Right now, all the "congestometers" point to low. That's a good sign for shippers. It means that at eight major U.S. ports, it's "business as usual, with no serious congestion, delay, or diversion of cargo anticipated," according to the key provided in the latest "Port Tracker" report. Port Tracker, a port monitoring service, uses the congestometers (which look something like an automobile's gas gauge) to alert shippers to potential port delays.
But as good as things look now, there's reason to worry. "Looking ahead to the coming 2006 peak season, we see continued challenges to system performance due to continued growth in trade that will start again within the next two months," warns Paul Bingham, an economist with Washington-based Global Insight, an economic research, forecasting and analysis firm.
Bingham heads up Global Insight's Port Tracker program, a subscription service that monitors inbound container volume, rail and truck capacity into and out of the ports, labor conditions, and other factors that could affect cargo movement. Following the ill-starred 2004 holiday shipping season, when ship logjams caused protracted freight backups at U.S. ports, the National Retail Federation commissioned the service to forewarn its members of problems.
Early warning may give shippers peace of mind, but it's no guarantee of trouble-free shipping. "As we must every year, we can expect some shocks to the system," Bingham says, citing the 2005 natural disasters and fuel price spikes as examples.
But natural disasters aren't the only threat to smooth-running port operations. What has the industry really worried is a rising tide of imports (particularly from China) that threatens to overwhelm the already- strained U.S. port and inland transportation infrastructure. Global Insight expects import volumes to rise more slowly this year than last, but Bingham points out that import growth will still outpace the overall economy (as well as any infrastructure development). "That means new record volumes," he says. "Staying in place is not going to cut it."
Diversionary tactics
Looking back at the 2005 peak shipping season, Bingham acknowledges that ports operated much more efficiently than they had a year earlier. "There was nothing on the scale of 2004," he says. That was partly because shippers shifted shipments away from the busy Los Angeles/Long Beach complex, routing them through other West Coast ports like Oakland, Seattle and Tacoma as well as through Savannah, Norfolk and Houston. Those shifts may well become permanent. Some of those ports are aggressively pursuing business, says Bingham, who notes that they're even developing regional distribution centers to attract Asian imports. The ports are likely to find a receptive audience for their pitches. Bingham believes many shippers are redesigning their networks to bring their shipments into the country at ports closer to the goods' destination, rather than simply bringing everything in through LA/Long Beach.
In the meantime, ports themselves are taking steps to ease the congestion. Los Angeles/Long Beach, for example, has expanded its port hours and instituted the OffPeak program, which offers shippers incentives to pick up containers at night or on weekends. So far, it appears to be working. PierPASS, the not-for-profit company that administers the program, says more than a million trucks were diverted from peak traffic periods between July, when the program was launched, and the end of last year.
Still, these measures are just temporary fixes. Diverting freight to other ports and rescheduling loading activity eases the pressure on the busiest facilities, but it doesn't solve the congestion problem. In fact, George Powers, president of American Port Services, which provides trans- loading, deconsolidation, warehousing, and distribution services, warns shippers who plan to shift cargo to East Coast ports that inland infrastructure could be an impediment. "I-95 is congested already," he says of the major north-south highway along the East Coast. "More freight will just add to the problem."
Running out of options In the meantime, other problems have emerged. Ironically, at a time when ports already face a capacity crunch, ocean lines are putting huge mega-containerships into service. These large vessels, though profitable for the carriers, present operating challenges to ports. Not only do they require special cranes and deeper channels, but larger ships also mean substantial surges in volume—the biggest of these ships carry more than 6,000 TEUs (twenty-foot equivalent units). Furthermore, not all ports can accommodate the large vessels.
Another problem is a shortage of inland transportation capacity. "The railroads were still pretty strained last year," Bingham says. Though Hurricane Katrina may have been partly to blame, Bingham still worries that the railroads will continue to be slow to add capacity.
In the past, shippers have circumvented rail capacity problems by bringing ships through the Panama Canal to ports on the East and Gulf Coasts, which eliminates the need for a cross-country haul. But that may not be an option much longer. A study done last year by London- based Drewry Shipping Consultants concluded that the canal, through which about a quarter of all trans-Pacific freight passes, was already operating in excess of 100 percent of its practical capacity—a level the report's authors termed "unsustainable."
That may ease ... a bit. Drewry expects short-term improvements will add about 10 percent to capacity by next year. There's also been talk of a major canal expansion project, but that won't begin anytime soon. The proposal, which still requires multiple layers of approval, faces ecological, technological and financial obstacles. And if Panama does go ahead with the expansion, Global Insight estimates that canal fees will double over 20 years to pay for the project.
Capacity problems in the canal zone would most likely ripple back to West Coast ports, which means it's doubtful shipping patterns will shift significantly in the near term. "Los Angeles will still be the dominant port," Powers says. "It has ... the location." The location, perhaps, but not the capacity, according to one consultant. The Drewry study warns that the West Coast ports could face a capacity shortage of 1.8 million TEUs as early as 2008. As bad as that sounds, the longer-term outlook is worse: Drewry says the shortage could swell to 6.5 million by 2010.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”