Logistics Conflicts on the Rise

Posted 03/11/2022

It is hard to imagine a time when there is more attention on ocean shipping, with the President of the United States addressing the practices of ocean carriers in his State of the Union address, new legislation being introduced to address anti-trust immunity by ocean carriers, and Ocean Shipping Reform being addressed by both the House and Senate. For beverage alcohol, we also saw action via a TTB circular on payment practices for consignment sales that may lead to investigations and penalties. Not to mention, we are in the midst of a war that is a human tragedy and also leaving hundreds of containers “stranded” in various places, and sanctions that are pushing fuel prices up. On the USWC, the congestion remains high and the potential for a work slowdown or strike during the upcoming ILWU contract negotiations is driving cargo to East Coast and Gulf ports.

For the logistics outlook, there is only bad news to report.

Fuel Prices: Fuel surcharges are increasing or being added in Europe and the USA by truckers and intermodal providers, and we expect this will also impact ocean carrier fuel pricing and affect all global areas.  The percentages vary based on the region but range from an uptick of 10% to over 30%.

Labor/Strike Potential: In Spain, we have been advised that some associations of independent truckers have invoked an indefinite strike starting next Monday 14th.  The truckers argue that negotiations reached in 2021 and effective in March do not satisfy their needs. The major transportation companies are not supporting this strike, and we will be monitoring the impact. In Italy, we are seeing a similar report, with a quote from one of the truckers associations sent to the Italian Government translated as follows: “We inform you that, due to the constant and exponential increases of the fuel cost that is penalising the trucking companies, we decided to suspend the trucking service for “force majeure cause” as of Monday march 14, 2022.” If these strikes come to fruition, it will cause further disruption in an already strained system. We will see what happens on Monday and will send further updates.

MSC Boston Service: We have received information on a change in routing on the MSC service to Boston, with a complete adjustment of the service and cancellation of the direct service from North Europe. We have sent information directly to many Boston area shippers but please let us know if you would like details. 

Congestion, Delays and Port Omissions: We are continuing to see unprecedented changes in routings, port omissions, carrier booking stoppages and cancelled bookings. Oceania to the US West Coast has been adversely affected, Italy is extremely backed up, and South America is facing severe backlogs. Carriers are changing routings to try to manage their networks, often adding transhipment ports. One example is South Africa, with a “normal” routing to the USWC usually coming in at a 50 day transit time, but what is now a four transhipment routing and 120 day transit. The transit times are simply out of control.

War Risk Insurance: We have seen many questions on war risk insurance coverage due to the situation in Russia and the Ukraine. War risk endorsements generally cover “sudden” acts of war and not in a situation where the intent and build up was known for weeks in advance.  The Commonwealth of Independent States, of which Russia and Ukraine are members, is often exempted from coverage or requires specific endorsements. Thus, if you have cargo that is caught in this conflict, you will need to review with your provider. In general, because of these present circumstances, no matter what type of coverage you have, every shipper should be taking precautions and making decisions as if they are uninsured, doing everything in their power to mitigate losses and risk.

Stay tuned for an upcoming supply chain webinar where we can address your specific concerns.