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Supply Chain Updates

Supply Chain Update – September 22

By September 22nd, 2023No Comments5 min read

St. Louis Supports New Orleans in Expanding Mississippi River Container Terminal

The St. Louis regional ports and the St. Louis Regional Freightway are backing the Louisiana International Terminal (LIT) development at the Port of New Orleans. Planned to be located downstream from New Orleans in Violet, Louisiana, the $1.8 billion project aims to advance cargo movement across sectors like agribusiness, port operations, and advanced manufacturing. Construction is set to kick off in 2025, with the terminal becoming operational by 2028.

The terminal’s addition will alleviate air-draft restrictions, thereby inviting larger ships to dock at Port NOLA and bolstering Louisiana’s trade capabilities. As the St. Louis region has a robust transportation network and holds a key stretch of the Mississippi River known for its grain and fertilizer barge handling, the new terminal will synergize with existing systems to amplify freight volumes, particularly in agricultural goods. By improving the cargo flow along the Mississippi, the terminal is expected to strengthen the country’s competitiveness on a global scale.


Panama Canal Draft Restrictions Raise Questions for Shipping Industry

Draft restrictions have been extended into next year for the largest ships passing through the Panama Canal. These limitations are due to insufficient rainfall, which is needed to flood the lock chambers and operate normally.

The situation is causing concern among ocean carriers about the long-term use of this key waterway, which is a major route for containerized cargo from North Asia to the North American East Coast.


Explosion Prompts Evacuation Near Romanian Port

A cargo ship sailing under Togo’s flag was headed toward a Ukrainian port on the Danube River when an explosion occurred on board near the Romanian port of Sulina. The event led to the immediate evacuation of the ship’s 12-person crew by the Romanian Agency for Saving Life at Sea, overseen by the country’s transport ministry. The cause of the explosion is currently unknown, with options ranging from a sea mine to an engine room malfunction.

The Black Sea, where the Danube meets the ocean, is a crucial route for the movement of grain, oil, and other goods. This incident casts doubts over its safety, especially considering that sea mines have been deployed in the region due to the ongoing situation in Ukraine. Romanian naval forces have responded by launching a sea mine hunter vessel to secure the area. 


Inflation Poses New Challenges for Marine Insurance Industry

According to the International Union of Marine Insurance (IUMI), global ocean hull insurance premiums saw a 5.7% rise in 2022, partly due to increased shipping activity and vessel values. Despite a good year for underwriters, upcoming challenges include the impact of inflation on shipyards, materials, and labor costs, which haven’t yet been factored into premium increases.

As the marine industry grapples with emerging issues like alternative fuels, lithium-ion battery risks, and other factors, the costs to insure vessels could surge. 


Fluctuating Trends in Blank Sailings Impact Global Shipping Routes

Shipping companies are increasingly canceling or “blanking” planned journeys for a variety of reasons, including port congestion and labor issues. This practice, called blank sailing, has been particularly significant on trade routes from Asia to Europe. Despite causing disruptions, these cancellations help stabilize freight rates and keep them above the break-even point for carriers.

For businesses dependent on maritime shipping, these cancellations can be a headache. They disrupt inventory management and lead to increased operational costs. Especially as the industry sees an oversupply in shipping capacity, these blank sailings further complicate the already delicate balance between supply and demand in global trade lanes.


Surge in Diesel Fuel Costs Impacts U.S. Trucking Rates

Diesel fuel prices have risen by 20% over the past three months, placing added financial strain on the U.S. trucking industry. This uptick has led to increased fuel surcharges, contributing to higher overall transportation costs. The rise coincides with seasonal freight demand, and future projections indicate that fuel prices and surcharges are likely to continue climbing.

The escalating costs are not just a concern for trucking companies but also impact those who rely on goods transported by trucks. Higher transportation costs mean that the price of moving goods across the country could rise, potentially affecting the bottom line for businesses dependent on importing and exporting goods.