How things change. Last week, West Coast ports were taking a positive stance on potential disruptions as China eases current lockdowns. This week, as the Port of Long Beach continues to set single-month records, they are expressing concern over China’s reopenings. Currently, the port is doing the best it can to move cargo off the docks in preparation for a wave of containers.
Of course, without a crystal ball, no one in the industry knows exactly what to expect. If there will indeed be a surge in imports or they’ll continue at a manageable level. Unfortunately, mixed signals are coming out of Shanghai, so knowing what to prepare for is challenging.
The good—or not so good—news is that there’s plenty of vessel capacity. To the point where some carriers are offering space at current spot prices to customers who they previously cut out of service contracts. But cancellations are up, with 25% of available capacity to the US West Coast blanked between April 4 and May 8.
The situation in China, and the Shanghai lockdown specifically, could be the tipping effect that drives migration out of China. Supply chain managers have begun to consider moving their operations from China and re-shoring. The industry is paying attention to a move made by Intel, who, in March, announced plans to invest in chip production in the EU. And they are watching Apple, which is reporting a loss of $8 billion in revenue due to COVID lockdowns and chip shortages, to see what they do.
Not surprisingly, there are a few contentious issues between the ILWU and the PMA. One of the biggest is port automation. ILWU officials contend that automation is not environmentally friendly or even more efficient when it comes to higher cargo throughput. However, the PMA responds with a report that finds throughput 44% higher at the ports of Los Angeles and Long Beach thanks to automation.
Finally, the FMCSA has announced changes to the emergency HOS waiver announced early in the pandemic. The transport of propane, natural gas, and heating oil have been added to the exemption. As of yet, there’s no word on whether the general exemption, which expires at the end of this month, will be extended, but this move seems to point to the possibility.
