Opposing Reactions Between PMA and ILWU to Automation Benefits Report

Automation at marine terminals in Los Angeles and Long Beach has increased paid hours for employees by expanding terminal capacity and improving cargo velocity, reports a new study commissioned by the Pacific Maritime Association (PMA) representing maritime employers at the West Coast ports.

The report, released ahead of labor negotiations which are due to begin on May 12 in San Francisco, has drawn criticism from the International Longshore Warehouse Union (ILWU). 

Michael Nacht, a professor of public policy at University of California at Berkeley and former US assistant secretary of defense, who prepared the report co-authored by Larry Henry, founder of ContainerTrac, said that automation has allowed the Long Beach and Los Angeles terminals to process containers significantly faster than conventional terminals. 

Container throughput per acre at the automated terminals in Southern California is 44% higher than at the manually operated terminals in Los Angeles-Long Beach, the study revealed. The study also showed that paid hours at the automated terminals at the ports of Los Angeles and Long Beach have increased 31.5% since 2015, over double the rate of the other, non-automated terminals at the same ports while ILWU's registered workforce in Los Angeles and Long Beach grew by 11.2%, compared to 8.4% for the other 27 West Coast ports. 

However, ILWU Coast Committeeman Frank Ponce De Leon said automation has destroyed longshore jobs and called the report “self-serving”. “Container volume has increased at the automated terminals, but this has been at the expense of other terminals that have had an offsetting drop in container volumes,” he said in a statement to JOC.com. 

“The bottom line is that automation has destroyed longshore jobs. We haven’t seen an overall increase in productivity at the ports, just a shell game to mask the human cost of job destruction,” Ponce De Leon added.

Source: Journal of Commerce 

Shanghai Lockdown Disrupting Intra-Asia Trade, Threatens Global Supply Chain

Shanghai, home to the world’s busiest port continues to be on extended lockdown. Peter Sand, chief analyst at Xeneta expects it will be “a month or two before things are back to normal”. He said a return to normality would be more of a gradual softening of restrictions, rather than a full reopening. He also does not expect “an immediate, massive pressure on container routes” because there is no “large, built-up need”. 

The disruption has primarily affected regional production and trade in Asia. With China as a key production base, the intra-Asia trade pipeline has been partially halted as a consequence of restrictions and limitation of movements. “It is not only the port that has come to a halt, it is the entire regional supply chain,” Sand pointed out.

More recently, routes in Europe are feeling the consequent effects as carriers have had to cancel sailings while delays have increased. Prior to the lockdown, carriers operated with ten-day delay. That delay has now become close to a month.

Source: Shipping Watch 

Asia-North Europe Faces Increased Blanking Activity

Data from Sea-Intelligence’s Blank Sailing Tracker shows an increasing trend of blanking activity on the Asia-North Europe tradelane, indicating concerns over vessel utilization by carriers.

“While the number itself appears relatively low, we need to keep in mind that the baseline number of regular scheduled services per week is currently 19,” stated Alan Murphy, CEO of Sea-Intelligence.

Murphy said the same analysis on the Asia-Mediterranean tradelane yielded opposite results. “There was an increasing trend in March 2022, which reversed in the following weeks, and now there is a behavior towards no additional blanking activity,’ he said, and suggested it could be a reason for rate levels holding up more firmly on Asia-Mediterranean than on Asia-North Europe.

On Asia-North America West Coast, there was a spike in the early part of the year due to Chinese New Year however, changes made by the carriers on a weekly basis has remained stable in recent weeks. The same trend is reflected on the Asia-North America East Coast, with the only difference that the spike came a little later than on Asia-North America West Coast.

Source: Sea-Intelligence

Congestion and Labor Shortages Hamper Softening of Trans-Atlantic Air Cargo Rates

Logistics experts say supply chain friction and elevated jet fuel prices are creating artificially robust freight rates on the Europe and North America trade in a declining market. 

According to Niall van de Wouw, co-founder and managing director of analytics firm Clive Data Services, cargo owners could get relief from high prices in the near term if airport constraints improve. Clive’s analysis shows the dynamic load factor has fallen below 80% for the first time in two years. Airlines have been adding to summer schedules which have also increased air cargo capacity.

Despite the looser market conditions, rates have climbed on the North European-North American corridor. A possible reason, suggests van de Wouw, could be that airport cargo terminals continue to struggle with labor shortages and inadequate truck capacity slowing their ability to load and unload huge freighters and sort shipments for pickup. He added that much larger crews are also needed to work passenger planes temporarily dedicated to cargo operations when light boxes are stored in the cabin. 

“Capacity in the air is not so much the limiting factor, it’s the capacity on the ground,” van de Wouw said in an interview. “So, there’s a bit of a disconnect temporarily between load factors and rates because there is a bottleneck. But even so, if that load factor starts to drop or remain at this level, I think it’s logical that rates will follow.”

High fuel surcharges are also adding to air freight rates. According to Platts, a barrel of jet fuel costs 150% higher than a year ago. A global forwarder reported that air carriers have increased fuel surcharges for shipments by more than 50% from the levels seen in early February.

However, Clive Data still sees signs of a potential buyer’s market in the coming months. van de Wouw predicted that negotiating power between airlines and forwarders will change and the more favorable rates will eventually be passed down to the shippers when ground-handling delays are resolved.

Source: American Shipper 

U.S. Intermodal Volumes Slide in First Quarter 2022

U.S. intermodal volumes dropped 6.6% year-over-year in the first quarter of 2022, reports the Intermodal Association of North America (IANA) in its Intermodal Quarterly report. International containers registered a decline of -15.5% and trailers of -12.8%, while domestic shipments recorded positive growth of 5.2%. 

The first quarter decline was preceded by contractions in the previous two quarters. IANA said congested terminals, driver and labor shortages and equipment misalignment caused falling volumes in the latter half of 2021. These issues are expected to continue through 1H 2022. 

The seven highest-density trade corridors recorded declines which collectively account for more than 60% of total volume. “The South Central-Southwest, with a 15.3 percent deficit, led the losses, followed by the Intra-Southeast and Trans-Canada corridors at 14.6 percent and 13.4 percent, respectively. Also dropping in the first quarter: Midwest-Southwest, 8.7 percent; Midwest-Northwest, 7.3 percent, and the Northeast-Midwest, 2.5 percent. The Southeast-Southwest held losses to 0.8 percent,” IANA said in a released statement.

Meanwhile, a downshift in trucking demand coupled with high fuel costs has given intermodal business an advantage as it is typically more fuel efficient than trucks. However, shippers have shown restraint over a dependency with intermodal options due to growing dwell times of intermodal containers at ports and chassis shortages in multiple locations.

Source: The Loadstar 

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