Panama Canal Tightens Restrictions Amid Worst Drought in a Century, Freight Rail Trade Groups Sue CA Board Over New Regulations for Locomotive Emissions, Amazon’s Disaster Relief Hub Doubled Capacity.

Ocean

Orders for newbuild pure car and truck carriers hit highest since 2008. Newbuild orders for pure car and truck carrier vessels total an estimated $14bn since 2020, the highest since the global financial crisis in 2008, according to Clarksons’ latest report. In 2020, just four PCTCs were commissioned as a result of more people working from home. Now, rising Chinese car exports are up 58% year on year to 1.07 million, and are powering the recovery in PCTC demand. China is now the world’s third-largest vehicle exporter, behind Japan and Europe, according to The Loadstar.

Panama Canal tightens restrictions amid worst drought in a century. The Panama Canal is experiencing its worst drought in more than a century, which could lead to global supply chain delays and increased costs. The Wall Street Journal reports that the government agency that manages the canal implemented transit restrictions in May, causing some large vessels to reduce container loads by roughly one-quarter. The restrictions will expand over the next few weeks, with the allowable draft of vessels down to 43 feet from the 50-foot peak level.

Ports

West Coast ports begin efforts to reverse business shift from East Coast. The tentative six-year labor agreement between the International Longshore and Warehouse Union and the Pacific Maritime Association is “a major step in addressing a shift of cargo volumes to East Coast ports that has taken place amid uncertainty sparked by the long negotiation process,” according to Transport Topics. “The contract is the single biggest factor to reverse the dramatic shift toward the East and Gulf Coast, but some of this lost cargo on the West Coast is never coming back, because the beneficial cargo owners are now relying on trade routes through the Panama Canal or the Suez Canal to reach the East Coast […],” said economist Paul Bingham, director of transportation consulting for S&P Global Market Intelligence. Port of Los Angeles Executive Director Gene Seroka said the facility through May has seen total container volumes drop 27% year-over-year, and that container volume is running at 15% lower than the five-year average.

Trucking

Report says logistics costs grew exponentially in 2022.According to the 34th annual State of Logistics Report, U.S. business logistics costs grew by an astounding 19.6% to a record $2.3 trillion in 2022, representing 9.1% of national gross domestic product. See a cost tally of the main logistics sectors here.

UPS Teamsters vote to authorize strike. UPS workers represented by the International Brotherhood of Teamsters voted 97% in favor of authorizing a strike during national contract negotiations. The UPS Teamsters National Negotiating Committee will be able to call a strike if an agreement isn’t reached by July 31. Teamsters leadership say a strike will happen if a deal isn’t reached by then, according to SupplyChainDive.

FedEx announces merging of Ground and Express operations in Canada. This week, FedEx Corp. announced that it will merge its FedEx Express and Ground operations in Canada, making it the 20th market where FedEx has merged Express, Ground and its services operations into one unit. According to Freightwaves, The combination will occur in phases, starting in April 2024 and finishing around the 2024 peak season. The operation will be called FedEx Express Canada.

Rail

Freight rail trade groups sue California board over new regulations for locomotive emissions. The Association of American Railroads (AAR) and the American Short Line and Regional Railroad Association (ASLRRA) are suing the California Air Resources Board (CARB) over new regulation that calls for railroads to move away from diesel locomotives and toward “zero-emission configurations” by as early as 2030. The two trade groups representing freight railroads say the regulation, passed in late April, calls for the industry to use technology that has neither been sufficiently tested in prototype nor is not commercially available in today’s market, according to Freightwaves. “While the urgency to act is real and unquestionable, CARB uses unreasonable, flawed assumptions to support a rule that will not result in emissions reductions,” AAR President and CEO Ian Jefferies said.

Air

FedEx to remove 29 aircraft amid shrinking demand. FedEx plans to remove 29 aircraft from its fleet this year in order to eliminate permanent costs and make its logistics network more flexible as global trade slows. CEO Raj Subramaniam said that the Express unit will park 20 aircraft in fiscal year 2024 and permanently retire nine additional MD-11 freighters. However, fleet statistics show that the carrier’s mainline fleet will actually grow by 10 aircraft this year as Boeing planes ordered years ago are delivered. FedEx plans to add 55 total aircraft to its fleet over the next two years, most of them small feeder aircraft operated by contractors.

International

Qatar signs second LNG supply deal with China in a year.This week, Qatar signed its second large gas supply deal with a Chinese state-controlled company in less than a year. QatarEnergy signed a 27-year agreement with China National Petroleum Corporation (CNPC). Under the agreement, China will purchase 4 million metric tons of liquefied natural gas (LNG) a year from Qatar, and CNPC will also take an equity stake in the eastern expansion of Qatar’s North Field LNG project. The deal is identical to one from November, in which QatarEnergy signed a 27-year supply agreement with China’s Sinopec in November for 4 million metric tons a year.

Other

Amazon’s Disaster Relief Hub doubled capacity.Amazon.com Inc. announced that it has more than doubled the capacity of its Disaster Relief Hub outside of Atlanta by “pre-positioning 2.4 million relief items ahead of the 2023 hurricane season,” according to Freightwaves. Amazon said that the items will be distributed in the wake of natural disasters to nonprofits and other aid partners that quickly help impacted communities. “As natural disasters increase in frequency and severity, we’re expanding our Disaster Relief Hub in Atlanta, allowing us to deliver more items in less time during this year’s hurricane season,” said Abe Diaz, head of Amazon Disaster Relief, in a statement.