Weekly Roundup – May 16, 2024

Welcome back to the weekly roundup, where we provide concise summaries of the most important supply chain and logistics stories of the week. Covering breaking news, emerging threats, and changing market dynamics, it contains all the news you need to maintain a competitive advantage.

Public-private backing pushes Delaware’s Edgemoor terminal project forward

Delaware is partnering with Enstructure on a $635 million project to develop the Edgemoor container terminal at the Port of Wilmington, elevating the port to a midsize East Coast contender capable of handling over 1 million TEUs. Enstructure will lead a public-private partnership to establish Port Delaware North on a brownfield site upriver from the existing terminal, with funding split between Enstructure and the Diamond State Port Corporation. The project will receive additional federal funding. The new terminal, to be built over five years, will boost the port’s capacity from 250,000 TEUs initially to 1.2 million TEUs by 2027, diversifying cargo and creating thousands of new jobs. This development follows the revocation of a previous operator’s concession, and marks a strategic expansion for Wilmington’s port.

Strong consumer spending drives another import upgrade from US retailers

Retailers are anticipating robust import volumes throughout the 2024 peak shipping season, with the National Retail Federation (NRF) revising its Global Port Tracker (GPT) forecasts to consistently exceed 2 million TEUs monthly. Despite economic uncertainties, NRF’s vice president Jonathan Gold noted strong consumer demand and ample merchandise supply. The GPT now projects May imports at 2.06 million TEUs (6.8% increase), June at 2.03 million TEUs (10.7% increase), and August at 2.1 million TEUs (7.1% increase). This optimism contrasts with earlier concerns about economic and geopolitical factors impacting import levels. Despite not matching early 2023’s rapid growth, sustained year-over-year increases in late 2024 suggest a return to typical seasonal import patterns.

Import surge boosting rail container dwells at some LA-LB marine terminals

Rail container backlogs are rising at the ports of Los Angeles and Long Beach due to a surge in imports from Asia, leading to increased eastbound intermodal train movements and a shortage of railcars returning westbound. Yusen Terminals in Los Angeles is grappling with twice its normal inventory of rail containers, prompting the use of near-dock storage to prevent operational disruptions, albeit at an additional cost.

While railroads like Union Pacific (UP) and BNSF are prepared for rising volumes, terminal operators are concerned about storage capacity as imports strengthen. Rail container dwell times have been steadily increasing, reflecting the challenge of managing cargo surges efficiently. The National Retail Federation’s Global Port Tracker predicts continued year-over-year import increases through August, signaling potential congestion issues for terminals handling increasing import volumes.

Surging ocean waves sending ripples into airfreight

The surge in Asia-to-Europe ocean freight is impacting airfreight operations significantly, with increased demand for air cargo due to uncertainty and delays in ocean shipments. Forwarders report a shift towards airfreight, especially from Asia to Europe, as customers seek alternatives to address shipping disruptions. Airlines are adjusting rates on a monthly basis to accommodate fluctuating demand. Sea-air transshipments via the Middle East and Indian sub-continent have also increased, driven by disruptions in container shipping.

The market remains strong for ecommerce-driven air cargo, but backhaul challenges persist. Maersk’s expansion of airfreight operations in Miami aims to facilitate transhipment cargo from Europe and Asia into Latin America, highlighting the growing importance of air cargo in global supply chains amid shipping disruptions.

ACL, BG Freight Line and Peel Ports launch fastest ever container service between Ireland and North America

ACL, in partnership with BG Freight Line and Peel Ports Group, has launched a new container service connecting Ireland and North America via a UK or Continental transshipment port. This service, starting from New York on May 10, offers transit times up to two weeks faster than competing services. The route includes direct calls at major ports like Halifax, New York, Baltimore, and Norfolk through the Port of Liverpool. The service aims to streamline connections and reduce transit times by utilizing Liverpool as the primary port of entry and exit in Europe, skipping intermediate European stops.

Both ACL and BG Freight Line will coordinate schedules to minimize connection times at Liverpool, ensuring smooth operations. This collaboration reflects a significant advancement in container shipping options between Ireland and North America.

Outpacing Disruption by Regionalizing Supply Chains

Ongoing disruptions like the Panama Canal drought, conflicts, and terrorism are increasing volatility and lead times for global supply chains, slowing the rate of globalization. Many companies are adapting by shifting manufacturing closer to customers, prioritizing proximity to end markets according to a Gartner survey. By 2028, Gartner predicts 70% of companies will adopt regionally diversified supply chains for resilience amid disruptions. Already, 35% of supply chain leaders have moved to regionalized production with multiple regional suppliers. Regionalization reduces supply chain disruptions, lowers risks, and supports cost efficiency.

Countries like Mexico, India, and Vietnam are improving infrastructure to support manufacturing growth. Organizations aiming to shift to regional supply models must align with business objectives, collaborate with partners, assess total costs, and use scenario planning to optimize their networks for resilience and competitiveness amidst global challenges.

ILA, local ports wrapping up contracts, setting up coastwide talks

The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) announced progress in local negotiations for a new contract covering port workers along the US East and Gulf coasts, with most local contracts expected to be settled by the May 17 deadline. This news is reassuring to shippers concerned about potential strike threats from the ILA. Once local negotiations are completed, broader talks on wages and benefits will resume toward reaching a new coastwide master contract before the current agreement expires on September 30, 2024. While some ports still have unresolved issues, negotiations are moving forward, aiming to avoid disruptions in cargo shipments as experienced in the past. The ILA and USMX expressed confidence in achieving a new agreement without disruptions, following the success of previous master contract negotiations in 2012 and 2018.

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