Tariff truce for Canada and Mexico – China retaliates, but lightly
Donald Trump’s use of tariffs for leverage and ‘deal-making’ was proven yesterday when those to ...
GM: SUPPLY CHAIN WOESMAERSK: ROTTERDAM TEMPORARY SUSPENSION OF OPERATIONSATSG: OWNERSHIP UPDATERXO: COYOTE FILLIP GONEGM: SUPPLY CHAIN HITBA: CUT THE FAT ON THE BONER: STEADY YIELDMAERSK: SELL-SIDE UPDATESDAC: TRADING UPDATE OUT SOONTSLA: FEEL THE PAIN IN CHINAWMT: GUESS WHATXPO: SURGINGAMZN: LOOKING FORWARDCHRW: PAYOUT UNCHANGEDWTC: NEW HIGH MAERSK: 'AFLOAT IN A SEA OF RISK' F: TARIFF TRAFFIC WARNING
GM: SUPPLY CHAIN WOESMAERSK: ROTTERDAM TEMPORARY SUSPENSION OF OPERATIONSATSG: OWNERSHIP UPDATERXO: COYOTE FILLIP GONEGM: SUPPLY CHAIN HITBA: CUT THE FAT ON THE BONER: STEADY YIELDMAERSK: SELL-SIDE UPDATESDAC: TRADING UPDATE OUT SOONTSLA: FEEL THE PAIN IN CHINAWMT: GUESS WHATXPO: SURGINGAMZN: LOOKING FORWARDCHRW: PAYOUT UNCHANGEDWTC: NEW HIGH MAERSK: 'AFLOAT IN A SEA OF RISK' F: TARIFF TRAFFIC WARNING
Drayage operators along the North American eastern seaboard heaved a sigh of relief last month when port employers and labour averted a crippling strike – but some damage had already been done.
Cargo owners had diverted traffic in anticipation of a work stoppage. however, the road to a brighter future finally appears clear after a painful slog that decimated the ranks of drayage firms over the past couple of years.
The market is highly fragmented, with many small local firms, so the shifts in cargo flows due to port contract negotiations, first on the west coast and then the east, meant a rollercoaster ride in a challenging market.
With a presence at every major port and rail hub across the US, IMC is one operator that had been able to weather the storm.
“Size and our financial strength got us through rough times,” said Donna Lemm, the Memphis-based company’s chief commercial officer.
2023 and the first half of last year were rough, she said, characterised by tremendous rate pressure. Overcapacity in the drayage market made it easier for customers to squeeze operators in order to reduce the pain from stratospheric ocean rates.
“We can’t see the ocean side gouged with outrageous rates and the land side squeezed. Drivers must be paid, and we have to purchase new trucks,” said Ms Lemm. “Costs continue to escalate – for equipment, insurance, drivers, and staff.”
On a brighter note, operating conditions are better than when box terminals and rail hubs were congested, observed Paul Brashier, VP global supply chain for ITS Logistics. Yard and chassis capacity had been expanded and processes implemented to make flows smoother, he said, pointing to the fact that the ports of Los Angeles and Long Beach as well as the rail network had coped with large volume increases this winter without serious disruption.
Terminal wait times were still a problem for truckers, though, Ms Lemm noted. Appointment systems, supposed to make for smoother flows, work well at some terminals, but others are problematic.
She mentioned a terminal that recently implemented a new appointment system, but slots were chronically short to cope with the volume of freight that had piled up.
“We’ve had four drivers quit. They can’t get in and out because of this new appointment system,” she said.
Documenting that no appointments were available when it comes to disputing demurrage charges is cumbersome, and most drayage firms, averaging about ten trucks, do not have the systems to automate elements like this, she added.
At the peak of the volume crunch a lack of chassis was another massive roadblock for container flows to and from ocean terminals. Today, with the congestion gone and more chassis added to the pool, there were no problems on that front, Mr Brashier said.
Still, the chassis situation remained a headache, he added. “The biggest headwind are additional charges when we bring in private chassis,” he said.
To Ms Lemm, this is the elephant in the room.
“We’re still stuck,” she commented, referring to the agreements between ocean carriers and the Ocean Carriers Equipment Management Association (OCEMA), which ties their traffic to OCEMA’s chassis pool.
Theoretically, this should not be an issue. A year ago a judge at the Federal Maritime Commission (FMC) ruled that requiring truckers to use specific intermodal chassis providers to move containers violated the US Shipping Act and issued a cease-and-desist order to OCEMA and its members. And in August the FMC opened an investigation after receiving complaints that OCEMA had not complied with the ruling.
The ocean carriers argue that it is not their decision, but this does not make sense, Ms Lemm said. “You provide a service, it’s your responsibility to make the container available,” she said. Truckers should face no restrictions which chassis to use, she argued.
She hopes that commercial sense will eventually prevail. It is in the interest of the shipping lines to get their assets back, and terminals would be more efficient and could accommodate more business without containers stuck in their yards, she reasoned.
Compliance with truck emissions rules, particularly in California, has been a thorny issue for the entire trucking community. The change in Washington has brought about a drastic reversal there, and California dropped its zero-emission truck rules ahead of the inauguration of the new administration. For IMC and ITS, investment in zero-emission trucks is continuing, though.
This is driven by management’s stance on the issue as well as customer interest.
Mr Brashier said. “We now have well over 100 EV trucks in LA/Long Beach, and we’re seeing some clients on the east coast ask for solution with zero- or near-zero-emission vehicles.”
It should help that the pressure on margins is abating. Ms Lemm rsaid the second half of last year brought a surge in traffic, which is expected to persist.
“We plan for continued growth, for investment in our infrastructure and also in our team, and growth with our customers,” she said.
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