U.S. West Coast Port Labor Talks Resume After Nine-Month Delay

West Coast dockworkers and marine terminal employers have resumed negotiations after a nine-month standstill caused by a jurisdictional issue involving Terminal 5 in Seattle. The International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) have reportedly agreed to set aside the matter to return to negotiations on a new contract after the last one expired in July 2022.

The decision to return to talks suggests that both parties face increasing pressure to come to an agreement. Port and terminal stakeholders are displeased at the cargo bleed at West coast ports, and beneficial cargo owners have voiced frustration at the stalemate, warning that the loss of business for West Coast ports could become permanent.

Meanwhile, Trans-Pacific shipping lines are presently negotiating new service contracts with retailers and other importers that typically take effect May 1 for the 2023-24 service year. Those contracts include routing decisions in which shippers declare minimum quantity commitments (MQCs) on West, East, and Gulf coast services from Asia. Retailers said they are choosing to use other ports for their goods due to the perceived uncertainty around contract talks.

Since last fall, Los Angeles-Long Beach and the Northwest Seaport Alliance of Seattle and Tacoma have registered year-over-year declines in US imports from Asia. In contrast, imports through major East and Gulf coast ports have increased, according to PIERS, a Journal of Commerce sister company within S&P Global (see Figure 1).

Source: Journal of Commerce

Medium-sized Ocean Carriers Reshuffle in Shifting Market

Medium-sized carriers on Alphaliner’s top-30 list have seen a shake-up in positions in the last 12 months, with capacity changes ranging from -34.6% to +55.3%, Alphaliner reported.

The capacity changes have had little impact on the overall global picture. The capacity count of the ten largest global carriers represents 83.7% of the total global containerfleet. The combined share of the liner shipping companies ranked in positions 11 to 30 accounts for 9.4% of the global container fleet.

Medium–sized operators have also not captured market share with their combined growth at 2.1% since 1 January 2022, which is about half the growth rate of the entire container fleet.

Smaller carriers that expanded into East-West trades which were booming during the COVID-19 pandemic, were hardest hit by the collapse in cargo demand from China to Europe and North America.

Chinese operator CULines had the most significant fleet reduction year-on-year at -34.6%. Meanwhile, carriers Wan Hai Lines and Matson, which significantly expanded their capacity on the Trans-Pacific, responded to weakened demand by closing services.

The biggest winner among the medium-sized carriers is Pacific International Lines (PIL), growing its fleet by 11.4%. Percentage-wise, Emirates Shipping Line and Swire were the fastest-growing carriers at 55.3% and 41.9%, respectively. All Korean operators in Alphaliner’s top 11-30 reduced their fleets last year.

Source: Alphaliner

Stricter Screening Rules Raise Concerns for Air Cargo Forwarders

The Airforwarders Association (AfA) has raised concerns regarding the implementation of stricter cargo screening rules to come into effect on November 1, 2023. The requirement that all such cargo must be screened has been in effect since June 2021. Until now, the sector has been working with U.S. Transportation Security Administration’s (TSA) alternative security measure. However, the TSA has said the measures, which create exemptions for impractical-to-screen cargo, will expire in October.

At AfA’s general meeting, panelists agreed that the Certified Cargo Standard Security Screening Program (CCSSSP) designed for bellyhold operations is the only viable way to meet new screening requirements. Additionally, they said TSA’s proposed Secure Packing Facility (SPF) initiative is not a viable solution for shippers or air freight forwarders who tender cargo that is difficult to screen for freighter export.

“All security programs across the various segments of the air cargo supply chain need to be aligned. Industry needs TSA’s strong support in messaging the shippers that the CCSSSP – which would regulate shippers tendering cargo that is challenging to screen using existing approved security methods – is the only realistic available option to continue to move their cargo,” said Brandon Fried, AfA’s executive director.

Panelists agreed that the CCSSSP would need to be adapted to include acceptance and handling elements into the various freighter security programs if it is to be used for the new requirements. In addition, the TSA would also need to update the regulatory framework to include freighters.

Source: Air Cargo News

Grim Market Assessment for U.S. Trucking and Shippers

Trucking operators are expected to face bearish market conditions through the first half of this year, according to Uber Freight's first-quarter update on global freight markets.

Truckload supply has continued to outstrip demand, which Uber attributes to "plunging imports and lower consumer spending". As a result, market weakness is expected to continue in the first half of 2023. "Freight demand transitioned from a spot market recession to a broad-based volume recession," Uber pointed out.

Imports, retail sales, and manufacturing output all declined in the fourth quarter. The Institute for Supply Management's PMI reading lowered from 49 in November to 48.4 in December, indicating weak future demand.

Also looming is the possibility of a tighter market in the latter half of the year. The pace of trucking capacity exiting the market is accelerating as smaller operators are caught between high costs and low rates. "While we expect demand to fall further in H1, we also expect supply to contract further," the analysts said, referencing the contracting pool of independent U.S. truckers.

According to Uber analysts, intermodal volumes have been down in 16 out of the past 17 months and are forecast to continue to decline for much of 2023. Meanwhile, truckload operators will continue to maintain pricing pressure on intermodal players in the coming months. As a result, little change is expected for the intermodal sector and robust growth will likely not occur before next year.

The LTL sector outperformed truckload and intermodal providers yet faced an overall decline of -7% in U.S. LTL volumes. Weakening demand in a previously tight market has opened up capacity, but shippers hoping for more advantageous pricing from their LTL providers will likely be disappointed.

Uber analysts note that actual increases are consistently higher than shipper expectations. "Historical patterns predict that it is strongly likely shippers will experience higher increases than their expectations," they warned. "We anticipate contractual renewal increases will continue to decline, sitting in the 3%-5% range through, at least, June."

Source: The Loadstar

Transport Workers’ Strike Paralyzes Finnish Ports

Representing around 45,000 transport workers across the country, the Finnish Transport Workers’ Union, Auto-ja Kjetusala Työntekijäliitto (AKT), started a series of strikes across ports and other sectors of the transport industry on 15 February.

All vessel operations in Finland’s ports, gate moves, and handling of containers within terminals are suspended until further notice. Additionally, there are strikes in the truck, tanker, and oil product industry and the “terminal operators” sector that involve around 9,000 employees.

The collective labor agreement between the Finnish Port Operators Association and AKT expired on January 31, 2023.

Source: World Cargo News

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