Thunderbolt Global Logistics Late August 2024 Transportation Update

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August 20,2024

We are now in what we call the dog days of August.    Summer holidays are ending, school is about to start, football in Europe has just begun their season and the NFL is going to start in early September.

The word of the day/week/year is disruption.  Here is the definition of disruption.

Disturbance or problems which interrupt an event, activity, or process

There seems to be a new disruption going on in global shipping every week.

  • On August 12th a container of hazardous materials blew up at the Port of Ningbo.
  • Ports in India may strike August 28th after 3 years of negotiations 
  • Brazil is facing massive port congestion and a surge of exports that has driven ocean freight rates to near Covid levels.  
  • The Red Sea situation has not changed and few vessels are transiting the Suez Canal and going around The Cape of Good Hope.       
  • A nationwide rail strike in Canada is likely to happen beginning this Wednesday August 22nd.   
  • The biggest potential disruption Is an impending strike at nearly all U.S.A.  East Coast and Gulf Coast ports when the ILA (Int’l Longshoreman’s Association) contract expires at midnight on Sept. 30th.      

The master contract for the ILA covers ports from Boston to Houston with few exceptions.    There hasn’t been a strike on the East Coast in over 45 years.   That may change based on what is being said by the leadership of the ILA.    The Biden Administration may have to get involved.   They have largely stayed on the sidelines so far.

Cargo handling at the ports would halt just weeks before the U.S. presidential election.  Here are statements from both sides in the negotiations:

The United States Maritime Alliance, known as USMX is ready to continue bargaining with the ILA leadership.   They state that their latest offer to longshoreman includes “industry -leading wage increases” and retains the current contract’s language on automation at the port terminals.

The ILA contends that shipping CEO’s are “taking home bonuses in the billions” and ocean carriers are raking in profits by “raising rates on their customers due to global conflicts or natural disruptions.”

The West Coast ports avoided a strike last year when they struck a deal on August 31,2023 that gave dock workers a 32% salary increase over the span of the 6-year contract.    The ILWA worked without a new contract as negotiations took place.  The ILA is looking to beat that increase for its members.  

They have stated that they will not work beyond the expiration of the contract.  Their members are preparing for a strike.   It doesn’t look good.

This is the situation in Canada.  The CIRB has made a ridiculous ruling that will greatly impact the Canadian and U.S. economies.   Here is what is happening;

With the Aug. 9 Canada Industrial Relations Board (CIRB) decision that none of the services provided by the two Canadian railways—CN and CPKC—are essential by law, no rail services are required to be maintained in the event of a work stoppage involving the Teamsters Canada Rail Conference (TCRC). The earliest possible date of a work stoppage is now Aug. 22 at 12 a.m. ET, and CN and CPKC are preparing their operations for ceased services.

In addition to the embargoes on Rail Security-Sensitive Materials (RSSM), Poison Inhalation Hazard (PIH) – Toxic Inhalation Hazard (TIH) and Time-Sensitive commodities issued on Aug. 12, CN announced a staggered schedule of embargoes for other freight handled by its network:

  • All temperature-controlled intermodal traffic, effective Aug. 15. (Exact timing is dependent on origin and destination.)
  • All hazmat traffic, effective Aug. 15. (Exact timing is dependent on origin and destination.)
  • All intermodal traffic destined to all points in Canada from U.S. origins or U.S. interchange, effective Aug. 16 at midnight ET.
  • All U.S. to U.S. Intermodal shipments will continue to move per normal operations.
  • You can also find CN’s embargo schedule, as well as intermodal origin/destination timing, here.  
  • “If a settlement is reached, or an arbitration process is established, we will remove embargoes and resume normal operations,” CN said in a statement.

No work stoppage planning schedule has been made available by CPKC at this time, but check the railroad’s website for updates here.

Here is the current situation in Brazil regarding congestion at the main port of Santos and at the Port of Itapoa.

An example of the situation is the BTP terminal, one of the most important in the Santos port complex.  The main terminals have been operating at close to 100% capacity for several months.

This has mainly affected export shipments, as terminals do not have sufficient windows to release appointments for truck drivers to deliver containers within the deadlines determined by maritime transport companies for shipment.

The possible consequences of this problem have been extra costs for truck drivers for not being able to deliver the loaded containers to the factories and the transfer of reserves to the next ship, as it is impossible to meet the deadlines given by the transporters.

Itapoa port terminal in the State of Santa Catarina has been facing similar congestion issues, but today it is not so critical as in Santos due to the lower volume of container handled in this port.

EUROPE TO THE UNITED STATES

Space has tightened up the United States in anticipation of the strike by the ILA at the end of September.

Rates have climbed and carriers will try to take advantage of the situation.   Some carriers have reduced the vessel size to the USA and redeployed them to Asia- Europe trade.    

ASIA to the UNITED STATES

Imports from Asia are very strong and have been for the last 4 months.    The possible strike along with additional tariffs for some commodities from China have led to a surge of cargo.    Ocean rates have tripled since earlier in the year.   Rates have stabilized over the last 2 weeks but they are still at the highest levels seen since Covid times.    West Coast ports will see more cargo due to the potential strike on the east coast and this will lead to rail delays from all west coast ports. 

The low water issue at the Panama Canal has improved a lot and the canal is nearly back to normal vessel transits per day.   This is a welcome relief after months of fewer daily transits through the Canal.

EXPORT FROM THE UNITED STATES

Ocean export volume from the United States is stronger now and space is tight to some regions of the world.   This is especially true to the Middle East due to the Red Sea situation.  

Empty container availability at inland rail depots is still problematic in some locations.  Chicago has deficits in available 40’ HC containers for many carriers.  Container availability is dependent on import shipments arriving at inland locations.  Ocean carriers rarely, if ever reposition empty containers to inland locations.

RO/RO carriers are accepting more and more static cargo to load on their vessels.   This is a turnaround from earlier in the year when they had no space available.          

PORT CONGESTION N THE UNITED STATES

New York seems to be the port on the east coast that is experiencing congestion.   Some truckers are charging congestion surcharges.  West Coast ports are likely to see a surge of containers due to the potential strike at the end of September. The upcoming rail strike in Canada has led to cargo diversion to U.S. west coast ports.We are grateful for all the support we receive from around the USA and around the world.  This is especially true during the period when the Port of Baltimore was closed due to the Key Bridge accident.

Please contact us if you have any questions or need more information. 

Be safe!

Jim Shapiro, Director