Logistics Crisis Continues

Posted 03/04/2022

We are just back from attending the TransPacific Maritime Conference, the largest logistics event in the United States covering all topics surrounding global economics and supply chain issues. After COVID cancellations, TPM22 drew over 2700 attendees from around the globe and featured speakers such as Dr. Narimen Behravesh, Economist for IHS Markit; John Butler, President and CEO of the World Shipping Council; Daniel Maffei, Chairman of the Federal Maritime Commission; Jeremy Nixon, CEO of Ocean Network Express/ONE; and Vincent Clerc, CEO, Ocean and Logistics, Maersk, and many many other industry experts and analysts. Bottom line, the news is not good for any speedy recovery of supply chain normalcy. The only reliable prediction is continued unreliability.

In this report, we will continue to highlight some of the hardest hit areas—and right now, wine and spirits origins are getting hit hard.

Europe/UK: The schedule disruption is at the worst level that we have seen yet. As an example, one of the top carriers, CMA-CGM budgeted for seven blank (cancelled) sailings for a transatlantic string in 2022. They have already had six. Every carrier is blanking or omitting ports as the only method to manage their networks. With delays in virtually every port in Europe and in the USA, the networks are in a complete breakdown. Cargo is sitting at terminals and getting rolled due to either port omission, backlog, or weight issue on the vessel. Equipment is practically non-existent in many areas, and carriers are putting a full stop on bookings to try to clear out the backlog. Italy is one of the worst hit areas; and the backlog of cargo waiting to load is steadily growing. On one service from Italy, several sailings are cancelled and bookings are not available until mid-May (yes, you are reading that correctly, mid-MAY). If you have any specific questions on the situation or root cause, we would be happy to provide further detail; but, please be prepared for even longer lead times in the next weeks.

South America: We are again seeing a backlog build from Chile to the US East Coast due to a variety of factors, including COVID outbreaks on vessels. Space will be very tight throughout March for the US East Coast, and schedule delays will remain problematic for US West Coast, primarily due to the continued congestion issues in LA/LB and Oakland. We are expecting the situation to improve for April, but we will keep you posted.

Oceania: Australia and NZ are both extremely tight in capacity for both USA and European-bound cargo, but cargo is flowing. Auckland port is again under restrictions, and we are keeping a close eye on the situation as the congestion can ramp up quickly as it did in 2021. Analysts in NZ are predicting heavy delays in the coming months, so again, be prepared for longer lead times and long transit times due to issues in transhipment ports.

USA West Coast Labor: With the ILWU contract coming up for negotiation, many importers are shifting cargo to the US East Coast to avoid potential disruption should a work slowdown or strike occur. This shift will create greater congestion in US East Coast ports and put pressure on the transloading and rail services in the next months.  

Russia/Ukraine Impact: The situation has led to cancellations of almost all vessel calls and thousands of inbound containers headed to Russia that could be discharged in European ports, adding to the overall congestion in the ports. The cancellations could also add some needed space in the Europe strings, but equipment will either be stuck in Russia that cannot be exported or stuck in Europe, unable to be delivered. We will understand the impact in more detail as the situation unfolds and will keep you posted.

The Good News: While it is difficult to find good news in the global supply chain, all stakeholders are working on solutions, whether it is pushing for data and visibility improvements, enforcing the FMC’s guidelines on demurrage and detention, or creating ‘pop up’ storage yards outside of port areas to deal with overflow of containers. At the TPM22 conference, there was a lot of discussion on 24/7 operations as a necessary tool to ease port congestion and throughput, as well as lowering the age for truck drivers to 18, and increasing weight limits. The White House attention on the supply chain has never been as strong as it is today, and while it will take the efforts of all stakeholders to make improvements, pressure from the President will help speed up progress.