The situation at the ports of Los Angeles and Long Beach has improved in recent weeks. The ports have been able to reduce vessel backlog from its peak of 109 on January 9^th to 74 on February 16^th. Part of this success is due to an increase of labour availability and progress clearing out empty containers from docks that were clogging up operations. Since October, carriers have sent over 75 “sweeper ships” who solely carried empty containers to Asia.¹

Trucking rates increased for the eighth straight month with average van rates increasing 11% and reefer rates increasing 3% from December 2021 to January 2022.¹ These stats are reported from DAT Freight & Analytics and based on $116 billion in annualized freight transactions. Industry experts say this is the result of tight capacity due disruptions from winter weather, COVID-19, and recent trucker protests.²

COVID-19 appears to be moving from a pandemic to endemic phase, and we are all wondering how soon supply chain issues will resolve. According to Denmark-based research analytics firm Sea-Intelligence, it will take 8-9 months before a return to normal reliability of container shipping.¹

Last Friday, the Biden administration suspended 44 flights from US to China in retaliation for China imposing similar restrictions on American flights in recent weeks. The Chinese government cancelled flights after passengers tested positive for COVID-19 after arriving in China, even though those passengers tested negative before getting on the planes.

Southern California’s ports garnered a lot of attention last year with record-breaking congestion and help from the US president to move to 24/7 operations. Although the congestion is slowly being cleared, there is labour uncertainty looming with the contracts of 15,000 port workers expiring on July 1, 2022. The International Longshore and Warehouse Union (ILWU) represents employees at 29 West Coast Ports in the states of Washington, Oregon, and California.

Effective January 22, 2022, the U.S. Department of Homeland Security is requiring that all Canadian and non-U.S. drivers entering the US for essential or non-essential reasons be fully vaccinated for COVID-19 and provide proof of vaccination. A week earlier, the Canadian government began requiring all truckers crossing the border from the US into Canada to be vaccinated. Please expect increased wait times at US land border crossings as travelers get used to the new requirements.

China’s upcoming Chinese New Year holiday is from January 31 to February 6. This will result in “blank sailings”, meaning that many shipping companies will decide to skip Chinese ports during this time period. Check with your customer service representative to see if this will impact any of your shipment schedules (and if you were curious, this year is the year of the Tiger).

Three former SpaceX engineers have raised $50 million to build what is described as “Tesla for freight trains”. Their company, Parallel Systems, has invented electric motorized train wheels. Cargo containers can be placed on top of the wheels, and the wheels can drive the container up to 500 miles on a track.

The Logistics Managers’ Index (LMI) is a survey of supply chain professionals that measures activity throughout the transportation, logistics, and warehousing sectors. November’s report shows that inventory levels and warehousing utilization are increasing, but at a slower rate than before. Inventory costs, warehousing prices, transportation utilization, and transportation prices are increasing, at a higher rate than before. And warehousing capacity and transportation capacity are contracting. To read the full report, go to the LMI website.

Last week there were 101 containers ships waiting outside the ports of Los Angeles and Long Beach. LA-LB ports are expected to handle 3 million more containers in 2021 than the previous year. A busy month used to be 800,000 containers per month, and during 2021, the ports have been handling 900,000 containers per month.

Last month’s torrential rain and flooding in British Columbia caused large disruptions to the movement of containers as well as shortages of food and emergency supplies. Thanks to the tremendous work of Transport Canada, CP Rail, CN Rail, the Port of Vancouver, the terminals, and everyone in the supply chain, we have been able to bring a level of normalcy to the movement of containers through the largest gateway in Canada. The Port of Vancouver has provided excellent daily updates on import rail performance, truck terminal turn times, vessel on-time performance, and more through their port dashboard.

While some believe that trucking rates will decrease in 2022, others are predicting that rates will stay high and capacity remain tight. Although consumer demand for physical products should decline in the new year, the retail and manufacturing demand to replenish inventory levels will persist. In addition, lower-value cargo is currently sitting while high-value goods are being moved, and that cargo will need to be moved in the new year, propping up demand. And despite increased demand, trucking companies are not interested in adding capacity that would diminish their pricing power and lower profits.

Warehouses across North America continue to be at full capacity, largely due to persisting congestion at ports and in the supply chain. In our local Greater Vancouver market, Colliers reports that 3^rd quarter warehousing vacancy rates are at 0.5%, a record low, and asking rents have increased 13.2% year-over-year and at an all-time high. There have been no vacancies of warehousing or logistics spaces over 50,000 square feet for two consecutive quarters.

You’re probably seen the photos from the flooding in British Columbia. Between Nov 13-15th, up to 200 millimeters of rain came down on in some areas. On November 17th, a provincial state of emergency was declared and remains in place. Highways, roads, and railway tracks were damaged in the flooding, as seen in the photos we’re included in this post, shared by the BC Ministry of Transportation & Infrastructure. 

After two years of meeting virtually, our project cargo team was finally able to meet in person in Croatia last month. Although project cargo volumes have been down in the last 18 months during the pandemic, global activity has increased over the past 6 months with new energy plants, infrastructure projects, and machinery production resuming.

Just when you thought things in California couldn’t get worse, they did. Last week, 81 container ships were at anchor or loitering at the Ports of Long Angeles and Long Beach, an all-time high. Some vessels will have to wait 3-4 weeks before anchoring. All this is happening despite the ports opening 24/7.