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Aperture and Focus- Sept 16

Aperture and Focus – September 16, 2022

Global Aperture

Labor action across the globe moves supply chains to high alert with rail disputes in the US, work stoppages in UK ports, and air traffic control strikes in France. While some carriers are optimistic that intra-Asia trade will avoid slumping in the near term, Chinese export demand continues its slow decline after an earlier-than-expected restocking season in Europe and the US.

In a survey of European companies operating in China, the EU Chamber of Commerce in China (EUCCC) found that nearly a quarter of respondents are in consideration to move investments out of China, largely due to shipping disruptions from factors like strict Covid-19 policies and geopolitical tensions. And they’re not alone; Chinese manufacturers are catching onto nearshoring trends in North America and establishing facilities in Mexico to avoid import tariffs.

 

Regional Focus

Americas

Tensions were high along North America’s intermodal network in the weeks leading to the September 16 nation-wide strike by a federation of worker unions—the event was estimated to cost shippers up to $2 billion per day. Rail operators pre-emptively suspended acceptance of DG cargointermodal shipmentstemperature controlled containers, and long-haul commuter routes as government officials sought contingency measures from alternative transport modes. A tentative deal was reached early September 15 following 20 hours of negotiations, averting the strike for the time being.

The containerized shift to US East and Gulf Coast ports also adds pressures on inland railyards: in past weeks, Savannah Port has experienced average delays in excess of 10 days, due to at-capacity warehouses and understaffed handling operations. As part of continued efforts to enact provisions of the Ocean Shipping Reform Act of 2022, the Federal Maritime Commission announced a new rule prohibiting ocean carriers from refusing customers’ allotment of available space, once again allowing 30 days for public comment via the Federal Registrar.

 

Asia-Pacific

Typhoon Muifa made landfall on China’s Zhoushan region, forcing thousands of flight cancellations and marine terminal closures in Shanghai and Ningbo through September 14. In the manufacturing hub of Chengdu, local government extended lockdown measures indefinitely, resulting in flight cancellations out of Shuangliu Airport on September 12. In contrast, Hong Kong lifted some restrictions on September 10 to allow arriving flight crews some reprieve from quarantine with proof of negative Covid-19 test—flag carrier Cathay Pacific plans to restore several flight services as a result.

Thousands of protestors continue to rally across Indonesia in response to a 30% increase in fuel prices—potentially driving up operational costs for land transportation. At Tanjung Priok, port authorities approve the dual implementation of a fuel surcharge by tugboat crews and the Indonesian National Shipowner’s Association (INSA) based on local market indices, but stress that the policy has not reduced operational burdens or service delays. In Japan, the government extends gasoline subsidies to the end of 2022 in response to the yen’s weakening value after a record-breaking drop seen in August; trade analysts attribute the fluctuation to increased energy costs as other nations in Asia-Pacific also tap into foreign exchange reserves to finance imports.

Australia’s premiere maritime cargo association, Shipping Australia Ltd. (SAL), urges cotton exporters to prepare for a busier 2023 harvest as land-based transport networks show increasing signs of wear in the Brisbane area. To alleviate imbalances in container markets, Asean Seas Line (ASL) introduces a mid-haul service between Australia and China, calling at the major ports of Shanghai, Qingdao, Shekou, Brisbane, Sydney, and Melbourne.

Europe, Middle East & Africa

A second eight-day strike at the Port of Felixstowe starts September 27 after the abrupt end of contract negotiations. With industrial action at the Port of Liverpool scheduled concurrently and rail unions expected to resume their work stoppages after a 10-day mourning period for the death of Queen Elizabeth II, over 50% of UK’s import and export movements will experience disruptions leading into winter retail season.

As bottlenecks continue at ports, UK’s trucking industry also faces a precipitous drop in demand as the two overlapping strike actions would lead about 2,000 empty-loaded vehicles migrating toward alternate ports.

Ground staff shortages at Amsterdam’s Schiphol Airport forced several airlines to reduce flight schedules on September 12. In France, air traffic controllers strike on September 16, reducing the number of flights in French airspace by 50%.

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