Transportation Roundup: Labor strike effects to linger

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Nearly 75% of International Longshore and Warehouse Union (ILWU) of Canada members voted to approve the tentative agreement with West Coast ports last week, but congestion in the supply chain could take months to recover from the strikes. The new agreement increases wages, benefits and training.

While the Canadian workers were on strike, many ocean carriers diverted and unloaded at U.S. ports instead. Containers on railroads piled up and are expected to take at least two months to clear up, while also taking a big hit to railroad’s revenue. Read more from CNBC here.

In ocean shipping, carriers are reporting lower profits but are still earning more than they did pre-COVID. Ocean Network Express (ONE) reported a 58% drop of net income in January-March and a 91% drop from last year, but the $513 million in earnings in their first quarter were still much higher than $5 million in April-June 2019. Profit trends are similar for CMA CGM: Their $1.33 billion net income this quarter is an 82% drop from a year ago and 34% drop from the first quarter. In quarter two of 2019, the ocean carrier had a net loss of $109 million.

Meanwhile, Maersk will adjust its operations in response to an expected decline of 1-4% of global container volumes. Their second quarter profits also sharply dropped from $8.62 billion in 2022 to $1.45 billion. Read more about Maersk’s drops in profit here.

Other articles of interest:

What the TEU tea leaves are telling us

Feds call attention to maritime ‘near misses’

Transportation Roundup: Maritime industry automation could be global crisis

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Some articles linked may require subscriptions to read.

During the International Longshoremen’s Association (ILA) convention on Monday, President Harold J. Daggett expressed his displeasure with automation in the maritime industry. Automation efforts such as container tracking would eliminate jobs, which Daggett called a “global crisis that demands a global response.” The ILA is the largest union of maritime workers in North America, representing longshoremen on the Atlantic and Gulf Coasts, Great Lakes, major U.S. rivers, Puerto Rico and Canada. Read more about Daggett’s comments here.

July has been a rollercoaster for ports in Canada, starting with a strike by the International Longshore and Warehouse Union (ILWU) Canada. Union members are expected to vote on a tentative contract agreement later this week. The ports were shut down Tuesday morning for members to review the tentative deal. The strike has disrupted cargo handling at Vancouver and Prince Rupert, which are vital for both U.S. and Canadian markets. Read more here.

A column in the Journal of Commerce reminds us to consider the comparative base when saying demand and ocean freight waves have “collapsed.” While rates from Asia to the West Coast have dropped 86% since in their peak in late 2021, this comparison is skewed due to the pandemic supply chain crisis. If comparing rates from Asia to the West Coast in 2019, rates are actually 17% higher, which suggests the market hasn’t collapsed, only normalized. Read more here.

SSGA leads transportation panel

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On July 13, SSGA Executive Director Eric Wenberg led a panel, “Teamwork Approach to Logistics & Transportation,” at the U.S. Agricultural Export Development Coalition’s (USAEDC) Attaché Seminar. Panelists, which included Port of Los Angeles CEO Gene Seroka, Brig Skoy of Savage Services and Jaeson Dandalides from CMA-CGM, discussed better approaches to moving equipment and making strategy.

Addressing USDA foreign attachés from U.S. embassies worldwide and leaders from U.S. agricultural associations, the panel stressed the need for better data and transparency between rail and ocean carriers to help reposition equipment. Often, carriers must overbook their vessels 150 percent so they can get a 90 percent fill rate.

The panelists detailed cases whereby working together has facilitated better outcomes in ag shipping. Seroka led the panelists saying he was ready to lead whatever discussion was needed to facilitate plans to get equipment where it was needed. Wenberg emphasized the need for USDA officials to keep logistics in mind when making plans for overseas market development and market access. It doesn’t make any sense to promote goods against logistical hurdles that are too great for companies to overcome.

Transportation Roundup: Submit Export Sales Reporting and Maintenance System comments

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SSGA is collecting comments from members about the USDA Export Sales Reporting and Maintenance System 2.1 (ESRMS 2.1). Access the survey at this link.

SSGA will submit your anonymous comments from this survey to USDA-FAS. Anyone involved in the reporting for an exporting company can submit their comments at this survey and multiple people from the same company can submit comments. Please complete the survey with your comments by EOD tomorrow, June 28.

USDA-FAS is interested in public comment on 1) whether collection of contract-based information will help improve the timeliness and reliability of the data in USDA’s Export Sales Reports; 2) the accuracy of the agency’s estimate of the burden of the collection of information including validity of the methodology and assumption used; 3) ways to enhance the quality, utility and clarity of the information collected; and 4) ways to minimize the burden of the collection of information on those who are required to report, including through the use of automated, electronic, mechanical or other technological collection techniques or other forms of information technology.

ESRMS 2.1 is available for user acceptance testing at this link until June 30.

SSGA would like to congratulate member Grain Millers Inc. for their recent 2023 Shipper of Choice award from FreightWaves. Grain Millers manufactures and supplies whole grain ingredients and is headquartered in Eden Prairie, Minn. The Shipper of Choice awards honor shippers for their collaboration, flexibility and attentiveness to carrier partners over the last year. Learn more about the awards here.

Last week, four Republican Senators introduced legislation that would prevent longshore workers from engaging in disruptive work slowdowns or resisting automation efforts at U.S. ports. Longshore unions would also be barred from impeding “modernization efforts at a port.”

The legislation, called the Preventing Labor Unions Slowdowns Act, would add two types of unfair labor practices by longshore work unions into the National Labor Relations Act and Labor Management Relations Act. Learn more about the proposed legislation here.

Another article of note:

Port of Cleveland attempts to punch above its weight

Despite labor agreement, some West Coast-bound ships still delayed

Transportation Roundup: FMC releases notice of proposed rulemaking

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The Federal Maritime Commission (FMC) released a Supplemental Notice of Proposed Rulemaking (SNPRM) Monday, proposing how it would implement the prohibition on common carriers unreasonably refusing available cargo space for shippers.

The SNPRM will address issues raised during the comment period for the Notice of Proposed Rulemaking (NPRM) in September 2022 regarding refusal to deal or negotiate vessel space. The SNPRM contains changes from this NPRM including:

  • Adding language to establish the elements for a refusal of cargo space accommodations claim.
  • Revising the definition of transportation factors to focus on vessel operation considerations.
  • Revising the definition of the term “unreasonable” to include a general definition and a non-exhaustive list of unreasonable conduct scenarios.
  • Clarifying that vessel space services are included in the definition of vessel space accommodations.
  • Proposing a mandatory export policy documentation requirement as an alternative to the previously proposed voluntary export strategy.
  • Removing the voluntary certification provision.

The SNPRM is available in the Federal Register here. It is scheduled to be published Wednesday and open for comments for 45 days.

SSGA encourages its exporter members to examine the Proposed Rule and make comment. Also, please reach out to SSGA with any comments we may, through the Competitive Shipping Action Team, also put forward during the comment period.

In other transportation news:

The West Coast labor situation seems to change each day but Tuesday’s day shift was running normal operations.  This come after the International Longshore and Warehouse Union (ILWU) and maritime employers agreed to a cooling off period in their negotiations with Julie Su, the acting Secretary of Labor.

In Canada, 99% of ILWU union workers voted in favor of a strike which would further complicate U.S. shipping. The Port of Vancouver, Canada’s largest port, would be affected most. 15% of container trade through Vancouver is to or from the U.S. Farther north at the Port of Prince Rupert, about two-thirds of container import are destined for the U.S. by rail. Read more from CNBC here.

 

SSGA tours Port of Duluth

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The Specialty Soya and Grains Alliance experienced a closer look at the burgeoning shipping opportunities at the Port of Duluth-Superior during a visit with four Moroccan buyers as part of a trade mission led by the U.S. Soybean Export Council (USSEC).

SSGA Manager of Strategic Programs Shane Frederick visited SSGA members Hansen-Mueller and Duluth Seaway Port Authority during the tour of the Hansen-Mueller Elevator in Duluth.

“You’re seeing history here,” Facility Manager Jeff Blaskowski said of Hansen-Mueller, which acquired the facility in 2022 after several years of vacancies. “This is a cool, old elevator.”

The Hansen-Mueller facility can store 3.5 million bushels of grain and stands 195 feet above the bar. The site also supports nine legs and has a nearly 2,000-foot dock and on-dock rail service from BNSF Railway. The facility was built in the late 1800s – “You’re not going to see a lot of automation here – yet,” Blaskowski said – and can export small grains, plus soybeans and meal, from the United States and Canada to both domestic and international customers.

Following the Hansen-Mueller visit, the delegation, which included buyers from Morocco’s feed milling industry, toured the Port of Duluth-Superior.

Though the port still ships about a million tons of grain annually – wheat and beet pulp pellets are some of the top exported commodities – iron ore is far and away the most popular material exported from the Port of Duluth-Superior, which first opened for commercial shipping over 150 years ago. The port is the continent’s furthest inland seaport and the highest-ranking port on the Great Lakes, attracting about 900 vessels each year. Shippers prefer shipping via Duluth-Superior party because traffic is uncongested; traffic on the Seaway could double and ships and barges would still flow freely.

“The great thing about the Great Lakes is we can offer a diversified supply chain for many of these shippers utilizing the coast,” said Kate Ferguson, director of trade and business development with the Duluth Seaway Port Authority. “So many companies want to diversify their risks, and we know the Great Lakes can be a reliable chain.”

Grain shipments at the port dipped by 20% in 2022, the port’s smallest grain throughput since 1890. The port hasn’t moved soybeans in about five years, and overall grain exports could drop again in 2023.

“It was great to visit with our members, and see the potential shipping opportunities at the Hansen-Mueller facility in Duluth,” Frederick said “We appreciated the opportunity to visit the Port of Duluth-Superior and tell our story.” 

Transportation Roundup: The truth behind the numbers

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Two ocean common carriers have reached agreement with the Federal Maritime Commission (FMC) to resolve allegations of misconduct.

Ocean Network Express (ONE) resolved allegations of assessing detention charges when appointments were unavailable during allocated free time to return equipment by paying the $1.7 million civil penalty. ONE will also pay back the impacted shippers with refunds and waivers.

The FMC also reached an agreement with Wan Hai Lines, paying $950,000 in civil penalties for failing to observe and enforce just and reasonable practices regarding charges related to empty container returns. Wan Hai also refunded the detention charges to the shippers impacted.

Read more from the FMC.

Headlines in the shipping industry lately show extreme numbers and while the year-over-year declines are factual, this article from Freightwaves reminds us to read the fine print on those numbers.

The historically high 2022 statistics make this year’s numbers, like the Port of Long Beach’s 22% import drop year-on-year in April, or first-quarter profits from several carriers down 90% or more, look staggering. But U.S. imports this year are actually similar to 2018-2019 and imports this summer are estimated slightly above pre-pandemic levels, according to the Global Port Tracker by the National Retail Federation and Hackett Associates.

Over in the trucking industry, U.S. Reps. Rick Crawford (R-Ark.) and Henry Cuellar (D- Texas) introduced a bill to ease requirements for 18- to 20-year-old drivers interested in the Safe Driver Apprenticeship Pilot program. The program currently has fewer than 12 drivers enrolled when it was intended for up to 3,000 drivers. The American Trucking Associations attributed the low participation on unnecessary U.S. Department of Transportation (DOT) requirements that weren’t included in the Bipartisan Infrastructure Law.

The proposed bipartisan bill, called the DRIVE Safe Integrity Act, urges the DOT to provide detailed reports on the program status and corrective action to improve participation. The bill also directs DOT to review the safety data and regulations for a permanent apprenticeship program after the pilot program ends. Read more from the American Trucking Associations.

Class I railroad unions are calling out employers for misleading efforts for hiring more employees. In a filing to the Surface Transportation Board (STB), a representative of several rail unions said that the number of railroad employees is still far below the number needed to grow network capacity and provide exceptional rail service.

Class 1 railroad reports to the STB show the number of employees is the highest since May 2020, but the unions argue that these numbers don’t tell the whole story. The data is reported by department, not by craft, and the data doesn’t consider the rate of attrition. Read more about this data from Freightwaves.

Transportation Roundup: OSRA hits milestone

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On May 1, the Ocean Shipping Reform Act’s Charge Complaint process surpassed $1 million in waived or refunded disputed charges to shippers and truckers. The milestone comes more than 10 months after the OSRA became law.

According to a press release issued by the Federal Maritime Commission (FMC), which administers the process, Charge Complaints provide a simplified and expedited process for shippers, consignees, truckers, and third parties to dispute charges which might have been wrongly assessed by a common carrier.

The Commission’s website has detailed information about the charge complaint procedure, including an instructional video on how to make a filing, and frequently asked questions.

The charge complaint process is one of several options available to parties seeking relief at the Commission. Disputes can also be addressed through the small claims or formal complaints processes, or by making use of dispute resolution services. Parties wanting to allege misconduct can also share information with the Commission that will be reviewed for potential investigatory action.

The total amount of fees waived or refunded through the charge complaint process does not include penalties or settlements realized through Commission enforcement activities.

More information on filing shipping complaints is available here.

In other transportation news:

  • After a few years of huge profits for container shippers, Drewry Maritime Research expects the industry to report a $10 billion loss in 2024. Carrier profits have been falling since the second half of 2022 and will continue with a capacity growth of 25% and new contracts signed at lower rates this year. Carriers profited $296 billion before tax in 2022 and are expected to profit $16.5 billion in 2023. Learn more about the Drewry report here.
  • Although down 18% from April 2022, U.S. ports imported more than 2 million twenty-foot equivalent units (TEUs) last month. This is up 9% from March and consistent with pre-pandemic volumes. Ports seeing the largest level of surges month over month were the Port of New York/New Jersey with a 19% increase and Savannah, Georgia with a 15% increase. More April import data is available here. The trends are expected to continue through at least peak shipping season, with high inflation somewhat compromising consumer spending, according to the latest Global Port Tracker.
  • In the rail industry, the Surface Transportation Board extended reporting of service data metrics to three Class I railroads: Union Pacific, BNSF and Norfolk Southern. CSX met nearly all one-year service targets and will no longer need to report the biweekly progress reports. All railroads will still be required to submit weekly performance and monthly employment data through 2023. Freightwaves has more on the STB updates here.

Transportation Roundup: Labor negotiations continue to intensify

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Operations at the Ports of Los Angeles and Long Beach grinded to a halt last week due to a manpower shortage possibly related to the ongoing labor dispute between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association, who have been contract negotiations for more than 11 months.

Trucks attempting to deliver into the port complexes were turned around, according to reports.

On Monday the ILWU Local 13 delayed work by slowing the dispatch of workers, according to the Journal of Commerce, resulting in delays but not a full stoppage of work.

Read more from the Journal of Commerce.

Earnings slow for container lines

First-quarter earnings from container lines are showing a large decrease from the 2022 fourth quarter, although their income is still well above pre-COVID earnings.

Cosco earned $1 billion in the first quarter, down 75% year on year but six times higher than their 2019 quarter one earnings. Cosco subsidiary OOCL reported a drop of 56% year over year and 31% less than quarter four. Read more about quarter one earnings here.

CSCMP to hold logistics panel

The Council of Supply Chain Management Professionals (CSCMP) Twin Cities Roundtable will hold an International Logistics Panel on April 19 at Lee & Associates in St. Louis Park, Minnesota. The event will be moderated by Steve Balaski, director, business development for The Northwest Seaport Alliance and include panelists from J.B. Hunt, Yardbird/Best Buy, The Scoular Company and BNSF Railway. Click here for more information.

Other items of note:

Inflation’s inventory gluts are here to stay and will hit the bottom line in weaker economy: CNBC Supply Chain Survey

U.S. imports bounce back in March despite dwindling China cargo

Transportation Roundup: FMC ruling and trucking woes

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The Federal Maritime Commission (FMC) released a final rule last week amending the Rules of Practice and Procedure governing the compromise, assessment, mitigation, settlement and collection of civil penalties. The changes will require ocean carriers to refund importers and exporters for overcharges and possibly for other violations. The rule will go into effect April 19. Read the entire rule in the federal register here. FMC Commissioner Max Vekich was at SSGA’s Transportation Go! in March to discuss OSRA and other FMC priorities. Read more from his presentation and the event here.

Peter Friedmann, Agriculture Transportation Coalition, Max Vekich, Federal Maritime Commission and Eric Wenberg, SSGA

At Transportation Go!, Alex Leslie from the American Transportation Research Institute discussed some of the challenges in the trucking industry, including lack of truck parking and lack of drivers. At a hearing last week, U.S. Transportation Secretary Pete Buttigieg told U.S. senators that just 22 carriers and four apprentices are approved for the Federal Motor Carrier Safety Administration’s pilot program for 18–20-year-old drivers to operate commercial motor vehicles in interstate commerce. Buttigieg reported ways the department is trying to garner interest in this program, including a video campaign and social media to reach 2023 graduates. The three-year pilot program, which started last summer, could accommodate up to 1,000 carriers and 3,000 apprentices.

Imports at Ports of Long Beach and Los Angeles were their lowest since March 2020. Total imports were down to 487,846 twenty-foot equivalent units (TEUs) last month, dropping 43% from February 2022, and down 33% from January. The decrease wasn’t a surprise, as the ports continue to deal with high U.S. inventory, longshore labor negotiations and factories closed longer than expected for the Lunar New Year holiday. Read more from Freightwaves here.

The ongoing labor negotiations at the West Coast ports are stalled and unionized dockworkers are being blamed for slower cargo handling. The Pacific Maritime Association says workers are stopping work each day for mealtimes, rather than staggering lunch breaks and keeping operations going. The Agriculture Transportation Coalition (AgTC) was among the 238 U.S. shippers and transportation groups that signed a letter encouraging Biden administration intervention in labor talks so that a new agreement can finally be reached.

Other articles of note:

St. Lawrence Seaway begins navigation season

Not all recent import share loss on West Coast is permanent: analyst

More women become truckers as the industry tries to overcome a shortage of drivers