Month in Review – August 2024
Maritime
August 2: Flexport Data Shows Sailings from China to U.S. West Coast 20 Days Faster than to East Coast Ports – American Journal of Transportation
Sailing times from China to U.S. West Coast ports are averaging 20 days faster than to U.S. East Coast ports, according to the supply chain logistics platform Flexport.
On July 29th, Flexport reported: “This week, the Ocean Timeliness Indicators (OTI) for China to the U.S. East Coast and China to the U.S. West Coast have decreased, falling from 61 to 60.5 days and 40.5 to 39.5 days, respectively. The OTI for China to Northern Europe also decreased, dropping from 69.5 days to 68 days. The reason? Port congestion on all trade lanes is slightly improving.”
The reason for the large gap between sailing times to U.S. East Coast and U.S. West Coast ports was explained by Nerijus Poskus, Vice President of Global Ocean Procurement at Flexport. He said that, due to the Suez Canal closure: “All vessels that typically sail to the U.S. East Coast via the Suez Canal are diverted to the Cape of Good Hope, which takes longer than normal routing. Global port congestion is further increasing transit times [due to vessel bunching, equipment issues, blank sailings, weather delays, etc.].”
August 5: Panama Canal Authority Increases Capacity as Water Levels Return – gCaptain
The Panama Canal Authority (ACP) has increased the number of daily transits and maximum draft of the expanded neopanamax locks, bringing the waterway one step closer to normal operations following last year’s historic drought.
Effective immediately, vessels transiting the neopanamax locks are now allowed a maximum authorized draft of 14.94 meters (49.0 feet) Tropical Fresh Water. The ACP said the decision is based on the current and projected water levels of Gatun Lake for the upcoming weeks.
Meanwhile, as of August 5, the number of daily transits has been adjusted to 35, up from 34 as of July 22nd and 32-33 earlier in the month.
The changes bring the canal’s capacity closer to its design specifications of approximately 36 daily transits and a maximum draft of 50 feet for the neopanamax locks.
August 8: U.S. Container Ports Face Record Cargo Surge Ahead of Possible Port Strike – gCaptain
Monthly inbound cargo volume at major U.S. container ports is expected to approach record levels as retailers expedite shipments ahead of a potential strike at East and Gulf Coast ports, the National Retail Federation (NRF) announced on August 8.
“Retailers are concerned by the possibility of a strike at ports on the East and Gulf coasts because contract talks have stalled,” said Jonathan Gold, NRF Vice President for Supply Chain and Customs Policy. “Many retailers have taken precautions, including earlier shipping and shifting cargo to West Coast ports.”
The contract between the International Longshoremen’s Association and the United States Maritime Alliance, covering East Coast and Gulf Coast ports, is set to expire on September 30. With negotiations at an impasse, the ILA has threatened to strike if a new contract is not reached by the deadline.
August 9: Explosion at Ningbo-Zhoushan Port in China Raises Serious Safety Concerns in Ocean Container Shipping – American Journal of Transportation
A major explosion occurred on August 9 on a container ship berthed at the port of Ningbo-Zhoushan in China in another incident that raises serious safety concerns.
Video footage shows a massive explosion onboard the YM Mobility. There are no reports of casualties.
Peter Sand, Xeneta Chief Analyst, said: “This type of incident should never happen and is another example of how one failure in ocean container shipping can have catastrophic consequences.
“Had this explosion happened at sea rather than at berth in port then the crew and ship would have been in even more perilous danger.
“An investigation will take place and the industry must learn from it. Container ships are used to transport hazardous and potentially explosive cargo, so it is of paramount importance that robust safety measures are in place.”
August 19: Cargo Backlog at Bangladesh Eases as Carriers Bring in More Ships – The Loadstar
Container lines serving strained Bangladesh supply chains are making every effort to clear up the cargo backlogs at Chittagong Port.
The cargo chaos began amid recent political upheaval that brought businesses across the country to a standstill.
A few carriers have deployed additional vessels to lift stranded exports at Chittagong, according to industry sources.
August 26: Chittagong Port Pay-Order Crisis Stalls Import-Export Operations – Jago News
Following the fall of the Sheikh Hasina government in Bangladesh, major shipping agents at Chittagong Port have stopped accepting payment orders from nine banks, causing delays in the release of import goods and complications in shipping export goods.
Exporters are fearing this disruption may lead to missed lead times, potentially harming the country’s economy.
The situation arose after the Hasina government fell on August 5, with an interim government led by Dr. Muhammad Yunus taking over on August 8. Subsequently, the top positions at Bangladesh Bank began changing, uncovering long-standing irregularities. As a result, Bangladesh Bank ceased providing cash assistance to banks embroiled in loan corruption, further exacerbating the situation.
August 29: Transpacific Rates War Breaks Out as New Arrivals Undercut Major Liners – The Loadstar
A rates war on the Asia-U.S. West Coast tradelane is under way, as newcomer transpacific carriers offer lower rates to gain market share.
This has forced the established mainline operators to drop their rates to hold onto customers.
According to Linerlytica’s report this week, while the Shanghai-U.S. West Coast rate on August 23 stood at $5,955 per 40ft, down 10% from the previous week, actual rates are more than $1,000 lower.
Linerlytica said: “Several of the smaller carriers and recent newcomers on the trade are slashing their rates to boost volumes, forcing their large rivals to match.”
August 30: Ocean Carriers ‘Fire Blanks’ Ahead of China’s Golden Week Holiday – The Loadstar
Fearing another container spot rate crash, ocean carriers have blanked a number of export sailings from Asia to Europe and Asia to the U.S., prior to the Chinese national holiday in early October.
A carrier contact said last week he expected to see “many more” void sailings this year in the key soft-demand weeks of the slack season.
“We are determined not to get sucked into another rates war this year, and as long as the Red Sea diversions continue we think we will be ok,” said the contact.
Drewry’s latest blanked sailings assessment puts the notified cancellation rate in September for scheduled sailings on the transpacific, Asia-Europe and the transatlantic at 10% to date.
Air
August 2: Air Rate Anger from Bangladesh Exporters as Carriers ‘Cash In’ on Logjams – The Loadstar
Airfreight rates from Bangladesh to major western destinations have shot up in a span of two weeks as export cargo piles up at the country’s main airfreight gateway, Dhaka.
Student-led protests in the third week of July prevented some 3,000 tonnes of exports leaving after the government responded to chaos and blocked highways with curfews and an internet shutdown.
As soon as the internet connection was restored, on July 24, businesses rushed to send export boxes to airports and seaports, intensifying a shortage of space, which in turn saw freight rates spiral.
Now, exporters are claiming carriers were taking advantage of the demand spike, raising rates by as much as $1.50 per kg to a variety of destinations.
August 7: WestJet Says 10 Percent of Fleet Grounded After Calgary Pummelled by Hail – CTV News
WestJet says 16 of its planes have been grounded after a massive hailstorm hit Calgary earlier this week.
The Calgary-based airline says those aircraft – 10 percent of its fleet – need substantial repairs and inspections before they can fly again.
The carrier also says 84 of its flights were cancelled on August 7, with 106 cancelled August 6 and 58 on August 5.
August 8: Shippers ‘Running Out of Options’ to Get Their Peak Season Goods Out of Asia by Air – The Loadstar
Cargo owners that haven’t made firm arrangements to move peak season cargo out of Asia by air are running out of options, warns logistics provider Dimerco.
Most direct, reliable freighter capacity has already been snapped up, it said.
Capacity on long-haul routes out of China and other countries in East and South-east Asia has been tight, driven by strong demand for e-commerce and a shift of container traffic from ocean to air, a result of extended transit times, congestion, limited capacity and soaring container rates, Dimerco notes in its latest airfreight market report.
August 8: Air Canada Drops 2 Late-Model Boeing Freighters from Fleet – FreightWaves
Air Canada has removed two new cargo jets from its fleet, furthering a strategic reversal in ambitious growth plans for dedicated freighter operations after less than three years even as the air cargo market experiences a robust recovery in 2024.
A management analysis published alongside the company’s second-quarter earnings report showed the size of the freighter fleet had fallen from eight to six Boeing 767-300 aircraft. A footnote indicated the two planes were sidelined in April.
Executive Vice President Mike Galardo mentioned on a call with analysts later that two freighters were pulled from the operating fleet early in the second quarter.
An Air Canada spokesperson declined to provide additional details about the status of the two freighter aircraft or why they have been grounded, but indicated in the response that they were “temporarily” removed from service.
August 14: Alert to Shippers as Airfreight Capacity Becomes Scarce and Rates Increase – The Loadstar
As air cargo’s peak season approaches, shippers are faced with limited capacity, allowing forwarders to up their sell rates on major trades.
The Loadstar previously reported how airlines were bracing for a busy Q3, as the steady drum of ecommerce traffic beats alongside the extra capacity taken up by modal switch to avoid the Red Sea and the usual pre-holiday volumes.
And market analytics platform Xeneta noted that, as the north-east Asia-to-Europe trade heats up, freight forwarder air cargo sell rates have hit their highest level in nearly a year-and-a-half. According to Xeneta, newly contracted long-term general cargo sell rates have reached $4.42 per kg, up 30% on the same period last year.
“Peak season surcharges introduced in May and June have now been removed, but the increasing base rates were clearly enough to elevate the market,” said the analytics platform.
August 14: Air Canada Pilots Prepare for Strike amid Ongoing Labour Dispute – CBC News
Air Canada and the union representing its pilots have been negotiating for more than a year but remain “far apart” on compensation and other issues, the union said.
Air Canada and the Air Line Pilots Association worked with a private mediator during the first half of this year and are now in conciliation.
The pilots are now voting on whether to give their union a strike mandate. The earliest possible job action would be September 17.
August 14: Bangladesh Air Cargo Logjams Ease but Delays Still Expected – Air Cargo News
The Bangladesh air cargo market continues to report delays to shipments following weeks of protests but the situation is beginning to ease.
At the height of the protests, cargo was taking around 10 days to be exported out of Dhaka Airport to the U.S. and Europe.
Maruf Khan, the chief operating officer of Bengal Airlift’s freight division, said the situation has eased over the past week. He said origin processing times at the airport are now down to around five days, although on August 13 there were around 200 trucks waiting in line at the airport.
August 15: WestJet Shuts Down Fledgling Freighter Network – American Shipper
WestJet has abandoned its scheduled freighter operation and put two of four Boeing 737-800 aircraft in storage one year after launching the business venture, according to the executive in charge of the airline’s cargo operations.
The development is a tacit acknowledgement by WestJet that it can’t compete in the challenging Canadian cargo market. Air Canada last week disclosed it has parked two new factory-built 767-300 freighter aircraft because of insufficient demand.
August 22: Air Canada Pilots Vote to Give Strike Mandate to Their Union – American Journal of Transportation
Air Canada pilots voted to give their union a strike mandate as negotiations over a new labour agreement have been stalled for more than a year. Workers could walk off the job as soon as mid-September.
The Air Line Pilots Association, representing Air Canada’s more than 5,400 aviators, is in a federal conciliation process with Air Canada until August 26, which will be followed by a 21-day cooling off period. The workers will be in a legal strike position starting September 17.
August 27: Forwarders and Shippers Push for Longer-Term Air Cargo Deals – Air Cargo News
Freight forwarders and shippers are continuing to push for longer-term air cargo deals as they look to avoid potential rate hikes due to the risk of supply chain disruption.
A half-year market report from analyst Xeneta shows that contracts of more than six months accounted for 54% of the market in the second quarter of 2024 compared with 30% a year earlier.
Spot deals (one-month contracts) in the second quarter accounted for 10% of the market against 12% for the period in 2023, three-month deals are at 18% of the market compared with 23% last year and six-month deals are at 18% compared with 35%.
The analyst said the move towards longer-term deals has been ongoing since last year, but the motivation for doing so has evolved.
August 28: Foreign Airlines React to Sudden New U.S. Rule Tightening Air Cargo Security – The Loadstar
Foreign airlines are said to have reacted strongly to an emergency security change to U.S. Customs regulations on airfreight, at least one carrier reportedly suspending cargo services as it seeks more clarity on the sudden additional requirement.
According to sources, an emergency amendment – with restricted access – has been passed by the U.S. Transportation Security Administration (TSA) requiring carriers to submit additional details of shippers and consignees to the U.S. Customs and Border Protection agency.
The new requirement became effective on August 21.
Rail
August 9: CN Asks Federal Government to Order Binding Arbitration to Protect Canada’s Economy – CN press release
Following the Canada Industrial Relations Board’s (CIRB) decision that does not bring the labour conflict any closer to a resolution, CN is formally requesting the Minister of Labour’s intervention under section 107 of the Canada Labour Code to protect Canada’s economy from the impacts of prolonged uncertainty.
Negotiations with the TCRC resumed on August 7. However, no progress has been made, said the railway in a press release, “as the TCRC has not engaged meaningfully at the negotiating table.”
While CN is willing to keep negotiating with the TCRC, “the company has lost faith in the process and is concerned that a negotiated deal is no longer possible without a willing partner.”
Unless there is immediate and meaningful progress at the negotiating table or binding arbitration, CN will begin a phased and progressive shutdown of its network, starting with embargoes of hazardous goods, which would culminate in a lockout at 00:01 Eastern Time on August 22nd.
August 9: CPKC to Issue TCRC Lockout Notice for August 22 – CPKC press release
Canadian Pacific Kansas City on August 9 said it will issue notice to the Teamsters Canada Rail Conference (TCRC) – Train and Engine (T&E) division and TCRC – Rail Traffic Controller (RCTC) division of its plan to lock out employees at 00:01 ET on August 22 if union leadership and the company are unable to come to a negotiated settlement or agree to binding interest arbitration. CPKC is committed to continuing good faith negotiation throughout.
The decision to issue a lockout notice comes after the Canada Industrial Relations Board (CIRB) on August 9 issued its decision, determining that no services need to be maintained during a railway strike or lockout in order to protect Canadian public health and safety. The CIRB also ordered a 13-day extension of the cooling off period, which ends on August 22. Following the expiration of the cooling off period, a legal strike or lockout involving the TCRC – T&E or TCRC – RCTC could occur.
August 9: Labour Minister Reacts to CIRB Decision – statement on X
Canada’s Labour Minister, Steven MacKinnon, posted on X after the Canada Industrial Relations Board (CIRB) issued its decision related to a potential strike or lockout at CN and CPKC. His statement ended with the following.
“The parties in this dispute have a responsibility to Canadians. I call upon the parties to stay at the bargaining table and continue holding productive and substantive discussions that meet the needs of this moment. A negotiated agreement is the best way forward.”
August 15: Labour Minister Rejects CN Rail’s Call for Binding Arbitration as Lockout Looms – CBC News
Labour Minister Steven MacKinnon has rejected CN Rail’s request for binding arbitration in the company’s labour dispute with Teamsters Canada Rail Conference (TCRC) – one week before a lockout could shut down the rail network.
“I would like to clarify that it is your shared responsibility – Canadian National Railway Company and the Teamsters Canada Rail Conference – to negotiate in good faith and work diligently towards a new collective agreement,” MacKinnon wrote in a letter.
The minister added that federal mediators remain available to both parties as negotiations continue.
August 18: CN Issues Lockout Notice to Teamsters – CN press release
CN has issued notice to the Teamsters Canada Rail Conference (TCRC) formally advising them of its intention to lockout Canadian TCRC-represented employees on August 22 at 00:01 ET unless an agreement or binding arbitration is achieved before that time.
Despite negotiations over the weekend, no meaningful progress has occurred, and the parties remain very far apart.
Unless there is an immediate and definite resolution to the labour conflict, CN will continue the phased and progressive shutdown of its network, which would culminate in a lockout.
CN chose to continue with the progressive and planned shutdown of its network, as it remains under the threat of an unpredictable strike notice. This planned shutdown helps to ensure the safety of the communities in which it operates and the safety of its customers’ goods, and to optimize the network’s recovery following a labour disruption.
August 18: Teamsters Issue Strike Notice to CPKC – TCRC press release
The Teamsters union has served 72-hours notice to CPKC to withdraw services, to be effective August 22 at 0001 Eastern Time, “to protect the TCRC’s statutory and Charter protected rights to engage in a lawful strike,” said the union in a statement. “We are continuing to bargain with the Company and will remain at the table as long as it takes.”
August 20: U.S. Agriculture Groups Urge Trudeau to Step in to Avert Rail Strike – American Journal of Transportation
Some of the biggest U.S. agriculture trade groups are urging Canada’s prime minister to step in to avert a rail strike in the country that could disrupt the flow of North American commodities.
“We request that you take action to ensure railroad operations continue before a lockout or strike occurs to prevent serious damage to the Canadian and U.S. economies,” 35 U.S. industry groups wrote in a letter to Prime Minister Justin Trudeau.
“Operational railroads are essential on both sides of the border for the integrated North American supply chain,” the groups wrote in their letter. “While we believe a negotiated solution is always the preferred outcome, your government should be prepared to move quickly if negotiations fail.”
August 22: CN Moves Forward with Lockout – CN press release
CN has formally locked out employees represented by the Teamsters Canada Rail Conference (TCRC) as of August 22 at 00:01 ET, after the union did not respond to another offer by CN in a final attempt to avoid a labour disruption.
Without an agreement or binding arbitration, CN chose to finalize a safe and orderly shutdown and proceed with a lockout.
August 22: CPKC Locks Out TCRC Employees, Moves to Full Shutdown of Canadian Rail Network – CPKC press release
Canadian Pacific Kansas City has locked out employees who are members of the Teamsters Canada Rail Conference (TCRC) – Train and Engine (T&E) division effective 00:01 Eastern Time on August 22.
That was followed by the lockout of employees who are members of the TCRC – Rail Traffic Controller (RCTC) division effective 00:01 Mountain Time.
Working closely with customers, CPKC has executed a safe and structured shutdown of its train operations across Canada. This will enable CPKC to safely and efficiently resume full rail operations across the entire network once the work stoppage ends.
August 22: Railways Prepare to Restart After Federal Government Forces Binding Arbitration in Labour Dispute – CTV News
Canada’s Labour Minister Steven MacKinnon is intervening to end a work stoppage that saw this country’s two largest railways grind to a standstill, by forcing the parties into binding arbitration.
MacKinnon said he is invoking powers under Section 107 of the Canada Labour Code to direct the Canada Industrial Relations Board (CIRB) to “assist the parties in settling the outstanding terms of their collective agreements by imposing final binding arbitration.”
MacKinnon has also ordered the board to extend the term on the parties’ current collective agreements until new deals are signed, and is calling for operations on both railways to resume “forthwith.”
August 22: CPKC Disappointed by TCRC’s Decision to Dispute Minister’s Direction to Resume Railway Operations – CPKC press release
In a case management conference convened by the Canada Industrial Relations Board (CIRB) at 9:00 pm ET on August 22, the Teamsters Canada Rail Conference (TCRC) representing the Train and Engine division and Rail Canada Traffic Controller division refused to discuss resumption of service, said CPKC in a statement. The union said it will make submissions to challenge the constitutionality of the Minister’s direction, as well as the CIRB’s discretion to proceed with any order.
Another case management conference was scheduled for 10:00 am ET on August 23 to further hear submissions by the parties.
While the Minister directed that the CIRB proceed expeditiously, any decision by the CIRB on the resumption of service will be delayed. CPKC remains prepared to resume service as soon as it is ordered to do so by the CIRB.
August 24: Federal Labour Board Orders Rail Workers Back on the Job, Imposes Binding Arbitration – CBC News
Freight trains were required to start rolling again first thing on August 26, the federal labour board ruled on August 24 as it ordered thousands of rail employees back to work to end a bitter contract dispute that shut down the country’s two major railways.
The decision by the Canada Industrial Relations Board (CIRB) imposes binding arbitration on the parties following an unprecedented dual work stoppage at Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) that halted freight shipments and snarled commutes across the country.
But the matter may not be settled for good, since the Teamsters union representing workers with both companies is pledging to appeal the ruling in court.
August 28: Train Movements in Canada Close to Normal, ‘Complete Recovery to Take Several Weeks’ – American Journal of Transportation
Train movements at Canadian National Railway Co. and Canadian Pacific Kansas City Ltd. are almost back to normal after a short lockout of unionized workers, according to RailState, a provider of real-time rail data.
Canadian National train movements were at 96% of pre-lockout levels as of August 27, while Canadian Pacific was at 95%, RailState said.
The data doesn’t necessarily indicate that the volumes of goods shipped are close to normal. Train movements are indications of trains in motion, including those with empty cars; the figures don’t provide information on the loads being transported. RailState based its average daily volume on train movements between August 1 and 21.
“Our recovery plan is underway,” CN Railway said in an emailed statement. “We expect complete recovery to take several weeks to catch up the impact that supply chains have been dealing with since April.” CPKC did not provide any details on operating levels.
August 30: Canada Rail Union Launches Court Challenges to Back-to-Work Order – Reuters
The union representing workers at Canada’s two main rail companies said on August 30 it had filed court challenges against rulings by the country’s industrial labour board that forced them back to work.
The union had already said it would appeal the rulings on the grounds that they were a win for the railways and could lead to the imposition of future contracts, eroding workers’ bargaining power.
“These decisions, if left unchallenged, set a dangerous precedent where a single politician can bust a union at will,” said Paul Boucher, president of the Teamsters rail union.
“The right to collectively bargain is a constitutional guarantee. Without it, unions lose leverage to negotiate better wages and safer working conditions for all Canadians,” he said in a statement.
Trucking
August 20: As Canada Braces for Rail Stoppage, Truckers Scramble to Meet Demand – Reuters
As Canada braced for a freight rail stoppage that could hit industries ranging from autos to agriculture, the trucking sector said it faced higher demand it could not meet.
Daman Grewal, a senior operations manager with British Columbia-based Centurion Trucking, would normally expect 20 or 30 online postings from shippers seeking trips east across Canada on an August Monday. On the morning of Monday, August 19, he saw more than 500.
“Last week is when a lot of the panic started to set in,” said Grewal, noting trips for which he charged C$7,000 a few days ago now cost up to C$9,000. “Similar to COVID, you see the scarcity in supply chain.”
Grewal said Centurion could increase capacity 10% to 20%, largely by reducing driver downtime.
“We would just have to turn the drivers around a little bit quicker,” he said.
Industry officials said some softening in the economy has left room to increase capacity but not enough to make up for idled railways.
CIFFA Advocacy, Communications, Activities
August 19: CIFFA Writes to PM, Minister of Labour Regarding Potential Rail Work Stoppage
CIFFA has sent a letter to Prime Minister Justin Trudeau and a letter to Labour Minister Steven MacKinnon to express the association’s frustration and concern with the current status of the rail negotiations.
CIFFA emphasized the severe impact of a complete rail stoppage to its approximately 14,000 employees from the key players in Canada’s supply chain, including customs brokers, drayage, freight brokers, load brokers and warehouse operators, who are equally challenged with the impacts of a pending disruption.
August 23: CIFFA Writes to Minister of Labour Seeking Government Intervention to Avert a Strike by Air Canada Pilots
CIFFA has written a letter to Canada’s Minister of Labour to express concern about “the looming possibility of a strike among the pilots of Air Canada.”
CIFFA urges the minister “to use all available resources within your department to facilitate an early resolution and, if necessary, to intervene to avert a strike.”
The letter was copied to Deputy Prime Minister Chrystia Freeland, Minister of Transport Pablo Rodriguez and Minister of Innovation, Science and Industry François-Philippe Champagne.
