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Oakland disruption underpins support for WC cargo shift
Cargo-handling operations were disrupted at the Port of Oakland Wednesday. Importers who are diverting cargo to the East and Gulf coasts amid labor negotiations were reassured of their decision. The shift is likely to continue until a labor deal is reached.
In the disruption, marine clerks from the ILWU picketed at Oakland over a travel pay issue for dockworkers who come into the port from outlying locations. That forced three of Oakland’s four container terminals to halt operations for the first shift.
Stoppages and slowdowns are contributing to cargo declines and a large decline in man-hours worked by West Coast longshoremen this fall. According to the PMA, September man-hours dropped 3.9% YoY. Man-hours also fell 7.6% in the first three weeks of October YoY.
The West Coast’s market share of US imports from Asia fell to 57.5% through the first nine months of the year, down from 61.2% in the same period last year. The East Coast’s share increased to 35.1% from 32.8%, while the Gulf Coast’s share rose to 7.1% from 5.7%.
Some terminal employers note that the rapid decline in man-hours may be what it takes for the rank-and-file to push their negotiators to reach a contract settlement.
Shipper uncertainty over labor on the West Coast is the main reason the ports are losing discretionary cargo. However, additional factors are at work.
Warehouses have been filled to capacity for much of the year because retailers ordered merchandise earlier than usual. Retailers ordered more than they needed, which is contributing to supply chain delays. Therefore, retailers have been diverting cargo to the East and Gulf coasts to avoid the bottlenecks on the West Coast.
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Carrier earnings to slow: Maersk CEO
Maersk remains on track for its best full-year result following record Q3 earnings. However, CEO Soren Skou indicated the period of the shipping industry’s highly elevated earnings was nearing its end.
He said, “It is clear that freight rates have peaked and started to normalize during the quarter, driven by both decreasing demand and easing of supply chain congestion.”
Maersk is awash with cash as average rates, including both spot and contract, rose 42% in Q3 to $5,046 per FEU, offsetting a 7.6% YoY decline in volume.
Contract rates continue to drive Maersk’s profitability, with 71% of its total volume carried under long-term agreements. Skou stated, “The rates were higher in Q3 than in Q2, which clearly demonstrates the value of our strategy in signing long-term contracts.” He also said they expect to have a similar level, or even higher levels, of long-term contracts in 2023.
Skou also said the deteriorating outlook had led the carrier to cut its outlook for global container demand growth for the full year from between 1 and minus 1 percent to minus 2 to minus 4 percent.
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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.