Overnight Wednesday, after a marathon 11th-hour negotiating session brokered by the White House, America’s freight rail operators accepted unions’ demands for unpaid medical leave for conductors, engineers and other workers. The tentative agreement ends a years-long bargaining process and heads off the prospect of a strike or lockout, which could have begun as early as Friday – and would have had a devastating impact on freight transport across the nation.

“This is a win for tens of thousands of rail workers and for their dignity and the dignity of their work,” said President Joe Biden on Thursday morning. “It’s about the right to go to a doctor or stay healthy and make sure you’re able to have the care you can afford.”

Biden thanked both rail workers and railway operators for keeping the supply chain moving during the pandemic, and he described the agreement as a win for both labor and management. “With this agreement, railroad companies will be able to retain and recruit workers.  They’ll be able to continue to operate effectively as a vital piece of our economy,” he said.

The Brotherhood of Locomotive Engineers and Trainmen (BLET) and the SMART Transportation Division – together representing nearly 60,000 workers – had already reached agreement with the employers’ association for Class I rail carriers, except for one sticking point. An unpopular points-based employee attendance policy – which effectively prevents medical leave, the unions claim – was worth risking a strike, even if it meant walking away from a 24-percent raise. “Our members are being terminated for getting sick or for attending routine medical visits,” claimed BLET and SMART in a joint statement last week.

The tentative agreement resolves that question and gives union members a new ability to take time off for “routine and preventive medical care, as well as exemptions from attendance policies for hospitalizations and surgical procedures,” the unions said. For the rest of the economy, it heads off the prospect of a $2 billion-per-day rail shutdown affecting 40 percent of the nation’s freight.

The deal’s completion was far from certain, and rail lines had already begun preparing for a halt in operations. National Economic Council Director Brian Deese told Politico that the conversation began to change after 2100 hours Wednesday, when White House officials began calling rail CEOs to warn them that “we took it very seriously and were going to resolve it and they needed to move.”

The deal is not yet fully sealed: it now goes to BLET and SMART’s membership for a ratification vote. The unions have agreed not to strike until voting is completed.

Containership lessor Seaspan Corporation announced it has canceled an order for four containership newbuilds “due to certain conditions in the contracts not being fulfilled”.

The original order, which was announced in May, was for four 7,700 TEU dual-fuel liquefied natural gas (LNG) containerships from an undisclosed “major” shipyard.

“Due to certain conditions in the contracts not being fulfilled by the counterparty, the contracts have become null and void. Seaspan has notified the relevant parties and has reserved its rights to claim against the counterparty in relation to the contracts,” the company said on Thursday.

The newbuilds, which had been scheduled for delivery in the third and fourth quarters of 2024, were lined up to be chartered by a “leading global liner customer”.

Source: https://www.marinelink.com/news/seaspan-cancels-fourship-newbuild-order-499500

The monthly record-setting streak that U.S. container import volumes have been posting since mid-2020 came to an end this August. While the August number was down slightly compared with the same month in 2021, it remained above 2.5M TEUs, which is still quite high and above the level that has caused port congestion and delays for the last 18 months. A number of factors, such as a slowing economy, inflation and high fuel costs, still have not had the anticipated impact of slowing down U.S. container imports. The combination of increased import volumes from China, persistent delays at major East and Gulf Coast ports and the high number of ships waiting off those ports continues to put pressure on supply chain predictability. The August update of the logistics metrics Descartes is tracking continues to point to congested and challenging global supply chain performance for the rest of 2022.

August finally broke the record monthly trend for U.S. container import volume.
Container imports into the U.S. last month dipped below the year-on-year level (see Figure 1), as TEU volume retreated 1.8% to 2,529,042, though volume was still up 18% from pre-pandemic August 2019. This is the first month since August 2020 that there has not been a record versus the previous year. August 2022 container import volume was relatively flat versus July 2022 with a 0.1% decline.

In August, U.S. container import volumes from China were up 1.4% to 1,008,499 TEUs compared to July 2022 and up 6.3% versus August 2021. Chinese imports in August were the highest of 2022. China represented 40% of the U.S. container import volume, up 0.6% since July 2022.

West Coast ports regained share from East and Gulf Coast ports even though the Port of Los Angeles saw a large decline in container import volume.
East and Gulf Coast ports continued to lead the West Coast ports in volume in August 2022 versus July 2022, but their overall share was lower. Comparing the top five West Coast ports to the top five East and Gulf Coast ports in August 2022 versus July 2022 shows that, of the total import container volume, the East declined slightly in August 2022 to 44.1%, while the West increased to 41.9% in August 2022 from 40.6% in July 2022. The top 10 ports gained share in August 2022 over smaller ports as the top 10 represented 85.9% of all volume, compared with 85.1% in July 2022 and 86.3% year-on-year.

Looking at five-month periods (see Figure 2), the top West Coast ports (orange), with the exception of Seattle, experienced container throughput shifts to other ports, including the East and Gulf Coasts (blue). The Port of New York/New Jersey retook the top spot at 451,190 TEUs in August 2022, up ~41,000 TEUs compared with July 2022. The Port of Los Angeles dropped considerably and came in second at 409,933 TEUs and down ~71,000 TEUs versus July 2022. Long Beach was third, up slightly in August by ~8,000 TEUs.

Part of the shift to East Coast ports can be attributed to the growth of Chinese imports and shippers’ decisions based upon last year’s West Coast port congestion. Of the increase in Chinese imports in August 2022 versus July 2022, the Ports of Norfolk, Charleston and New York/New Jersey saw 32.5%, 16.2% and 15.8% growth, respectively. The Port of Los Angeles saw a 16.7% decline, which explains to a great degree why the port’s overall import container volume was down so much.

August port delays remain extended at major East and Gulf Coast ports.
Port delays in August 2022 were consistent with July 2022. The two largest West Coast ports experienced ~7-day delays, but East and Gulf Coast ports remained in the double-digits (See Figure 3). The number of ships waiting off ports according to MarineTraffic/American Shipper decreased overall by 15% to 130 at the end of August 2022, but the percentage of the total waiting off East and Gulf Coast ports increased 11% to 73 in August , reflecting the higher wait times.

Industry and macroeconomic issues persist.

The labor situation remains the same and presents continued risk to port operations. The International Longshore and Warehouse Union (ILWU) contract expired on July 1st; however, business has proceeded as usual with the union working with management. There has been no impact on container processing as has been the case in the past. California law AB5 still remains a significant issue with no resolution in sight and there is a risk that more AB5-related stoppages could occur in other California ports in the future causing greater disruption. The labor uncertainty could be a significant reason why import volumes are not shifting back to major California ports despite their situation improving.

The potential impact of a slowing economy, peak season, inflation and fuel costs are all clouding the view of future import volumes. Despite gross domestic product shrinking for the second quarter in a row, the U.S. economy remains relatively strong. The August Jobs Report was again stronger than expected at 315,000 more jobs filled than anticipated and unemployment inched up to 3.7% due to 344,000 more people seeking work versus July 2022. The impact of peak season demand on container import volumes is unclear as August container import volume was flat versus July and China posted record container volumes into the U.S. Additionally, potential container import volume dampening high inflation rates remain high with the Consumer Price Index increasing slightly by 0.1% to 8.3%. According to the U.S. Energy Information Association, gasoline costs, a significant contributor to high inflation rates, dropped as much as $0.36/gallon in August, but diesel remained stable at $5.12/gallon. Both are still high and likely to remain elevated for the foreseeable future given the disruption of global energy markets as a result of the Russian invasion of Ukraine and subsequent sanctions on Russia.
Source: Descartes

A collective of firms including MSC and Shell have launched a new strategy to reduce methane emissions from vessels.

According to a report from Reuters, initiative supporters include ship certifier Lloyds Register.

In a statement, the supporters noted there were no globally recognized methods for measuring methane slip – unburned fuel that is not fully combusted in a vessel’s engines – and reaffirmed the importance of clarity in methane emissions measurements.

The Reuters report notes that shipping firms are increasingly trialling low or zero-emission fuels including biofuel, Liquefied Natural Gas (LNG), and methanol.

However, LNG-powered vessels, for example, can leak unburned methane into the atmosphere when a ship is running – a much more potent greenhouse gas (GHG) than CO₂.

Members will pilot new technologies to gauge and drive down methane slip from LNG-powered vessels. The statement added that once the solutions have been validated, the collective will look to implement them in industry from 2023 onwards.

Earlier this month the CMA CGM Group announced a new Special Fund for Energies to accelerate its energy transition and achieve net-zero carbon by 2050.

Shipping group Maran Gas Maritime, among the seven partners involved, said it had “long been convinced of the advantages of LNG as a clean burning fuel”.

“However, in light of the strong warming potential of methane releases to the atmosphere, keeping tight control over methane emissions is critical to ensure that LNG’s overall GHG footprint delivers as much GHG reduction as possible,” Andreas Spertos, EVP-Technical Director with Maran Gas Maritime said.

Source: https://www.globaltrademag.com/msc-shell-and-partners-launch-initiative-to-reduce-industry-methane-emissions/?gtd=3850&scn=

The Georgia Ports Authority reported that Savannah set a new record for the number of containers handled during August. It was the third record in the past four months as carriers and shippers continue to increase volumes to U.S. east coast ports.

As the contract expiration neared for dockworkers on the U.S. West Coast analysts had forecast that volumes were expected to increase for ports along the U.S. East and Gulf coasts. Savannah has been one of the primary ports experiencing a further surge in volumes beyond the record pace the port reported in FY 2021. Starting in May, Savannah reported a new all-time high of more than 519,000 TEU. After a slight decline to 494,000 TEU in June the port has continued to see a steady increase in volumes. July reached 530,800 TEU and August experienced a further 18.5 percent increase to 575,513 TEU.

“The Port of Savannah’s geographic and capacity advantages remain a driving force behind current and new customers deciding to move cargo through Georgia,” said GPA Executive Director Griff Lynch. “Our central location, and service through the largest container terminal in the Western Hemisphere offers speed to market and unmatched room to grow.”

The Georgia Ports Authority began its new fiscal year in July and highlights that they are currently operating at a pace exceeding 6 million TEU annually. Last fiscal year, the port authority reported a record of 5.76 million TEU. Combined July and August exceeded 1 million TEU, becoming the fastest pace for the port to reach that level in its history.

“The investments we have made in our operating infrastructure have been paying off in our ability to handle the sustained influx of business that began two years ago,” said GPA Chairman Joel Wooten. “Combined with a deeper harbor, our improved rail capabilities and expanded container yard space have allowed GPA to maintain fluid cargo management.”

The surge in volume, however, has also resulted in a renewed vessel backlog with a record number of containerships waiting at anchor. Last week, AIS data indicates that more than 40 containerships were riding anchor outside Savannah which exceeds the backlog experienced a year ago when approximately 30 containerships were waiting. As the delays mounted, last October CMA CGM and Hapag began dropping calls at the port. CMA CGM shifted north to Charleston, South Carolina while Hapag substituted Jacksonville, Florida on its route.

GPA Executive Director Lynch commented that the port is focusing on reducing its backlog. He noted that imports were trending down from 265,000 TEU destined for the port in July to the current 223,460 TEU. Today’s AIS data shows at least 35 containerships waiting outside Savannah, but Lynch forecast that they would be able to work down the number further over the next six weeks.

Work to realign the berth for Container Berth 1 at Garden City Terminal is now more than 60 percent complete he noted with the project scheduled to be completed by June 2023. The improvement will provide space for another big ship berth, allowing the Port of Savannah to simultaneously serve four 16,000-TEU vessels, as well as three additional ships.

“This is a rare project for a U.S. port,” Wooten said. “By this time next year, an additional big ship berth in Savannah will have increased our ability to move containers on and off vessels by 1.4 million TEUs per year.”

Other projects underway to increase the port’s handling capacity include orders for eight new ship-to-shore cranes, set to be commissioned in December 2023. Another project will add 90 acres of container storage space that will add 1 million TEU of annual container handling capacity, coming online in phases in 2023 and 2024.

Source: https://www.maritime-executive.com/article/savannah-sets-third-monthly-all-time-record-as-teu-volume-surges

Container volumes in head-haul and regional trades are the key drivers of container vessel demand, average container rates, liner operator profits, and, since 2020, port congestion. According to Container Trade Statistics, combined head-haul and regional trade volumes fell 0.4% y/y in the first half of 2022. Head-haul volumes were 1.3% lower than a year ago while regional volumes were 0.6% higher. Under normal market circumstances the peak season in key head-haul trades should lift Q3 volumes. However, recently released volume statistics indicate that there may be no peak season in 2022 but it is very likely that volumes will slow in Q4.

In July, the combined head-haul and regional trade volumes fell 1.5% m/m but were up 1.5% y/y. While this initially seems to be a relative improvement in volumes, compared to first half results, the figure appears in a different light when historical seasonality is considered.

As an example, in the Far East to North America trade lane, volumes in July have historically been on average 7.0% higher than June volumes due to the beginning of the peak season. However, this year volumes were 3.3% lower in July than in June. Applying historical seasonality, volumes should have been nearly 200,000 TEU and 10.6% higher than actual volumes.

Using the same principle for all head-haul and regional trade lanes, the combined July volumes should under normal circumstances have been 3.3% higher; 4.3% higher in head-haul trades and 1.9% in regional trades. Overall, volumes would then have been 4.9% higher than July 2021 instead of 1.5%. This is partly because it in 2021 was the first time in recent years that volumes in July were lower than in June.

Applying the same seasonality-based calculation to the rest of 2022, the full year volume estimate ends at 77.8 million TEU and 63.7 million TEU for head-haul and regional trades respectively. In total, that would leave the combined volumes at 141.5 million TEU and 1.3 million TEU lower than in 2021 (a reduction of 0.9%). Head-haul volumes would be down 3.3% y/y while regional volumes would be up 2.3% y/y.

Focusing on the rest-of-year period from August to December, the calculation indicates that combined head-haul and regional trade volumes will be down by 1.9% y/y. From a congestion perspective it is interesting to note a 10.7% y/y and 8.2% y/y fall in import volumes to the Europe and Mediterranean region and North America respectively.

“Considering the risk of energy shortages in Europe during winter and that conditions for consumers and businesses are likely to get worse before they get better as the year progresses, it is possible that volumes could end even lower,” says BIMCO’s Chief Shipping Analyst, Niels Rasmussen.

“Though we appreciate that this approach to forecasting rest-of-year volumes may be somewhat simplistic, the overall forecast does tally with the economy-based forecasts in our recently published Container Market Overview and Outlook report. The prediction will most likely not end up 100% accurate, but we do believe the overall trend will end up correct, confirming a very muted peak season in key head-haul trades and lower Q4 volumes in line with normal seasonality,” Rasmussen says.
Source: BIMCO, By Neils Rasmussen, Chief Shipping Analyst