On Alert: Shanghai, US Ports, ILWU
Updated: Oct 28, 2022
As you may already know, Shanghai has been on lockdown for the past few weeks, and there are strong indications it will remain on lockdown until May 1st.
The lockdown is strictly enforced. Residents are not allowed to leave their homes except for COVID testing. Many of the transportation and shipping offices are subsequently closed or have minimal teams at airport offices and warehouses with little access to information and systems.
The lockdown is impacting overall market supply and demand. Airlines & charter companies are trying to switch their flights to alternative inland airports, such as Zhengzhou, Chongqing, Shenzhen, and even Hong Kong. But unfortunately, many flights have instead been cancelled.
The situation is intensifying as COVID cases spread further from Shanghai. Beijing, China’s capital city, has initiated mass testing and localized lockdowns in an effort to avoid the extreme situation facing Shanghai.
We continue to monitor the situation and will provide additional updates as information becomes available.
Alternatively, if you have an urgent air or ocean freight inquiry/order, please let us know immediately. We will try to make use of Qingdao & Tianjin for ocean, and Xiamen, Zhengzhou and Shenzhen for airfreight in China. For Southern China, we may consider using Hong Kong.
If you have an immediate concern or need for assistance, please reach out to our International Team via email firstname.lastname@example.org, or call us at 800-486-8326.
Thank you for your patience and consideration.
The International Team at Watchpoint Logistics, Inc.
Port Update - Volume & Congestion
Port congestion and supply chain issues have followed us into the new year: “Aging infrastructure, the pandemic, and geopolitical disruptions continue to cause bottlenecks, congestion, and challenges in global markets.” US Department of Transportation
There are a few hopeful signs, however. “The total number of container ships waiting for berths at U.S. ports has dropped by 35% since peaking in early February and freight railroads’ weekly intermodal movements in March approached their highest levels of 2022.”
And the Port of Los Angeles, for example, has reported its best March on record. Even as transport stocks crash, cargo volume continues to soar. The jump in volume from December to March appears to indicate a “pressure release” from the buildup experienced in December that prevented cargo offloading. March imports, therefore, surged as dock fluidity finally caught up. Fewer vessels in line, more room on the tarmac, and a healthier workforce post-omicron has alleviated some tension.
The good news, however, may be superficial at best. With a vast number of vessels currently stuck in China due to lockdown, the decrease in congestion may be temporary. What happens when lockdown has ended, and detained ships sail once again?
Even as the pressure on West Coast ports slackens, congestion remains a challenge in certain areas. Gulf and East Coast ports are now experiencing significant congestion. The problem has merely shifted rather than resolving altogether.
Watchpoint Logistics, Inc. is closely monitoring the everchanging landscape of the global supply chain. We will do our best to keep you informed. Stay tuned!
Looming ILWU strike
We’ve all heard about port congestion and the supply chain woes experienced by West Coast ports throughout the past year. Unfortunately, the problem could worsen rather than improve, due to the slow contract negotiations between the Pacific Maritime Association (PMA) and the International Longshoreman and Warehouse Union (ILWU). A delay in successful negotiations could result in further shipping delays and an increase in already high transportation prices.
Bracing for this possibility, the National Retail Federation (NRF) has urged the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) to settle contract negotiations quickly. Their current contract is set to expire on June 30th. A speedy settlement could help ease current backlogs created by high consumer demand and COVID related labor and equipment shortages. If the contract is delayed, however, retailers and consumers worldwide may suffer the consequences.
Sticking points in the contract include the ILWU’s desire to see wage increases that reflect the record-breaking port profits from 2021. The union is also concerned about automation’s impact on union member jobs.
Fears over the possibility of failed West Coast negotiations have some retailers exploring creative solutions to mitigate any potential disruption. Options under consideration include air transport and seaports in other locations like Canada, the Gulf of Mexico, and the East coast.
Substantial political and commercial pressure to reach an on-time agreement between the PMA and ILWU has retailers and down-chain stakeholders across the globe hoping for the best while planning for the worst.
For details relating to the long history of PMA & ILWU negotiations, read Eric Kulisch’s February 25, 2022 article in American Shipper.