The top story of the week for supply chains is the unfortunate situation in Ukraine, which is having a widespread impact and adding to an already challenging time. Commodity prices, including fuel, are being negatively affected.
As many factories in China were closed for the holidays in early February, export container volume dropped 8.3% in tandem with a drop of 20.2% in domestic volume. In all, February saw a decline of 7.5% and 7.6% year-on-year for cargo throughput at major coastal hub ports and international trade, respectively.
In the U.S., the White House is taking further steps to improve the supply chain for several critical industries, with an emphasis on ocean freight costs. The White House has announced its latest step which is an agreement between the Department of Justice and the Federal Maritime Commission (FMC) to make sure that large ocean freight companies cannot take advantage of U.S. businesses and consumers.
As if retailers haven’t had enough angst over the last two years, there’s an additional threat on the horizon. The current contract between West Coast port operators and dockworkers expires June 30 and there is concern that negotiations will get ugly. With that in mind, the National Retail Federation is asking Pacific Maritime Association and the International Longshore and Warehouse Union to start talks immediately to avoid an even deeper crisis. Something that would put further stress on anyone—both business and consumer—that relies on West Coast ports.
On the Trans-Pacific route, poor scheduling continues to disrupt trade. Despite a slight improvement in on-time performance in January, there isn’t much cause for getting our hopes up. Sea-Intel predicts that congestion and scheduling issues will continue along the trade route for several more months.
Finally, Russia invading Ukraine has brought expected turmoil in the industry. Oil prices have hit an 8-year high, reaching a price of more than $105 a barrel with predictions of jumping to $130 in the next few weeks. The price of low-sulfur fuel oil (LSFO) has also gained 40% since December. All this has carriers bracing for expected hikes in surcharges, with many expecting an emergency BAF (Bunker Adjustment Factor) to hit within the next few weeks.
For more on these stories, check out the article highlights below.
