Point Global Logistics News of the Week — 12.2.22

Decaying demand sees China’s ports building empty container mountains

Amid a “very quiet” end-of-year shipping season, empty containers are piling up at Chinese ports.

According to Alice Tang, China-Europe land transport planner at ITS Cargo, there has been a complete reversal of the severe equipment shortages of last year’s pandemic-induced cargo boom.

“Empty containers are piling up at ports including Guangzhou, Yantian, and Shekou,” she told The Loadstar.

House Passes Rail Deal, Senate to Schedule Vote

To avert a railroad strike projected to cost the economy $2 billion daily, the U.S. House of Representatives on Nov. 30 passed a bill outlining a labor agreement between rail carriers and workers.

The legislation, which advanced to the U.S. Senate, would implement provisions negotiated in a tentative agreement reached in September by the Presidential Emergency Board.

The measure’s passage in the House by a vote of 290-137 with bipartisan support came on the heels of President Joe Biden urging Congress to legislate on the ongoing labor dispute between railroads and key freight rail unions.

Georgia Ports Authority puts customers, drivers first as demand surges

West Coast ports have been slammed with a slew of headwinds recently, including record-breaking congestion and labor disruptions. As a result, East Coast ports have gained popularity with shippers — and carriers — of all types.

The Port of Los Angeles saw throughput fall 25% year over year in October, and the Port of Long Beach experienced a 24% year-over-year drop. In contrast, the Port of Savannah experienced a 2% year-over-year climb, and the Port of Charleston realized 7% annual growth.

While a portion of the West Coast’s dropping volumes can be attributed to waning consumer demand for durable goods, the growth seen on the East Coast makes it clear that companies are beginning to favor the Eastern Seaboard.

Point Global Logistics News of the Week — 11.18.22

Third Railroad Workers Union Turns Down Pact

The possibility of a nationwide freight railroad strike is increasing after another union turned down a tentative agreement that was negotiated in mid-September among the major Class I carriers, a management council and the Biden administration.

The International Brotherhood of Boilermakers voted down the agreement, according to the union and the railroads. The precise vote was not made available.

While the union is the smallest of the bargaining units with only about 300 workers who repair and rebuild diesel locomotives, if any union votes to go on strike and picket lines are set up, it is expected the more than 115,000 workers, including locomotive engineers and conductors, would honor the strike.

Imports Into Southern California’s Ports Plunged 26% in October

Imports into the nation’s busiest container port complex in Southern California are plummeting as U.S. trade sputters and retailers and manufacturers shift their supply chains amid increasingly contentious West Coast port labor negotiations.

The neighboring ports of Los Angeles and Long Beach handled 630,231 loaded inbound containers in October, down 26% from the same month a year ago and the lowest volume of goods coming into the ports since May 2020.

Gene Seroka, the executive director of the Port of Los Angeles, said Tuesday that the biggest factor in the cargo declines, which began in August, is that importers are moving more of their goods to East Coast and Gulf Coast ports “due to protracted labor negotiations.”

US imports from China falling faster than from other countries

America and China remain intimately intertwined via trade despite worsening tensions over Taiwan and the Russia-Ukraine war. More than a third of all U.S. containerized imports arrive from China. More than a sixth of China’s export value derives from U.S. purchases.

But there are growing signs of at least some decoupling. In recent months, America’s imports from China have fallen faster than total imports. Other Asian countries are increasingly taking U.S. market share from China, a trend that began before the pandemic and has continued.

According to new data from Descartes, U.S. containerized imports in October were flat (up 0.2%) versus September. But imports from China fell 5.5% month on month, by 45,071 twenty-foot equivalent units. The decline from China was entirely offset by gains from Thailand, South Korea, Taiwan, Japan and other countries.

Point Global Logistics News of the Week — 10.28.22

Goods-Trade Deficit Widens for the First Time Since March

The U.S. merchandise-trade deficit widened in September for the first time in six months as imports grew and some exports plunged.

The shortfall widened 5.7% to $92.2 billion last month, Commerce Department data showed Oct. 26. The figures, which aren’t adjusted for inflation, compared with a median estimate for a gap of $87.5 billion in a Bloomberg survey of economists.

Exports declined 1.5% to $177.6 billion. Imports rose to $269.8 billion, also the first increase since March.

Another Railroad Union Rejects Contract

Members of another railroad union rejected a tentative agreement on wages and work conditions reached with the freight railroads in September, further clouding the outlook for labor peace after the White House brokered a deal to avert a strike.

The latest vote, by the Brotherhood of Railroad Signalmen, sends the two sides back to the negotiating table. Failure to agree on a revised deal could result in a strike as early as December.

U.S. West Coast Ports Beat Congestion, But Slowdowns at Houston Remain

Congestion has cleared up at the twin ports of Los Angeles and Long Beach, which together make up the busiest container-terminal complex in the United States. But the slowdown hasn’t gone away: Instead, the same overabundance of cargo can now be found at Houston, which is the biggest container port on the U.S. Gulf Coast.

“We currently see a lack of storage in Houston, as well as minimal chassis availability and vessel congestion at Houston area terminals,” said Paul Brashier, VP of Drayage and Intermodal for ITS Logistics, in the company’s latest supply chain index report. “Houston is seeing higher inbound volumes, a chassis imbalance and terminal congestion above normal levels.”

Point Global Logistics News of the Week 9.30.22

American Logistics Aid Network gets activated for Hurricane Ian
As Hurricane Ian intensifies, the American Logistics Aid Network (ALAN) is urging Florida and Gulf Coast residents to prepare—and asking members of the logistics community who aren’t located near the storm’s path to be ready to help.

“Over the next few days Hurricane Ian has the potential to deliver high winds, strong rains and a significant storm surge across many parts of Florida,” said Kathy Fulton, ALAN’s Executive Director. “We are mobilizing accordingly.”

Source: Logistics Management

August intermodal volumes trend up, reports IANA
Intermodal volumes, for the month of August, were largely up, following mostly across-the-board declines in July, according to data provided to LM by the Intermodal Association of North America.

Total August volume—at 1,581,860—increased 2.0% annually.

Trailers—at 72,223—saw another significant decline, down 25.6%, an improvement over July’s 29.0% annual decline, for the lone segment tracked by IANA to fall. Domestic containers—at 698,252—increased 4.7% annually. All domestic equipment, which is comprised of trailers and domestic containers, eked out a 0.9% gain, to 770,475. ISO, or international, containers—at 811,385—headed up 3.%.

Source: Logistics Management

Port of Liverpool community braces for second dockworker strike

Liverpool dockworkers are to stage a second walkout, from 11-17 October, after negotiations with the Peel Ports-operated terminal failed.

The Unite union announced the next strike with five days left of the current industrial action, saying an offer of an 8.3% pay rise and one-off £750 payment fell well short of the present 12.3% rate of inflation, which is forecast to continue rising.

However, One forwarder seemed unphased by the news and told The Loadstar the strikes at Liverpool and Felixstowe had had “a muted impact” on their business.

Source: TheLoadStar

Meet our Dominican Republic Team

Meet our Dominican Republic Team

This month, we are featuring two of our employees from our Dominican Republic team, Oliver Cruz and Ysangel Ogando.

To start, let’s hear more about Oliver, our Logistics Analyst. He started working at Point Global Logistics in January and his daily tasks include tracking cargo, updating information in the system, and other tasks such as creating a CNS report and enhancing our database.

His role at PGL has taught him to listen to professionals with more experience to help him improve both as a person and as an employee.  

Prior to joining the team at PGL, Oliver studied International Business at UNAPEC. Oliver started his logistics career at Tropical Shipping where he learned a lot about global logistics and how to work with carriers. Now, he continues to educate himself further by taking courses in logistics and supply chain management. 

In his free time, he enjoys going to the gym and hanging out with his friends. He has two pets: one chihuahua, Doki, and a kitten, Lissi.

Now let’s turn to our Logistics Specialist, Ysangel, who started with us in October 2021. Ysangel stays busy keeping up with emails and tracking bookings in order to update them and keep the office and clients updated. For clients, she coordinates the operation process from quoting until the cargo is shipped out. With what time she haves left at the end of the day, she completes billing and keeps organized by making a list of anything she needs to follow up on the next day, such as a request for the shipping lines or shipping instructions. 

Prior to working at PGL, Ysangel started at a local bank before moving into the logistics field at two local freight forwarding companies. Along with work, she is also continuing her education at UNAPEC through a double degree program at SUNY Empire State College (ESC) where she is studying to obtain a B.S. in Business, Management, and Economics with a concentration in Economics.

Her favorite part of the job is that “there is always something new to do and something new to learn.” In her career, she has learned that studying and working at the same time is worth it.

Ysangel plays volleyball every weekend and in her free time she watches movies, reads books, or hangs out with her boyfriend and friends.   

Thank you, Ysangel and Oliver, for telling us more about yourselves and your careers. We appreciate your hard work and look forward to seeing you progress in your career here at Point Global Logistics!

Employee Spotlight: Will Yazigi

Will Yazigi

Say hello to our Charlotte, NC Branch Manager, Will Yazigi. Will is originally from Lebanon and immigrated to the U.S. in 2007. He started working at Point Global Logistics in July of 2020.

Will started his career in international transportation in Lebanon and worked as an expatriate in Saudi Arabia and Hong Kong before relocating to the United States.

He begins each day by meeting with his team, reviewing existing business, and assisting with tasks as necessary. Then, he reaches out to customers to address any challenges they may have and provides updates on current market conditions. Lastly, he reviews the commercial side of the business to make sure the company is competitive and meeting milestones. 

Working closely with his colleagues and customers to develop solutions that improve customers’ end-to-end supply chain is his favorite part of the job. 

Will enjoys hobbies such as spending quality time with his wife and 11-year-old twin sons and outdoor activities like mountain biking, hiking, and snowboarding. In addition to his human family, Will also has a two-year-old Aussie Doodle puppy that grew to be 60 lbs that keeps his family very busy. They also have adopted a one-year-old ragdoll cat that is very talkative.

His dream place he’d like to visit is Tibet. His favorite type of food to eat is Mediterranean cuisine. 

His best career advice? “Learn a new thing every day and be flexible and adapt quickly to industry changes as change is the only constant.”

Thanks, Will for sharing a little more about yourself and for being such a valuable member of our team!

The Key to the Long Expansion? Logistics

“You can’t recommend those stocks,” a Wall Street strategist insisted in 1986. “We’re in the third year of a four-year expansion. They won’t work.” Being naive, I did it anyway. The expansion lasted a total of almost eight years, until July 1990. Strategists don’t know much, but to be fair, it was a B-school accepted truth that expansions last four years. Another expansion began in 1991 and lasted a record 10 years. And this month we broke that record. Since June 2009, the U.S. economy has kept growing. Every day is another record.

Did you ever wonder why we are enjoying a decadelong run? What changed? Everyone wants credit. Was it the Federal Reserve and its relentless stimulus? Nope. The Fed creates the money the economy needs, but not the need itself. Obama or Trump policies? A divided Congress? Demographic shifts? A strong or weak dollar? Actually, none of the above. The answer is just-in-time. You can thank all those freshly minted consultants you see in premium economy crisscrossing the country with their AirPods and Allbirds and airy attitudes.

In the previous era, before pervasive computing, economies would live and die by inventory cycles. Heck, biblical times record seven years of feast and seven of famine. The expansion starts, consumers buy, investment and hiring ramp up, wages and prices rise, inflation emerges, consumers buy ahead of price increases, investment peaks, inventories build, consumers are tapped out, recession starts, inventories are drawn down, and layoffs begin—then start all over every four years. Until recently, price signals didn’t travel very fast, and inventory tracking used clipboards.

In a micro version of this cycle, the videogame industry had a huge bonanza in the early 1980s that ended in ’83 with bust of the highly anticipated “E.T. the Extra-Terrestrial” game. Warner Communications literally buried about 700,000 unsold cartridges of “E.T.” and other titles, and lost more than $500 million. The semiconductor industry got stuck with loads of chips in inventory that had to be written down. It was ugly. After a similar inventory mess related to then-newfangled personal computers, the tech world started implementing just-in-time delivery. Companies like Compaq would ask for chips to be delivered Tuesday for PCs shipped on Wednesday. This gradually smoothed out the cycles of a very volatile industry.

Thirty-six years later, much of the global economy has perfected this just-in-time supply chain. Digital cash registers and bar codes log consumer purchases. Logistics software allows manufacturers to track every production detail everywhere on the globe. Data is fed into giant databases that forecast demand. Manufacturing, transportation and retail are a highly choreographed water ballet of delivering inventory right before it’s needed. Exactly the right amount of toothpaste is magically dropped onto Walmart shelves each night.

Software is now a mind-bending cornucopia of supply-chain management, enterprise-resource planning, business-process re-engineering and decision-support systems—all of which barely existed 30 years ago. But here’s the dirty little secret: Enterprise software from Oracle and SAP and just about everyone else is notoriously hard to use, nasty to implement, and a royal pain to maintain. That means a virtual Full Employment Act for consultants—tens of thousands are hired yearly by PwC, Deloitte, KPMG, Ernst & Young—add BCG and McKinsey too—to customize and implement business processes.

I have to admit my eyes usually glaze over with images of paint drying when I hear these companies’ names. But consulting is booming. Deloitte consulting has grown by double digits in each of the past 10 years. Consulting is now a $130 billion global business. Of that, digital-technology consulting makes up some $50 billion. This software has become the lubricant for economic gears, preventing inventory from gumming up the works. “Consultants” are mislabeled—most are more like implementers, but that doesn’t look as good on a résumé.

Price signals move around the globe in nanoseconds instead of months and squash excesses before they happen. Analytics are also improving—and the field is heating up, as shown by the recent sales of Looker and Tableau. Next, we’ll see machine learning find patterns to squeeze out even more efficiency, putting goods in the right place at the right time. Productivity tools have stretched expansions beyond anyone’s belief and have expanded wealth the world over—see value created at public Salesforce and private Vista Equity Partners.

Have we forever tamed the cycle? Nah, because like white tigers in Las Vegas, outside events can still bite and maul economic growth—oil embargoes, terrorism, tariffs, wars, no-doc home loans, maybe leveraged loans next. The current expansion may have already ended for all we know, stabbed in the back by tariff daggers. But I don’t think so—this could go on for a while. Thank those airline-mile-accumulating consultants. Give ’em your unwanted peanuts. They know how to track them.

Logistics Spending Jumped 11.4% on Strong Economic Growth

U.S. businesses spent $1.64 trillion on transportation and warehousing costs last year, with demand slowing in 2019

By Jennifer Smith
June 18, 2019 9:00 am ET
Rising logistics costs consumed a bigger share of U.S. corporate spending over the past year as companies rushed to take advantage of an improving U.S. economy, according to a new report.

Spending on transportation, inventory-carrying costs and other shipping-related expenses as a share of gross domestic product last year reached its highest level since 2014, the Council of Supply Chain Management Professionals said in its annual State of Logistics Report, a surge the report said is cooling this year on more plentiful capacity and moderating shipping demand.

U.S. businesses spent a record $1.64 trillion on logistics in 2018, up 11.4% from the prior year and accounting for 8% of GDP, the report said. Industry experts view the logistics share of GDP as a measure of the efficiency of transportation and distribution networks, and last year’s figure was sharply up from a 7.5% share in 2017.

With economic growth expected to slow in the second half of 2019, companies that built up inventories ahead of expected tariffs could pull back their demand for logistics services this year, “easing the price increases that bedeviled shippers” during last year’s sizzling freight market, the report said. “This is good news for shippers, but carriers will struggle as volumes fall.”

Logistics costs should still rise in 2019, though not as abruptly as last year, when booming demand and tight capacity strained supply-chain budgets and sent shippers scrambling to book transportation, said Michael Zimmerman, a partner at consulting firm A.T. Kearney Inc. and the lead author of the report.

Trucking rates “will come down but not as dramatically as they have in the past,” Mr. Zimmerman said, while costs tied to warehousing and labor continue to rise. A.T. Kearney forecasts contract pricing for over-the-road truck shipments will decline by between 3% and 5% in 2019.

U.S.-China trade tensions are a wild card that could weigh on shipping demand in 2019. Retailers, manufacturers and wholesalers pulled shipments forward in late 2018 in anticipation of rising levies on Chinese imports. That jammed warehouses and strained logistics capacity around major U.S. trans-Pacific gateways.

Storage and other inventory costs jumped 14.8% in 2018 as inventories measured by value increased 4.6% compared with the prior year, the report said.

Commerce Department figures suggest that inventories may be getting ahead of demand, with the inventory-to-sales ratio for all U.S. businesses hovering around 1.39 this spring, after falling to a three-year low of 1.34 in May and June of 2018.

Accelerating tariffs may have contributed to softer-than-usual demand this spring for Omaha, Neb.-based trucking company Werner Enterprises Inc., whose retail customers account for 52% of revenue, Chief Financial Officer John Steele said at a June 5 industrial conference in Chicago.

“It appears that several [retail customers] grew their inventories in that February-to-March time period,” which could have led to destocking in April and May, Mr. Steele said. A number of retailers notched same-store sales improvement from February to April, “so hopefully that will translate into better freight volumes for our retail customer base going forward,” he said.

Lee Clair, a managing partner at Transportation and Logistics Advisors LLC, a supply-chain-strategy consulting firm, said freight demand this year has “moderated into something below where we were last year, but it’s higher than anything that existed before that…There’s no way it could continue to boom the way it was.”

Overall transportation spending increased 10.4% overall in 2018, with spending on intermodal truck-rail transport soaring 28.7%.

Write to Jennifer Smith at jennifer.smith@wsj.com

IMO 2020: The Big Shipping Shake-Up

FedEx, UPS Strive to Automate Loading and Unloading Trucks