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Supply Chain Updates

T.News June 16

By June 19th, 2023No Comments6 min read

Tentative Six-Year Deal Reached: A New Dawn for U.S. West Coast Ports

After enduring 13 months of intense negotiations and numerous work disruptions, the International Longshore and Warehouse Union (ILWU) and maritime employers have tentatively agreed on a new six-year contract. This agreement covers all 29 ports along the U.S. West Coast and is pending a potentially drawn-out ratification process​. 

This tentative agreement brings significant implications for businesses. Over the past year, labor challenges on the West Coast have underscored a stark contrast: unlike those on the East and Gulf coasts, many West Coast shippers have not felt like valued customers during the labor conflict. The percentage of the traffic rerouted to the Gulf and East Coast that will return to its original destination remains to be seen. The settlement of this labor deal could reignite import volumes, which are currently at their highest in 2023 but have experienced a 20% drop from the previous year. The agreement could prompt a seasonal uptick in activity at major US ports, offering relief to businesses that rely on efficient port operations for their supply chains​. 

Looming Labour Disruption at British Columbia Ports

In British Columbia, thousands of cargo handlers are flexing their collective muscle. An overwhelming majority of these workers have indicated their willingness to strike if ongoing negotiations with maritime employers fail to resolve their issues. Their union, a Canadian branch of a globally recognized organization, has reported near-unanimous support for potential industrial action. If no agreement is reached by June 24, a strike notice may be issued, following a cooling-off period that ends on June 21. This development comes after their previous work contract ended in late March.

May’s Dip and Rise in U.S. Imports from Key Asian Economies

In May, US ports saw a substantial amount of cargo arrive from ten prominent Asian nations, totaling 1,474,872 Twenty-foot Equivalent Units (TEUs). These figures were compiled using data from the Automated Commercial Environment (ACE) and bill-of-lading records supplied by U.S. Customs and Border Protection (CBP). This data represents the container volume handled at the origin ports where goods are loaded for shipment.

While this volume indicates a significant 20% reduction compared to May of the previous year, the May figures actually reflect a 5.2% increase from the preceding month. This could suggest a recovery trend, which, if it continues, might point to a potential rise in trade activities between these Asian economies and the United States.

Highway Breakdown: How the I-95 Collapse Impacts East Coast Trade

The U.S. Secretary of Transportation recently confirmed the repercussions of a significant infrastructure failure. A major section of Interstate 95, located in the northeast of Philadelphia, crumbled following a tanker-truck fire. The vital highway stretches from Miami to the Canada-Maine border, and the affected segment was responsible for carrying 160,000 vehicles daily, with commercial trucks making up 8% of the total. The disrupted route now forces trucks onto a 40-mile detour on non-interstate roads with over 60 traffic lights, complicating logistics significantly.

This event is expected to have a domino effect on the cost of goods on the East Coast due to the critical role the interstate plays in the transportation of goods and services. The issue has been exacerbated by recent labor conflicts on the West Coast and a drop in container exports from Asia, which may further contribute to the economic strain. These challenges put importers and exporters in a tight spot, as the delays and disruptions lead to increased costs and inefficiencies in supply chains. The transportation mishap on the I-95 is not just a local issue; it’s a cog in the larger machine of national and international trade.

Safety Assurance Measures for New Trucking Operators to be Implemented

This summer, regulators are set to address a 14-year-old petition that urges the introduction of a standardized proficiency test for new trucking operators before they are given operating authority. The petition, initiated by Advocates for Highway and Auto Safety, was a reaction to a 2008 rule by the Federal Motor Carrier Safety Administration (FMCSA) that aimed to enhance the safety performance of new carriers. The Advocates asserted that the FMCSA’s rule did not include a proficiency exam to ensure that new operators have the necessary knowledge and ability to comply with federal safety requirements and conduct safe operations.

The implementation of this petition could result in a safer and more efficient transportation landscape. The proposed proficiency test would require new trucking operators to demonstrate their understanding of federal safety regulations. This measure is designed to ensure that all new entrants into the trucking industry have the necessary knowledge to ensure safe and compliant operations. However, it’s important to note that the introduction of such a test may also lead to an increase in the cost of setting up new trucking operations due to the resources required to prepare for and administer the exam. Ultimately, this proposed rulemaking aims to enhance road safety, which can lead to more reliable and efficient transportation for goods, positively impacting the supply chain.

Georgia Ports: A Rising Star in the Shipping Industry

In a recent gathering at the Georgia Foreign Trade Conference, the Executive Director of the Georgia Ports Authority projected a positive future for the Port of Savannah. The director discussed several factors contributing to the port’s domestic and international growth. Among them were shifting manufacturing trends and a growing population in the Southeastern United States. Furthermore, he explained that production is gradually moving towards countries like India and Vietnam, which favor Savannah as a delivery destination.

This shift indicates a new focal point in the logistics map. The Port of Savannah, already the fastest-growing in the nation, continues to increase its share of the U.S. container market, currently handling one in every eight loaded TEUs in the country. This growth is supported by the port’s infrastructure expansion projects, backed by a $1.9 billion investment. As some manufacturers combine production in China with other locations, such as India, this port’s strategic location and speedy transit times offer a distinct advantage for businesses looking to diversify their supply chains.