RIM has been focused on transparency and communicating the current state of affairs around the world and here in the United States when it comes to supply chain delays and disruptions. Given that there’s no mode of transport that is without challenges, here are the top issues we have identified as the greatest concern across each mode of transportation.
Air Freight: China and Vietnam
At Shanghai Pudong Airport, a small number of positive tests has driven the airport authority and China’s government to take a very heavy-handed approach to stop further spread by severely curtailing, nearly to the point of shutting down, operations at the ground handling company where the positive tests were recorded.
An estimated one-third of flights were cancelled into and out of the airport this past weekend, impacting passenger and cargo operations alike.
We, like other industry stakeholders, are concerned and watching for whether or not it impacts other handling companies on the airport.
In Vietnam, the Ho Chi Minh government instituted a mandatory two-week lockdown that prohibits citizens from even leaving their homes for food. Factories who wish to continue through the lockdown must provide housing for employees and remain quarantined. Vietnam’s Textile and Apparel Association has estimated that fully 30 – 50% of factories have had to close, unable to comply with the regulations.
These closures, coupled with backlogs in Vietnam’s seaports, have many shippers turning to air freight. Keep in mind that this is Vietnam and not China and while many companies pre-pandemic had been looking to try to diversify sourcing in the face of trade remedy duties on Chinese exports, the bandwidth for vessels and flights at seaports and airports is far less.
Sea Freight: Idled tonnage and record ship counts at anchor
Thankfully, Meishan Terminal in Ningbo is fully open as of today. Initial forecasts were for a ramping up to full operations that would happen on September 1st.
Meanwhile, Lars Jensen of Vespucci Maritime has estimated that nearly 10% of the world’s container fleet is idled – not for lack of cargo, but at ports around the world waiting to be unloaded.
Rail: Double-digit dwell times at ports, weeks-long recoveries at ramps
The Pacific Merchant Shippers Association reported in July the average time a container remained on the terminal before being picked up by a truck in the LA basin was 5.2 days. While this impacts local destination cargo, the bigger figure was the reporting of more than 11.3 days for a container to be put on a rail car and moved inland.
The BNSF re-opened an intermodal ramp in Marion, Arkansas, serving the Memphis area and southeastern United States. At the same time, the situation in Chicago grows more grim where the time to recover containers continues to grow.
The problems in Chicago and other ramps are three-fold. First, the sheer number of containers are overwhelming these facilities that were built in green spaces, presumably, to accommodate for future growth. Second, containers are not being returned quickly enough for the wheels they sit on to be used for other import containers. Third, the inability of truckers to bring their own wheels and the rails’ willingness to dig through stacks of containers to “cherry-pick”, or find containers, means shippers are at the mercy of the process.
Trucking: Driver shortages, soaring rates
These two go hand-in-hand as far as shippers are concerned. The delays in Southern California have translated into increased demand for transload services and domestic trucking to inland points for retailers and shippers desperate to lay hands on their goods.
According to reporting by Ari Ashe on August 13th in the Journal of Commerce (subscription required):
“Spot truckload posts, a measure of demand, from Los Angeles to Chicago, one of the top freight lanes in the US, have jumped 40 percent in the last four weeks compared with the four weeks leading up to July 4, according to DAT Solutions. Spot truckload rates have surged 92 cents between January and the first week of August between Los Angeles and Chicago.”
RIM is using every tool in our toolbox for mitigation.
From our air charter operations to utilizing our facility in Santa Fe Springs and ongoing carrier negotiations while simultaneously seeking alternate routings and port pairs, our focus is on doing our best to contain situations out of our control. RIM’s dedicated employees are focused on moving cargo as quickly as possible and once in the possession of one of our many global and US offices, we can exert the greatest influence.
We continue to remind clients that transparency and communication are paramount and forecasts, early identification of critical shipments and space protection requests as early in the purchase order process as possible will be how we can best influence and make the best of a challenging environment.