MARKET BRIEF | October 2022
A BRIEF look at what’s happening in the logistics and shipping industry.
UPDATES ON SHIPPING DELAYS
Vessels continue to be pushed further off schedule. This results in in blank sailings — additionally convoluting the increase in import volume that has been building over the past two years. Hurricane Ian caused some port and warehouse closures throughout Florida and the Carolinas, adding to delays in the Southeast. China’s observance of Golden Week, at the beginning of this month, also had a negative impact on imports. China has already been playing catch-up, due to constant factory closures because of the strict COVID-19 restrictions that have been imposed. So, it’s expected that supply chain disruption will persist throughout the end of the year (and probably beyond).
WEST COAST PORTS LOSING VOLUME TO THE EAST
In August, the Port of New York and New Jersey was the busiest port in the U.S. That distinction had previously belonged to the Port of Long Beach, closely followed by the Port of Los Angeles. This seems to be the culmination of a trend where shipping volume has been shifting to the Atlantic Coast for most of 2022. It’s the result of operational and labor issues that have plagued Pacific Coast ports. And as conditions in California continue to deteriorate, many believe that this shift could be permanent. Not only does holding inventory in the East make sense by keeping it closer to large consumer areas, but it also makes economical sense, as inflation continues.
PORT OF L.A. RECEIVES $20 MILLION FEDERAL GRANT
The Port of Los Angeles has received a $20 million federal grant for a critical road-railway grade separation project. This is intended to help cargo move faster and reduce delays. The award comes from the U.S. Department of Transportation, and is earmarked for capital investments that support roads, bridges, transit, rail, ports, and intermodal transportation. The project will entail construction of a four-lane rail-roadway grade separation, which will allow unimpeded truck access to an 80-acre marine support facility on Terminal Island. The new rail-roadway will connect trucks directly to the highway system in two directions, resulting in an estimated reduction of 2,500 truck-hour delays daily, a decrease of more than 3,000 metric tons of emissions per year, and a reduction of 1,200 truck miles travelled per day (which will also decrease accident potential in the area).
MANUFACTURING MOVES TO MEXICO
In recent years, U.S. companies have been moving manufacturing (or “maquiladora”) operations to Mexico. The close proximity, and favorable operating environment, has made this practice an attractive one, especially as American companies expand their businesses and manage costs. With transit times often no more than a few days, this is also a more ideal solution, rather than utilizing overseas shipments.
Vessels continue to be pushed further off schedule. This results in in blank sailings — additionally convoluting the increase in import volume that has been building over the past two years. Hurricane Ian caused some port and warehouse closures throughout Florida and the Carolinas, adding to delays in the Southeast. China’s observance of Golden Week, at the beginning of this month, also had a negative impact on imports. China has already been playing catch-up, due to constant factory closures because of the strict COVID-19 restrictions that have been imposed. So, it’s expected that supply chain disruption will persist throughout the end of the year (and probably beyond).
WEST COAST PORTS LOSING VOLUME TO THE EAST
In August, the Port of New York and New Jersey was the busiest port in the U.S. That distinction had previously belonged to the Port of Long Beach, closely followed by the Port of Los Angeles. This seems to be the culmination of a trend where shipping volume has been shifting to the Atlantic Coast for most of 2022. It’s the result of operational and labor issues that have plagued Pacific Coast ports. And as conditions in California continue to deteriorate, many believe that this shift could be permanent. Not only does holding inventory in the East make sense by keeping it closer to large consumer areas, but it also makes economical sense, as inflation continues.
PORT OF L.A. RECEIVES $20 MILLION FEDERAL GRANT
The Port of Los Angeles has received a $20 million federal grant for a critical road-railway grade separation project. This is intended to help cargo move faster and reduce delays. The award comes from the U.S. Department of Transportation, and is earmarked for capital investments that support roads, bridges, transit, rail, ports, and intermodal transportation. The project will entail construction of a four-lane rail-roadway grade separation, which will allow unimpeded truck access to an 80-acre marine support facility on Terminal Island. The new rail-roadway will connect trucks directly to the highway system in two directions, resulting in an estimated reduction of 2,500 truck-hour delays daily, a decrease of more than 3,000 metric tons of emissions per year, and a reduction of 1,200 truck miles travelled per day (which will also decrease accident potential in the area).
MANUFACTURING MOVES TO MEXICO
In recent years, U.S. companies have been moving manufacturing (or “maquiladora”) operations to Mexico. The close proximity, and favorable operating environment, has made this practice an attractive one, especially as American companies expand their businesses and manage costs. With transit times often no more than a few days, this is also a more ideal solution, rather than utilizing overseas shipments.
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