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ILWU, PMA likely to reach new contract in August-September

A growing number of sources close to the ongoing West Coast longshore labor negotiations believe that the likelihood is growing that a deal will be reached in August or September. They believe there will be little disruption occurring on the docks.

However, some are not convinced the process will proceed smoothly from here despite intense pressure on both labor and management from the Biden administration. None are willing to entirely rule out the possibility that talks could go off the rails. However, very few believe that they will.

Sentiment is growing among sources close to the talks that the potential for large-scale disruption is fading as the two sides proceed deeper into the negotiations. The optimism rests on assumptions that major issues, such as automation, can be overcome at the negotiating table.

There have been no known slowdowns thus far at West Coast ports. Despite the expiration of the prior contract on July 1st, neither side can initiate a strike or lockout unless an impasse is declared in the negotiations.

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Shipping needs greater regulatory intervention: ITF

According to the International Transport Forum (ITF), government regulators must extend their reach deeper into container shipping to ensure fair competition and greater monitoring of the industry.

In the report, the ITF reiterated its long-held position that the regulatory arrangements for container shipping have not resulted in price stability, lower prices, or more competition and therefore should be reviewed.

The report stated that cooperation agreements have become the main element of coordination between shipping lines. Additionally, it said that expectations that these would stimulate price competition and lower shipping prices were confounded by record-high freight rates.

The ITF report also covered vertical integration moves by carriers flush with cash after a highly profitable two years. Some carriers have used profit to make targeted, large-scale acquisitions in the logistics and forwarding industry. The ITF recommended governments pay greater attention to fair competition in the integrated container logistics transport solutions that are now on offer.

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Shippers seek lower trans-Pacific contract rates

A relative easing of trans-Pacific spot rates is spurring some shippers to try to renegotiate their service contracts. Some U.S. shippers have been successful in signing short-term contracts at lower rates. However, customers seeking to renegotiate for the life of the contract are receiving strong pushback from carriers.

Spot rates were elevated this spring, and mid-sized shippers signed service contracts with rates of $8,000 to $10,000 per FEU. With WC spot rates now averaging $7,000 per FEU, customers are gravitating toward booking their containers at the lower spot market rate.

Although the rate of cargo volume has weakened over the past few weeks, imports should be strong during the peak season. The July 8th GPT forecast that imports through November each month will be slightly above or slightly below the same months last year.

Retailers and industry analysts say carriers do not want to pass up booking opportunities. Thus, they are working with customers to provide immediate relief. A few importers said that they have been able to renegotiate rates for the life of the contract through April 30, 2023.

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U.S. imports from Asia highest ever for month of June

U.S. imports from Asia rose 12.7% YoY in June, making it the busiest June ever on the eastbound trans-Pacific. Imports through the first half of the year were up 6.2% over the first six months of 2021.

The higher imports for June and the first half of 2022 show that consumer spending has so far not been muted by rising inflation and three months of Covid lockdowns in Shanghai.

U.S. imports from Asia totaled 1.69 million TEU in June. On a month-to-month basis, June imports were down 2% from 1.72 million TEU in May. Retailers expect monthly imports in the second half of the year to remain at or near record levels.

Imports from Asia in the first half of 2022 were up 31.3% from the first six months of pre-pandemic 2019. With the base level for cargo volumes now 25 to 30% higher than it was before Covid, U.S. ports and inland supply chains must prepare for the near-record volumes.

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About O’Neill Logistics

O’Neill Logistics is a leading 3PL with operations in Rancho Cucamonga, CA; Savannah, GA; and Newark/Monroe, NJ. We service many verticals including Garments, Fashion Accessories, Footwear, Furniture, Home Goods, & Electronics. Additionally, we offer omni-channel distribution and all value-added services. Lastly, we focus on retail “drop shipment” fulfillment and item-level fulfillment services with same-day service offerings.

O’Neill Logistics has over 2 million square feet of state-of-the-art facilities. Additionally, we offer dray services to support the warehouses and provide distribution to retailers and wholesalers. Our reliable 3PL platform combines sophisticated technology with robust, flexible processing designs and speed-to-market gateway models.

Lastly, we aim to simplify your supply chain. We deliver exceptional service and can optimize your operational performance. Therefore, we aim to build, protect and foster strong business partnerships.