Shippers May See Rate Hikes in Wake of UPS Contract, Yellow Corp. Halts Operations, CPKC Aims to Recover Revenue Loss from Canadian Port Strikes.

Ocean

Long-term ocean freight rates hit two-year low. Global long-term shipping rates reached a two-year low in July, witnessing a significant 9.5% decline compared to June, as indicated by Xeneta’s Shipping Index. This drop adds to a severe downturn that began last year. Long-term valid contract rates have lost 57.8% of their value since the same period in 2022, according to Hellenic Shipping news.

Ports

Tentative labor deal announced in Canadian port negotiations. Following a two-week strike that disrupted supply chains, the International Longshore and Warehouse Union of Canada and the British Columbia Maritime Employers Association announced a tentative agreement on Sunday. The specific terms of the deal have not been disclosed, but the union members had previously rejected a proposed deal last week. While Canada’s Industrial Relations Board has pressed for a vote deadline of August 4, the union has not indicated when the voting by rank-and-file members will occur.

Over $700M awarded to CA port projects. The California State Transportation Agency allocated $1.2 billion to support 15 projects aimed at bolstering capacity for the transportation of goods through the state’s global trade gateways, according to multiple port press releases in July. “These investments – unprecedented in scope and scale – will modernize our ports, reduce pollution, eliminate bottlenecks and create a more dynamic distribution network,” Gov. Gavin Newsom said in a July statement. SupplyChainDive offers a closer look at the awarded grants here.

Trucking

Unseasonable demand surge offers boost for transportation providers. An unexpected surge in truckload tender volumes is providing domestic transportation providers with a long-awaited potential turning point. The national Outbound Tender Volume Index (OTVI), measuring electronic truckload capacity requests from shippers to carriers, has risen by nearly 7% compared to the previous month, a departure from the usual trend excluding the pandemic-related spike in 2020. This defies the conventional summer pattern of gradual rise and July decline seen in previous years (2018: -7% in July, 2019: -2-3% drop).

Shippers may see rate hikes in wake of UPS contract. Shippers using UPS Inc. services should prepare for significant double-digit general rate hikes in 2024 as the company aims to offset the substantial cost escalations incurred through its provisional five-year contract with the Teamsters union reached earlier this week, according to FreightWaves. The agreement is being touted by the union as the most favorable contract ever negotiated with UPS. The endorsement of the tentative deal was supported by Teamsters local unions, representing 340,000 full- and part-time UPS Inc. employees, with a resounding vote of 161-1, and the deal has been recommended for approval by the entire membership.

Yellow Corp. halts operations. Yellow Corp. has suspended its operations and is filing for bankruptcy, according to Reuters. The closure puts nearly 30,000 jobs at risk. The Teamsters, representing approximately 22,000 unionized Yellow employees across the country, said that they had received official notification of Yellow’s actions on Monday, which Sean O’Brien, the union’s general president, characterized as “unfortunate but not surprising.” Kevin Holtrup, Senior Director of Sales at Radiant Road & Rail, recommends that shippers prepare for possible disruptions to service due to Yellow’s current unresolved situation. Get in touch with our LTL specialists for strategies to proactively reduce the effects of potential service disruptions on your operations.

Rail

CPKC aims to recover revenue loss from Canadian port strikes. The work stoppage by International Longshore and Warehouse Union members at Canadian West Coast ports may have led to an estimated $80 million loss in revenue for Canadian Pacific Kansas City, according to executives during the railway’s second-quarter earnings call. CPKC aims to recover this lost revenue in the third and fourth quarters by increasing activity at the Port of St. John in eastern Canada to counter international intermodal soft demand, and an aggressive pursuit of intermodal opportunities, according to CPKC President and CEO Keith Creel.

Air

Pratt & Whitney recall affects hundreds of plane engines. Aerospace supplier Pratt & Whitney is recalling a “significant portion” of an engine line used in aircraft due to a rare powder metal issue, according to SupplyChainDive. Around 200 PW1100G engines will be recalled by mid-September, with 1,000 more engines to be inspected in the next 9-12 months, as stated by executives. This recall affects Airbus’ A320neo family, specifically parts produced between Q4 2015 and Q3 2021, according to Airbus CEO Guillaume Faury. These parts are not currently being produced, so the company does not “expect any impact on ongoing deliveries.”

International

Fire-damaged car carrier reaches Netherlands port. The fire-damaged Fremantle Highway car carrier finally arrived at Eemshaven port in the Netherlands, having endured a fire that broke out nine days earlier. The vessel originally caught fire 27 kilometers north of Ameland, but it was later towed to a temporary site between July 30 and July 31. This week the ship was carefully guided to Julianahaven, where the port was closed for all other maritime activities to ensure a seamless and secure operation, according to Splash247.

Other

Bill introduced to end sale and import of commercial kangaroo skin products. Last week, a bipartisan group of congresspeople introduced the Kangaroo Protection Act, H.R. 4995, aimed at prohibiting the sale of kangaroo skin in commercial goods within the U.S. According to a release from the Center for a Humane Economy, Nike and Puma have both indicated that they intend to cease the use of kangaroo skin in their supply chains by the end of 2023. However, Adidas, Mizuno, and New Balance are currently maintaining the use of kangaroo skins in their shoes, while brands such as L.L. Bean and Lucchese also still use kangaroo in other items across their product ranges, according to the Center’s report.