Weekly Roundup – May 30, 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.

Sea-Intelligence reports average minimum transit time up 39% on Asia-Med routes

The Red Sea crisis has forced shipping lines to reroute around the Cape of Good Hope, extending sailing distances and increasing transit times. Sea-Intelligence cautions that impressive transit time figures often pertain to non-competitive port pairs, thus not reflecting true market conditions. Alan Murphy, CEO of Sea-Intelligence, emphasized the importance of comparing the shortest actual transit times for competitive port pairs. Since the crisis began in early 2024, the average minimum transit time from Asia to the Mediterranean has increased by 39%, based on a six-month baseline from mid-2023.

In comparison, the Asia-North Europe routes saw a smaller increase of 15%. The most significant impact was on routes connecting to the East and Central Mediterranean, with increases of up to 63%, while North Europe’s Baltic connections experienced the smallest impact, with a 7%-11% increase.

East Coast port labor talks spark shipper contingency plans

If labor negotiations at East and Gulf Coast ports fail before the Sept. 30 deadline, some cargo may be diverted to the West Coast, according to Port of Los Angeles Executive Director Gene Seroka. Importers and exporters have already shifted 2% to 5% of cargo back to the West Coast due to security concerns, Panama Canal drought restrictions, and labor talks. Shippers are preemptively reallocating cargo to ensure vessel availability and empty containers for imports.

Daniel Hackett of Hackett Associates noted that these shifts could affect cargo balance between coasts. The current East and Gulf Coast ports labor contract expires on Sept. 30, with both sides committed to reaching a new agreement to avoid disruptions.

Port of Los Angeles cargo volumes rise 12% YoY in April

In 2024, the West Coast has seen stronger growth than the East Coast, though year-over-year growth rates are expected to slow in the second half of the year. Comparing pre- and post-pandemic volumes is complex; from 2019 to 2024, West Coast volumes increased by 5%, while East Coast volumes rose by 14%. Forecasting is complicated by changes in peak season patterns and the upcoming labor contract expiration at East and Gulf Coast ports. Some shippers are preemptively moving cargo, affecting volume predictions. Thus, quarterly and yearly comparisons are preferred over month-to-month analyses.

Rate volatility clouds carrier contract negotiations on Indian trades

Indian shippers and freight forwarders are cautious about annual service contract negotiations due to volatile ocean rates on major trade lanes to the US and Europe. Shippers are holding back volume commitments, particularly on the India-US routes, where rates have dropped following Ocean Network Express’s new service. Declining spot rates and a demand downturn are causing hesitation, with some opting for spot rate bookings to secure vessel space and equipment.

Despite ongoing negotiations and few signed contracts, customers are pressuring carriers to reopen deals for adjustments. Major liners, needing volumes, are not pushing for lower-priced named account contracts. Peak season surcharges have been announced by Maersk, Hapag-Lloyd, and CMA CGM, but rates continue to fall.

Rise of private chassis fleets forces IEPs, railroads to rethink operations

Chassis providers and railroads are adjusting to the increasing use of trucker-controlled chassis for ocean containers. Despite the Federal Maritime Commission (FMC) ruling supporting greater chassis choice, shippers and truckers face challenges, especially at inland rail ramps. Mike O’Malley from Direct ChassisLink noted a significant rise in motor carriers using owned or leased chassis, especially at inland locations like Memphis and Chicago. This shift is driven by shippers preferring merchant haulage, where truckers use their own chassis.

Val Noel from Trac Intermodal reported a decline in their merchant haulage business due to this trend. The FMC ruling affirms the right to choose any chassis, but issues remain, such as delays and equipment problems at inland sites. Railroads like Union Pacific are adapting by transitioning to stacked operations, requiring significant investment to accommodate private chassis and operational growth.

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