February 2023 Recap

Feb 28, 2023 | LinkedIn

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1. Turkey and Syria’s Earthquake Relief Efforts Encounter Logistical Challenges

 

Turkey’s Iskenderun Port Burns After Earthquakes Topple Containers. Photo: Benoit Tessier/Reuters

 

Humanitarian aid groups and logistics operators are attempting to provide urgent relief efforts for victims of the recent earthquakes in Turkey and Syria, but the damaged infrastructure and cold weather are making it difficult to move the necessary supplies through the region. US aid groups are collaborating to fly medical supplies, antibiotics, and first aid to Turkey and Syria. However, roads, bridges, and airports have been damaged, and travel in the region is hampered by snow and freezing temperatures.

 

The Port of Iskenderun in Turkey has suspended operations due to the earthquakes, and air travel is also severely disrupted, with several airports in Turkey struggling to cope with backlogs caused by the disaster. Aid groups are concerned that this will lead to congestion at airports, particularly at Adana’s airport, where Direct Relief plans to fly supplies. Meanwhile, demand for air transport has surged, making it harder to secure air charters and pushing up rates. The surge in demand for air charters is also making it more difficult and expensive to secure space for aid and relief efforts in other parts of the world.

 

Children in Turkey and Syria urgently need your help! Donate here: UNICEF

Above is our summary that captures the highlights in order to save you time, but you can read the full article on The Wall Street Journal

 

2. Port of Los Angeles Aims for a Second-Half Rebound Amid Ongoing Challenges

 

 

The Port of Los Angeles is facing declining volumes due to canceled sailings and a softer market in the second quarter, according to Executive Director Gene Seroka. The port reported a 13% year-on-year decline in imports in January, although there was a 6% increase from December attributed to a push ahead of the Lunar New Year holidays. A new West Coast port labor contract has yet to be agreed upon, with Seroka stating that the lack of a deal has led to imports being pushed to East and Gulf Coast ports. Seroka expects volumes to improve in the second half of the year and predicts a return to a more traditional peak-season import pattern.

 

Comparisons to pre-pandemic levels highlight the port’s decline in comparison to East and Gulf Coast ports, with Los Angeles down 10% and Long Beach down 15%, while imports to Savannah and Charleston were up 12% and 20%, respectively. Seroka acknowledged that this shift isn’t new and has been happening over the past 20 years, citing that the West Coast is too expensive, overregulated, and has complicated labor issues compared to East and Gulf Coast ports. However, he believes that a collective bargaining agreement needs to be made to remove uncertainty from the discussion and attract more business to the West Coast.

 

Above is our summary that captures the highlights in order to save you time, but you can read the full article on Freight Waves

 

 

3. Retailers Aim to Lower Ocean Freight Costs Through Negotiations

 

 

US retailers are seeking to reduce shipping costs by negotiating new contracts with ocean carriers. Retailers such as Costco and Hobby Lobby are expecting to save millions of dollars as a result of lower ocean freight rates, allowing for price reductions on goods. Contract negotiations will begin this month at the annual TPM conference, where retailers will look to cut rates by half or more.

 

Last year’s surge in rates led to shipping volumes increasing, which contributed to supply chain bottlenecks and a doubling of transit times. Shipping companies such as A.P. Moller-Maersk have already reported falling earnings for this year. However, lower shipping rates are expected to help retailers in stabilizing prices. Although retailers warn that they still face other pressures from high energy, labor, and raw material costs, lower ocean shipping expenses are expected to provide some relief.

 

Above is our summary that captures the highlights in order to save you time, but you can read the full article on The Wall Street Journal

 

 

4. Major Shipping Companies Suggest Global Trade Slowdown

 

 

The world’s biggest shipping companies are signaling a global trade slowdown for 2023 due to supply chain bottlenecks easing and changing consumer spending habits. Maersk reported a fall in profit and revenue in Q4 2022, and it anticipates full-year underlying earnings of between $8 billion and $11 billion, a sharp decline from the nearly $37 billion total reported last year. Maersk’s CEO, Vincent Clerc, said that the company is expanding its presence in logistics to help manage volatility in the ocean-freight market.

 

Container import volumes into major US ports are expected to be down about 26% in February compared with last year and are projected to reach the lowest level since May 2020. Both Maersk and UPS have cited high inflation, rising interest rates, the war in Ukraine, COVID-19 disruptions in China, and labor negotiations in the US as contributing factors to the anticipated slowdown. Nonetheless, there are some signs that the decline in shipping volumes in the US is leveling off, as container import volumes in January were up 7.2% from December and just 0.3% behind the January 2019 pre-pandemic level.

 

Above is our summary that captures the highlights in order to save you time, but you can read the full article on The Wall Street Journal

 

 

5. Mexico’s Industrial Growth Signals Nearshoring Trend

 

An industrial park under construction last summer in Monterrey, Mexico. Photo: Marian Carrasquero/Bloomberg News

 

Mexico’s industrial hubs are growing as part of a trend toward nearshoring. This is due to prolonged Covid-related shutdowns in China, supply chain disruptions, soaring shipping rates, and geopolitical uncertainty caused by Russia’s invasion of Ukraine, according to economists and executives. In addition, free-trade pacts, a manufacturing-based economy, proximity to the US, and labor shortages are all cited as attractions for investors.

Demand for industrial space is outpacing supply along the border with the US, with insufficient electricity infrastructure limiting the speed at which manufacturers can move into Mexico. However, the Biden administration is encouraging regional production as part of its plans to bolster US manufacturing and shore up supply chains. After a decline to $28.2 billion in 2020 during the pandemic, foreign direct investment in Mexico rose to $31.4 billion in 2021 and reached $32.1 billion during the first nine months of 2022. Of that amount, around $11.6 billion was in manufacturing.

 

Above is our summary that captures the highlights in order to save you time, but you can read the full article on The Wall Street Journal

 

 

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