All Eyes on the Suez Canal as Container Shipping Giants Halt Passage Through Red Sea


Mediterranean Shipping Company (MSC), CMA CGM, OOCL, HMM, Evergreen and Yang Ming are following in the footsteps of Maersk and Hapag-Lloyd in suspending operations through the Bab El-Mandeb Strait after a string of projectile attacks from the Yemen-based Houthi militia.

Read Article

Ocean Freight Rate Trends Signal Breathing Room for Shippers?


While ocean freight rates have dipped a bit of late, they are still substantially higher than medium- and long-term prices for containers and experts expect spot rates to remain stable or continue falling in the coming weeks. Drewry’s composite World Container Index (WCI) decreased 0.9 percent to $7,874.43 per 40-foot container or equivalent unit (FEU) for the week ended Thursday, but remained 60.3 percent higher than a year ago. The average composite index of the WCI, assessed by the supply chain advisory for year-to-date, was $8,965 per FEU, which was $5,708 higher than the five-year average of $3,257 per FEU. Freight rates on the Shanghai to Rotterda route dropped 2 percent, or $213, to $10,364 per FEU, while rates form Shanghai to New York fell 1 percent, or $124, to $11,229 per FEU. Similarly, rates on Shanghai-Los Angeles slid $24 to reach $8,758 per FEU, while rates on Rotterdam-Shanghai; Shanghai-Genoa, Italy; Los Angeles-Shanghai; New York-Rotterdam and Rotterdam-New York trade lanes hovered around the previous week’s level. Drewry expects spot rates to remain stable in the coming weeks. According to a recent analysis by Container xChange, one of the many challenges for the supply chain now is the overflowing container depots in the United States and the pileup of empties that will push the container prices further downwards in the mid-term. The analysis showed that container prices are declining in the U.S. by as much as 30 percent in the past two months across the East and West Coast and more than halved at some ports from 2021 prices. In general, logjams and disruptions lead to [an] increase in container prices, especially in second-hand container prices because more container volume is tied up along the logistic supply chain,” said Christian Roeloffs, Container xChange co-founder and CEO. “However, in the United States there is a pile-up of empties as those containers cannot be repatriated back to Asia because of several disruptions…in the past two years, and more recently due to the China lockdowns and Russia-Ukraine crisis.” Roeloffs said there could be a continued slide in container prices because depots are overflowing with containers, and carriers and other container owners will be “getting desperate to get rid of those units.”“Once we see depots overflowing, and this is also what we expect in the midterm once disruptions ease up a little bit, container turnaround times becoming faster and shorter again, container fleet utilization increasing again, we do believe that container availability on a global scale will become more abundant again,” Roeloffs said. “As more and more containers will be required to be stored in depots in the U.S. and because the depot space is limited, there will be a massive downward push on container prices in the immediate short to mid-term.” In reporting fiscal 2021 financial results in February, Maersk said its Ocean division saw profitability increase substantially to revenue of $48.2 billion compared to $29.2 billion the previous year, “driven by high freight rates due to the ongoing impact from the pandemic that has resulted in disruptions of global supply chains.” “Ocean is expected to grow in line with global container demand, which is expected to grow 2 percent to 4 percent in 2022,” Maersk said.

Read Article

Prioritize Your ‘Hot List’: Logistics Expert Rattles Off China Lockdown Workaround.


Logistics giants Seko and Geodis warned shippers of the impact from new China covid lockdowns affecting freight operations around Shenzhen. Workers collect deliveries for a locked down community on Sunday, March 13, 2022, in Beijing. The number of new coronavirus cases in an outbreak in China's northeast tripled Sunday and authorities tightened control on access to Shanghai in the east, suspending bus service to the city of 24 million and requiring a virus test for anyone who wants to enter. Shippers are being warned of the impact of China's zero-Covid policy, which sent millions in the country into lockdown over the weekend and sparked a fresh wave of supply chain concerns. China’s National Health Commission reported Monday 1,437 new cases in mainland China, which is roughly quadruple the number of new cases reported a week ago. Shenzhen, Shanghai, Dongguan and Jilin province are in various states of lockdown as the 1.3-billion-strong country looks to contain the flare-up. State media reported Chinese Vice Premier Sun Chunlan during a Saturday meeting with state officials called for strict measures to stem the latest outbreaks, including nucleic acid testing, antigen screening and quarantines. “With lockdowns impacting both Shenzhen and Shanghai, sourcing teams should plan to go back to a situation where every order is treated as an exception case,” Brian Glick, CEO of supply chain integration platform, told Sourcing Journal. “Close collaboration with vendors and freight forwarders is key—with passenger fights being diverted and potential airport shutdowns in play, falling back to airfreight may not be feasible. Make sure you’re clearly prioritizing your ‘hot list’ with all partners so you can make sure you get the highest priority goods out with the space you can secure.” The Port of Shenzhen, an umbrella name given to multiple ports running along the coast, is considered one of the world’s busiest with trade routes to more than 300 ports located in more than 100 countries. Shenzhen, with a population of about 17.5 million, is now conducting three rounds of mandatory testing through Sunday, according to a government website. Residents were told to stay at home in an announcement Sunday that took effect immediately, while public workers were told to work from home. Public transportation has ceased. Workers selling water, electricity, fuel or other essentials are exempt from the stay-at-home order. All other businesses are closed. Shenzhen is also home to a number of electronics manufacturing facilities, such as Apple supplier Foxconn. Reuters reported the company has shuttered some operations in response to the stay-at-home order. Transport and logistics firm confirmed Monday the closure of its Shenzhen warehouse, with employees working from home. Truck transport continues, but there are fewer available drivers due to the shelter-in-place order. Meanwhile, because factories in Shenzhen and Dongguan have been closed, containers are not being filled or delivered to ports. As the outbreak of omicron across China worsens, local authorities are enforcing restrictions, which will have an impact on our offices, warehouses and operations. The Yantian Free Trade Zone will be closed through March 20, the transport and logistics company said. Loaded ships will leave the port as planned, but cargo will not be loaded next week. Cargo moving between Shenzhen and Hong Kong has been stopped, with the exception of essential goods.

Read Article

From Cotton to Containers, Supply Chain Prices Stay Inflated


Inflationary pressures are being felt on many aspects of the apparel and textile supply chain, from raw materials to shipping. U.S. spot cotton prices averaged $1.11 per pound for the week ended Jan. 6, up from $1.09 per pound the previous week and from 75.34 cents a year earlier, according to the U.S. Department of Agriculture. At the same time, Drewry’s composite World Container Index (WCI) increased 1.1 percent to $9,408.81 per 40-foot container or equivalent unit (FEU) for the same period and was 80 percent higher than the same week in 2021. “After a steady decrease in rates on transpacific lanes since mid-September 2021, we now see the rates increasing for the fifth consecutive week,” Drewry said. Freight rates from the key Shanghai to Los Angeles and Shanghai to New York routes gained 3 percent each to reach $10,520 and $13,518 per FEU, respectively. Rates from New York to Rotterdam surged 5 percent, or $57 to reach $1,244 per FEU. However, rates from Los Angeles to Shanghai dipped 1 percent to reach $1,290 per FEU, while rates on Shanghai to Rotterdam, Holland, Rotterdam to Shanghai, Shanghai to Genoa, Italy, and Rotterdam to New York hovered around the previous week’s level. Drewry expects rates to climb higher in the coming week on account of Chinese New Year and the need for factories to push goods to port ahead of factory closures surrounding the holiday. Meanwhile, the International Cotton Advisory Committee (ICAC) said in a year-end report that cotton prices are expected to remain at elevated levels throughout the 2021-2022 crop season. ICAC’s current price forecast of the season-average A index, a composite of global spot cotton prices for 2021-22, ranges from 91 cents to $1.19, with a midpoint at $1.04 per pound. Devine also cited India as being “the epicenter of the latest surge in prices,” with Indian values reaching record highs. There have been calls for the government to lift import duties, but the availability of foreign cotton that can be rapidly shipped may be in short supply,” he added. Relief shouldn’t be expected from synthetic fibers, either. On the one hand, historically, when prices for cotton rise, so do the costs of other fibers. On the other hand, inputs for synthetic fibers such as petroleum, are also high. The Producer Price Index (PPI) for U.S.-made synthetic fibers increased 24.7 percent for the year ended Nov. 30. The PPI for processed yarns and threads rose 28.9 percent in the same period, while the index for finished fabrics increased 13.4 percent. Joel Prakken, chief U.S. economist and co-head of U.S. economics at IHS Markit, said in a report last week that IHS has revised its forecast U.S. gross domestic product (GDP) growth in 2022 down to 4.1 percent from 4.3 percent. We’ve revised up the forecast for CPI (Consumer Price Index) inflation in 2022 from 3.7 percent to 4.2 percent after which we expect inflation to subside close to the Fed’s long-run 2 percent objective,” Prakken said. “Beyond disruptions to travel and entertainment, the Omicron strain may pose wider risks to supply chains and hence inflation.” Inflationary pressures are being felt on many aspects of the apparel and textile supply chain, from raw materials to shipping.

Read Article

Everything is coming up rosy—again.


Though pink has been a key color in women’s collection for several years, WGSN and its sister color systems company, Coloro, is doubling down on its forecast for Orchid Flower as color of the year for 2022. WGSN reports that the saturated magenta tone is gaining mass appeal across various industries, and it has the data to back it up. Pink looks in Spring/Summer 2022 women’s runway collections grew 89 percent year-over-year to account for 8 percent of the overall color mix, WGSN reported. Looks with Orchid Flower—a rich, medium pink—increased 100 percent compared to last September. The color was seen in Ernanno Scervino’s line as a pull-over windbreaker and in Drome’s collection as strapless and one-sleeve tops. Issey Miyake used the color for a watercolor-inspired floral print, while MSGM applied it to patterned sets. Described as having an “intense, hyper-real and energizing quality that stands out in both real-life and digital settings,” Orchid Flower boasts a versatility that works across seasons and products. The color lends itself well to “small luxuries” and lustrous materials, metallics and reflective surfaces, WGSN noted. The color is also gaining traction in the youth market and pops across social media platforms. “In a challenging time, this saturated magenta tone creates a sense of positivity and escapism and embodies the dopamine brights trend that has been peaking across industries as we navigate towards a post-Covid world,” WGSN states.Orchid Flower is part of WGSN’s color forecast for 2022, which it introduced in 2020. Other colors in the palette include Olive Oil, a nature-based green that has broad appeal across outdoor and active apparel, denim, footwear and interiors; Butter, a creamy shade of yellow; Mango Sorbet, an optimistic tropical hue that doubles as a go-to for swimwear and activewear and as a unique bright for women’s wear; and Atlantic Blue, a “dependable, versatile and trustworthy” shade that “echoes the hues of organic indigo dyes and the ocean, making it perfect for sustainable and heritage designs.”

Read Article

Cotton Prices Are Surging. What Does This Mean for Fashion?


Apparel manufacturers already battling supply chain backlogs and delays and badly congested ports now face surging cotton prices. How high can they go? As if the industry didn’t have enough challenges, with pandemic-related supply and demand issues compounding port and logistics congestion, apparel manufacturers now face surging cotton prices. Cotton prices began their latest ascent by jumping off levels near 89 cents per pound on Sept. 20. That dip pulled values down to the trend line maintained by the New York/ICE Nearby futures since April 2020, Cotton Incorporated noted in its monthly analysis released Wednesday. “The reconfirmation of the trend may have attracted attention from speculators,” Cotton Inc.’s Monthly Economic Letter said. “That attention was likely enhanced by the momentum of price increases that occurred since then. While the patterns in price movement could have pulled investors into the cotton market, recent demand data may have also been attractive.” Notably, there has been evidence of strong demand from China as manufacturing revved back up. Auctions from government reserves in China surpassed the initial target of 600,000 tons scheduled for release between early July and the end of September–the total volume sold came out near 630,000 tons or 2.9 million bales, according to Cotton Inc. Strong demand extended auctions through the end of November. Most benchmark prices surged since late September. After trading near $1.03 per pound for much of last month, the A Index, an average of global cotton prices, dipped below $1.00 on Sept. 21. Since then, it has climbed to levels as high as $1.20. U.S. spot cotton prices averaged $1.05 cents per pound for the week ended Oct. 7, according to the U.S. Department of Agriculture (USDA). This was the highest weekly average since the week ended Sept. 15, 2011, when the average was $1.08, DOA noted. The weekly average was up from 97.22 cents the prior week and from 61.13 cents a year earlier. So far, the spike hasn’t been felt down the supply chain. In Wednesday’s Consumer Price Index eport, retail apparel prices fell a seasonally adjusted 1.1 percent in September after rising 0.4 percent the prior month, although those goods were made with cotton purchased months ago. Meanwhile, the Cotton Inc. report said “it remains to be seen how high and how long the current surge in cotton prices will last–the recent rally does not appear supported by market fundamentals.” “This suggests it is unlikely that the rally can be maintained long enough to produce prices anywhere near the levels experienced around the peak during the 2010-11 crop year,” the report said. This time is different because the world is not facing a lack of supply, Cotton Inc. said. Even after recent sales, China is estimated to be holding five to six times the volume of cotton in reserves than it had in early 2010-11, for example, while private Chinese stocks are currently estimated at roughly three times higher than in early 2010-11. Stocks in the world-less-China are forecast to be at their third-highest volume on record at the end of the 2021-22 season. The latest USDA report highlighted an increase to the forecast for global cotton production, up 695,000 bales to 120.3 million bales, and a decrease for global mill-use, down 734,000 bales to 123.4 million bales. A net result of revisions to production, consumption and beginning stocks was a 446,000 bale addition to the projection for 2021-22 ending stocks to 87.1 million bales. Cotton Inc. said this figure suggests that world stocks will finish the current crop year at a level that ranks as the seventh highest on record. The International Cotton Advisory Council’s current price forecast of the season-average A index for 2021-22 ranges from 82 cents to $1.27, with a midpoint at $1.02 per pound.

Read Article

Cargo Crunch Prompts New Hours at LA Ports


After consulting with multiple supply chain stakeholders and the U.S. Department of Transportation, the ports of Long Beach and Los Angeles announced new measures to improve freight movement and reduce delays as the facilities continue to experience record volumes. The ports said these measures will enhance their landside operations to help meet the unprecedented growth in cargo volume moving through the San Pedro Bay. Specifically, the twin ports will expand the hours during which trucks can pick up and return containers. Mario Cordero, executive director of the Port of Long Beach, announced that Long Beach will take the first step towards a 24/7 supply chain by maximizing nighttime operations. Port of Los Angeles executive director Gene Seroka announced that the Port of Los Angeles will expand weekend operating gate hours. Dubbed “Accelerate Cargo LA,” the Port of Los Angeles’ program will operate on a pilot basis to ensure that gate availability meets cargo demands and provides greater transparency to improve efficiency. In addition, both ports have called on marine terminal operators to incentivize the use of all available gate hours, especially night gates, to reduce congestion and maximize cargo throughput capacity. “We appreciate the leadership of the Biden-Harris Administration in marshaling a response to the unprecedented global supply chain disruption so acutely felt here at the San Pedro Bay Port Complex,” Seroka said. “These steps, in addition to what has previously been recommended, demonstrate that the Port of Los Angeles will continue to innovate in order to manage this historic cargo surge.” Cordero said the Port of Long Beach is prepared to take “bold and immediate action to help the supply chain move the record cargo volumes that keep our economy moving, and we appreciate the support and leadership shown by the Biden-Harris Administration.” The ports of Long Beach and Los Angeles will work closely with the trucking community to ensure that all truck operators understand how to take advantage of incentivized gate hours, as well as the expanded opportunities that will be created to move cargo during non-peak times. In addition, the ports urged terminals and the trucking community to consider other corrective measures. “I thank directors Cordero and Seroka for their leadership and all of the men and women who have helped meet the challenge of moving extraordinary cargo volumes during a global pandemic,” said John Porcari, the ports envoy to the Biden-Harris Administration’s Task Force on Supply Chain Disruptions. “I look forward to continuing to work with all stakeholders to strengthen the resiliency of our transportation supply chain.” The ports noted that approximately 70 percent by tonnage of all U.S.-international trade moves by water through the nation’s ports. The San Pedro Bay ports move approximately 40 percent of all containerized cargo entering the U.S. each year and about 30 percent of all containerized exports. In addition to actions taken today, the ports are working closely with the White House Supply Chain Disruptions Task Force to alleviate bottlenecks and speed up the movement of goods to consumers, while expanding export opportunities for U.S. exporters, including agricultural producers. The Port of Los Angeles and Port of Long Beach are the two largest ports in the nation, first and second respectively, and combined are the ninth-largest port complex in the world. Trade that flows through the San Pedro Bay ports complex generates more than 3 million jobs nationwide. Steve Lamar, president and CEO of the American Apparel & Footwear Association (AAFA), sent a letter to President Biden administration officials calling for “action now to end and provide relief from the shipping crisis.” Lamar lauded the creation of the task force and said AAFA welcomes “your executive order that urges the Federal Maritime Commission to “vigorously enforce the prohibition of unjust and unreasonable practices.” He also urged the administration to “consider further rulemaking to improve detention and demurrage practices and enforcement of related Shipping Act prohibitions,” but added that more needs to be done “to help provide relief from, the acute shipping crisis that is now impacting all parts of our economy.” “Your administration can provide immediate relief by offsetting out of control freight cost increases by removing the temporary tariff costs, such as the U.S. government’s punitive Section 301 tariffs on China, our industry still must pay,” Lamar added. “Supporting quick action by Congress to retroactively renew the Generalized System of Preferences program and the Miscellaneous Tariff Bill will also mean immediate relief for job creators in our industry.”

Read Article

Pantone’s SS22 Color Trend Report Finds Comfort and Optimism in Uncertainty


New York Fashion Week is back—and with it, Pantone’s Spring/Summer Color Trend Report. Released Wednesday, the Pantone Fashion Color Trend Report Spring/Summer 2022 edition for New York Fashion Week highlights the key hues that the color authority’s trend forecasting arm, the Pantone Color Institute, expects to see as designers introduce their latest collections over the next week. According to Pantone Color Institute experts, the selected hues—it named 10 standout colors and current takes on five core classics—reflect an “aspiration for balance as we move into a different landscape” and embody a need for comfort, clarity and security, as well as “free-spirited optimism and a feeling of new liberation.” “As we enter this new landscape where fashion rules no longer apply, hues for Spring/Summer 2022 allow us to mix and marry as we please, encouraging the exploration of new chromatic realities, and opening the door for personalized style and spontaneous color statements,” Leatrice Eiseman, executive director of the Pantone Color Institute, said in a statement. Among the identified colors are PANTONE 12-4401 Spun Sugar, a sweetened pastel blue, and the soft and powdery PANTONE 13-1513 Gossamer Pink. Calming and cooling PANTONE 16-4118 Glacier Lake, meanwhile, conveys serenity, while PANTONE 18-4728 Harbor Blue “reflects our search for a safe space,” Pantone said. Adding a note of warmth is the earthy brown of PANTONE 18-1019 Coca Mocha. The Spring/Summer 2022 NYFW color palette also includes several brighter hues: the tantalizing red of PANTONE 18-2042 Innuendo, the deep blue of PANTONE 19-4151 Skydiver, the joyful yellow of PANTONE 14-0850 Daffodil, the dynamic purple of PANTONE 18-3324 Dahlia and the heated red of PANTONE 18-1564 Poinciana. In addition to its larger color palette, Pantone also identified current takes on five core classics. PANTONE 11-0602 Snow White offers a clean and pure white, “expressive of our desire for simplicity and uninterrupted inner peace,” it said, while PANTONE 13-0003 Perfectly Pale provides a subtle sandy beige, echoing the comfort of warm beachy retreats. The sweet and savory green of PANTONE 16-6216 Basil reflects the cultural movement toward health and wellness. The pale gray of PANTONE 14-4104 Northern Droplet channels feelings of tranquility. The deep gray PANTONE 18-4004 Poppy Seed closes things out with “timeless familiarity.”

Read Article

Bangaldesh Factories Forced to Close Amid Lockdown


The Bangladesh government announced Thursday that factories will be closed from July 23 through Aug. 5, leaving manufacturers scrambling to plan how to fill their orders. Though the country went into lockdown July 1 to prevent the spread of Covid-19, factories in most areas were allowed to continue functioning. Bangladesh has been a draw for shifting business from global brands and retailers as Myanmar underwent a military coup and India faced a severe wave of the coronavirus. As the second biggest apparel manufacturer in the world, after China, with more than 4.5 million workers in the industry, the mandated lockdown will be a setback at a busy time as global orders continue to surge to meet growing consumer demand. “This lockdown is to be stricter than the ones imposed earlier, garment factories will remain closed,” Farhad Hossain, Bangladesh State Minister for Public Administration said on Thursday, adding that no one will be allowed to go outside except for trips of absolute necessity, medical treatment or attending burials and funerals. He said that legal action would be taken against any violators. Starting Friday morning, ferries are to be suspended, along with other public transport services, putting an end to the brief lifting of the countrywide lockdown for celebrations of Eid al-Adha from July 15-23.It also puts an end to the special exemption for garment factories to continue to operate. Given the spread of the Delta variant of Covid-19 in Bangladesh, concerns have been mounting. On Thursday, total Covid cases crossed 1.14 million, with 3,697 new cases and 187 deaths reported over the last 24 hours according to the Directorate General of Health Services of Bangladesh. Some industry analysts believe that the imminent lockdown will not have a major impact on business as it follows the holiday period during which many workers return to their hometowns, others, however, are less sanguine. A complete lockdown in March of 2020 had migrant workers in flux, causing disarray in production. In addition, the sweeping pandemic in Europe and the U.S saw order cancellations of approximately $3.18 billion, according to figures from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA). This time around however, the situation is different as Europe and the U.S. are expecting an upswing in sales for the holiday season. Delays in production will impact factory owners, who have already been working under difficult conditions with limited resources as many migrant workers made their way toward their home provinces, concerned for their safety. Although labor and factory owners have been voicing concerns, the financial results of 2020-21 have shown an unexpected resilience.The Bangladesh financial year which ended June 30 showed a 13 percent increase in apparel exports, to $31.5 billion. That is lower than the $34.12 billion in financial year 2018-19, but up from the $27.94 billion in 2019-20. As demand for knitwear has grown, Bangladesh has seen a surge in orders, and June was a promising month, with a 31 percent increase in exports over the previous-year period, to $3.58 billion.Factory owners have been lobbying to stay open, citing a loss of $119.38 million each day that factories remained closed, as well as the high catch-up costs to make production deadlines, including air freight of shipments.As Faruque Hassan, president, BGMEA, said speaking about the timing of the lockdown, “Saving lives is critical with the lockdown; but saving livelihoods is essential as well.”

Read Article

Port of LA Director: ‘Historic’ Import Surge Requires Federal Intervention


f there was any way to accurately describe the surge in imports into the U.S. in recent months, Eugene Seroka, executive director of the Port of Los Angeles, may label it best: “historic.” There’s no doubt that the Southern California port and others have seen a barrage of shipments starting last summer when demand started to swing higher as non-sential stores across the country cautiously reopened. But as the summer wound down and the earlier-than-usual holiday season followed, the spending only continued to increase at record levels. In a session at Sourcing Journal’s Hong Kong Sourcing Summit, Seroka noted that any month the port processed more than 800,000 twenty-foot equivalent units (TEUs) prior to the pandemic was a “busy month.” But the ecosystem has significantly nged, with March 2021 reaching 957,599 total TEUs. The port could potentially harbor 10 million TEUs for the fiscal year ended June 30, 2021, which would surpass the urrent 12-month record of 9.5 million units in 2018. For the first quarter of 2021, container volume is up 44 percent year over year, and for March alone, the ratio of loaded imports to exports remained at about four to one, which Seroka called “the highest gap we’ve seen in recent times.” More than 340,000 empty container units went back to Asia in March, the most empties the Port of Los Angeles has ever exported in one month. Thankfully, ships either waiting at anchor or in port have reduced in number since their late January/early February peak. While 67 total container ships were in port on Jan. 30, that number dipped to 45 by April 14. And although ships at anchor topped out at 40 on Feb. 1, they have halved to 20. The backlog at the ports has made an impact throughout logistics operations on the road. Container dwell time on the terminals still remains an impediment to landside cargo flow, Seroka said. “Warehouses across the region continue to operate at full capacity,” said Seroka. “Because warehouses are full, container dwell time in the terminals averaged five days in February. The March average was 3.8 days, so we are making some improvement. As containers on chassis wait for warehousing space, our average street dwell times was 6.8 days in March, down from 7.6 days in February. We still need those containers and chassis back at a quicker rate.” Rail dwell times for containers being transported back to the Port of Los Angeles continue to linger as well, up to nearly 11 days on average in March, an “extremely high” number for the port, said Seroka. “The rapid succession of vessel calls, inclement weather across the country and the massive surge in imports have made it difficult for the railroads to get rail cars, engine power and crews back to L.A. fast enough,” Seroka said. “Some of our terminals have several thousand or more intermodal containers on their property, awaiting rail transport, and it’s going to take several weeks to clear those out.” A call to action for federal relief Declaring that the U.S. freight system is “long overdue for federal investment,” Seroka noted that the American Jobs Plan proposed by the Biden administration “has the framework to make real infrastructure improvements.” With the plan in mind, the port is planning its advocacy efforts on three areas. The first is the transition of heavy-duty trucks to zero-emission operation units, with calls for “a portion” of the plan’s $174 billion for spending on electric vehicles to transform the the U.S.’s largest drayage fleets. Drayagefleets typically pick up cargo at ports and transport them to distribution centers. “It would reduce the carbon footprint of every cargo owner that ships could through our gateway,” Seroka said. The second key area calls for some of the $100 billion earmarked for digital infrastructure to go toward industrial digitization, meaning that the larger industry would gain access to tools similar to the port’s own Port Optimizer to get goods to American consumers and manufacturers faster. The system aggregates key cargo data and leverages a combination of tools like predictive and prescriptive analytics, machine learning and AI to help companies track their cargo box by box from point of origin to final destination. The Port of Los Angeles remains the only one in the U.S. that has put a port community system into service, Seroka said, and cargo owners and their partners can sign up to use the Track & Trace functionality to track all imports and exports. And with Biden’s plan setting aside $50 billion for national infrastructure resilience, the port is advocating for a portion to be allocated to power grid resiliency. Seroka highlighted that last summer, California ports had to shut down various shoreside power operations in the face of heat waves, resulting in increased ship emissions. “Because heat waves and other climate disruptions face all of us in the years to come, we need to make our power grids stronger and more resilient,” Seroka said.

Read Article

Vietnam Won the US-China Tariff War


Monthly imports from Vietnam have been rising steadily on a year-over-year basis since June 2020, and the year-to-date figures show they doesn’t appear to be leveling off anytime soon. Data from the U.S. Census Bureau shows that for March, the most recent monthly tally available, U.S. imports from Vietnam were $8.80 billion, up sequentially from $6.76 billion in February and reflecting a 70 percent spike from $5.18 billion in March 2020. The February total saw $6.76 billion in imports, a sequential dip from $7.66 billion in January, but a 12 percent increase from $6.03 billion in February 2020. And January’s $7.66 billon in imports was a sequential increase from $6.92 billion in December 2020, which also represented a 20 percent jump from December 2019. As for 2020 monthly compares from the same year-ago tallies in 2019, most months saw increases except for March and May 2020, when imports from Vietnam were down from 2019 figures. A look at the available data from the Census Bureau showed that imports from Vietnam have shown steady year-over-year growth since 1994 when imports reached $50.5 million from zero the year prior, the numbers indicate. However, it wasn’t until 2019 when total imports spiked 36 percent to $66.63 billion from 2018’s $49.16 billion that the monthly import figures began an upward trajectory that has yet to slow down. In 2018, many apparel companies were already in a multi-year process of moving production away from China amid rising labor costs. Some looked to India, while others eyed Vietnam. The start of the U.S.-China trade war on July 6, 2018, when the U.S. under the Trump administration imposed a 25 percent tariff on $34 billion of Chinese imports, further accelerated anywhere-but-China sourcing. That was the first in a series of tariffs that has only escalated via multiple tranches in the months that followed. Former President Trump tabled a 25 percent tariff on $300 billion of Chinese imports in June 2019. That didn’t last long as the U.S. slapped an additional 10 percent tariff on $300 billion worth of Chinese imports two months later starting Sept. 1, 2019. For apparel production, Asian countries that saw gains included Vietnam, India, Bangladesh, Myanmar and Cambodia. Companies also looked elsewhere for production, such as Turkey. One question looming on the horizon is whether the U.S. Trade Representative will at some point impose new tariffs on goods from Vietnam. The USTR has determined that Vietnam’s practices related to currency valuation had harmed U.S. commerce. The USTR in January decided to hold off on new tariffs for now, just before the Biden administration took over, but that could change at any moment. For now, the main loser seems to be China. According to the U.S. Census Bureau, imports from China in 2018 totaled $539.24 billion, a 7 percent increase from $505.17 billion in 2017. Following the imposition of tariffs, 2019 imports from China fell 16 percent to $451.65 billion from 2018’s tally. And in 2020, imports fell again by 4 percent to $435.44 billion. Because of the impact from the coronavirus pandemic in 2020, data from 2021 as the year progresses will help determine what will be the trend for imports from China in the months ahead. For the three-month tally from January to March 2021, imports totaled $113.37 billion, representing a 49 percent gain from the comparable 2020 period of $75.90 billion when China was hard hit by the pandemic, but just a 7 percent increase from $105.84 billion in the same 2019 period. So far, the Biden administration is keeping Trump’s tariffs in place. The USTR delivered Biden’s 2021 Trade Agenda to Congress in March, recognizing China’s trade policies as harming U.S. workers, threatening America’s technological edge and weakening its supply-chain resiliency, not to mention undermining national interests. For now, the key priority for Biden appears to be focusing on rebuilding the U.S. economy and fighting the coronavirus pandemic. On March 12, he signed a $1.9 trillion Covid relief bill into law, which was welcomed by retail trade groups the National Retail Federation and the American Apparel & Footwear Association.

Read Article