing and forming lines in front of FedEx locations, demanding better quality of life improvements, such as improved pensions that will benefit their lifestyle, especially amid the Covid-19 pandemic.


Tough Market for Owner-Operators

A recent survey conducted by FreightWaves Research has found that many owner-operators in the trucking industry are considering leaving due to market difficulties. Over one third of self-identified owner-operators selected the option that they would leave the industry if the market did not improve materially by the end of 2023. Furthermore, 21% of respondents reported having trouble finding loads to haul, while fewer than 8% said they were considering signing on with a larger carrier. The high costs of fuel, equipment, and insurance combined with falling spot market rates have made it tough for owner-operators.

The results of the survey suggest that smaller carriers are being hit particularly hard due to their less diversified business models, and larger carriers may outbid smaller ones on lanes to keep trucks moving. The survey also found that the drop-off in trucking demand over the past year has impacted newer owner-operators more, with many wanting to take advantage of high demand and spot rates until March 2023. While the average owner-operator has been driving for over 20 years and may not leave the industry against their will, newer owner-operators are most at risk.

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China in the Crosshairs

The US government is planning to introduce new ocean shipping reforms in May, including provisions to prevent China from exploiting proprietary cargo shipping data. US Representative Dusty Johnson, a member of the House Supply Chain Caucus, has called for addressing data security concerns for companies using the Shanghai Shipping Exchange and disincentivizing the use of the Chinese state-sponsored shipment tracking data exchange, LOGINK. Johnson argues that China's state-funded efforts to obtain first-mover advantage could enable LOGINK to set the rules of the road in a way that favors Chinese firms and otherwise advances China's interests. In addition, China's government could gain access to sensitive data, including commercial transport of US military cargo, insight into supply chain vulnerabilities, and critical market information.

The new bill, dubbed OSRA 2.0, will also attempt to address alliances and agreements among ocean carriers. Currently, under the Shipping Act of 1984, ocean carriers that decide to form an alliance or other agreement with each other must file it at the Federal Maritime Commission, where it automatically goes into effect within 30 days, regardless of whether it is considered pro-competition or good or bad for the economy. The new provision would give the FMC the authority to block such an agreement upon filing, and the carriers filing the agreement would have to convince the federal court to allow it to go into effect. The reform could have a momentous impact on boosting FMC oversight authority.

Is Your Supply Chain Ready for a Cyber-Attack?

The Luxembourg Times reported in January 2022 that European Union governments would launch a large-scale simulation of cyberattacks against multiple member states. As a result, members of the Indago supply chain research community were asked about the probability of a major cyberattack disrupting global supply chains in 2022 and the preparedness of their supply chains for a cyber-attack. Out of the 23 respondents who were all supply chain and logistics executives from manufacturing, retail, and distribution companies, 69% believed that the probability of a cyber-attack disrupting global supply chains was “very high” (30%) or “high” (39%). This sentiment was echoed by one member who stated that supply chains were long and complex, making them easy targets for cyber-attacks, and that it was only a matter of time before there were more cyber-attacks.

Only 26% of the respondents said that their companies were "very prepared" for a cyber-attack on their supply chains, while 43% said they were only "slightly prepared" (30%) or "not prepared at all" (13%). One supply chain executive noted that no efforts were underway to head off a cyber-attack and that this could be disastrous given how fragile and spread thin supply chains currently were. Some members added that this was not a new issue and that they were actively monitoring and putting in place tools to mitigate malicious activity within their organization, while others had experienced attempts to break their cybersecurity in the past 6 months. Finally, one member noted that this was an under-reported phenomenon, with many companies being cyber-attacked but not making it public.

Dunavant’s Solution: Dunavant uses top of the line technology to protect our customers and our own data. Each of our employees are trained to think proactively about cybersecurity, reducing cyber threats and online security issues. 


China’s Empty Container Buildup
The buildup of empty containers in China is having a significant impact on the rest of the market, as a slowdown in overseas orders and a lack of shipping demand has resulted in container leasing and purchasing prices plummeting in major Asian ports. According to reports, empty containers are piling up at ports including Guangzhou, Yantian, and Shekou with some already being left on roadsides. Trailer drivers, who would previously bring loaded containers to the terminal and pick up empty containers for the next load, are no longer doing so due to a lack of demand. Last year saw forwarders queuing through the night to get their hands on empty containers, but now they are in abundance.

The lack of shipping demand is having a knock-on effect on freight rates from the Far East to Europe, the Middle East, and Africa, with rates continuing to fall amid volume weakness across all trade lanes. Carriers are pushing for a new round of general rate increases in December, but analysts predict they are unlikely to succeed if surplus capacity is not removed. Contract rates for the 2023 season are also expected to fall significantly, with the SCFI already down 73% year on year. This excess supply of shipping capacity has resulted in more ships entering lay-up, with some carriers mothballing their ships altogether. Overall, the buildup of empty containers in China is a worrying sign for the global shipping industry, indicating a significant slowdown in demand and economic recovery.


Posted by Katie Elizabeth Carpenter at 11:17