Freight Right Global Logistics

💻 Several California lawmakers including Senator Alex Padilla and Representative zoe lofgren are urging the Biden administration not to proceed with plans to tighten restrictions on U.S. technology exports to China. They are concerned about the sharply declining market share and the potential negative impact such measures could have on U.S. companies.

A recent Reuters report, https://www.reuters.com/technology/new-us-rule-foreign-chip-equipment-exports-china-exempt-some-allies-sources-say-2024-07-31/, said that US Commerce Department plans to expand us powers to stop exports of semi conductor manufacturing equipment from foreign companies to Chinese chip makers but that new rule would also exempt countries including Japan, South Korea and the Netherlands.

CGTNAmerica’s Mark Niu interviewed industry experts Robert Khachatryan and Winston Ma on the issue.

Ma commented, "if you only apply sanctions to us companies without the global markets on the same page, then the us company will take the biggest hit".

Khachatryan also commented, "frustrated is probably a pretty good way to describe [the situation]. a lot of our customers are in californai including companies in the semi conductor indstry. it definitely raises the compliance cost for everyone."

The letter doesn't ask for a full rollback of the policy. Just more consistency and more evaluation that the rollout in the current state wouldn't damage US businesses.

Listen to the full interview below:

https://america.cgtn.com/2024/08/27/companies-say-plans-to-increase-export-restrictions-to-china-could-hurt-us-businesses

Companies say plans to increase export restrictions to China could hurt U.S. businesses See why some lawmakers are urging the Biden administration not to increase restrictions on U.S. technology exports to China.

🚃 The strike announced by Teamsters Canada and CN has been called off over the weekend. Canada's rail services are set to resume after nearly 10,000 rail workers ended their work stoppage.

The Canada Industrial Relations Board sided with a federal government order, requiring the country's two major railroads, Canadian National and Canadian Pacific Kansas City, to resume operations and enter binding arbitration to resolve their contract disputes.

💡 The labor board's ruling also prohibits further work stoppages during the arbitration process, effectively canceling a strike notice issued by the Teamsters union, which plans to appeal the decision in federal court.

While the ruling temporarily averts a crisis that threatened North American supply chains, it does not fully resolve the ongoing labor contract negotiations that have disrupted Canada’s rail networks throughout the summer. Although rail operations are set to restart this week, freight shippers may remain concerned about long-term labor stability.

The arbitration process, ordered by Labor Minister Steven MacKinnon, extends the expired contracts of the rail workers and aims to reduce freight delays and congestion across North America. However, the uncertainty surrounding future labor relations continues to cast a shadow over Canada's rail industry.

🛑Breaking from Lori Ann LaRocco: Teamsters Canada have issued a strike notice effective this Monday.🛑

We had mentioned late last week that a rail strike would have a devastating impact on shippers.

Disruptions to rail transportation would result in significant delays, increased costs, and potential losses due to spoiled or damaged goods. Shippers would struggle to find alternative transportation options, leading to skyrocketing shipping costs and severe supply chain disruptions.

Additionally, the uncertainty caused by a strike would make it difficult for businesses to plan and forecast their operations, obstructing economic growth. Aspects including:

1. Increased shipping costs: Truck transportation, as an alternative, is generally more expensive than rail.

2. Product shortages: Essential goods could become scarce due to transportation delays.

3. Supply chain disruptions: The ripple effects of a rail strike could cause widespread chaos in the supply chain.

4. Economic slowdown: Decreased efficiency and higher costs can stifle business growth and job creation.

It looks like that time is now for shippers to prepare for the strike ahead.

Lori Ann LaRocco on LinkedIn: #strike #teamsters #logistics #logisticsmanagement #rail #businessnews BREAKING NEWS Teamsters Canada serve CN with strike notice effective Monday. Press release At 10:00 a.m. eastern today, the Teamsters Canada Rail…

🚢 Freight demand experienced significant growth during the second quarter of 2024.

According to FreightWaves' Q3 Carrier Rate Report, re**er transportation witnessed robust activity in Florida and Texas, while dry van volumes surged primarily as a result of a marked growth in containerized imports among other significant discoveries.

Factors contributing to the increased import volume include: 🌎 geopolitical instability, the threat of tariffs, and potential labor disruptions at port facilities.

⬆ Anticipating sustained rate increases, shippers have accelerated shipment schedules. Additionally, the expansion of cross-border trade between China and Mexico is strengthening truckload demand as Chinese exporters seek to elude tariffs.

💵 Retail sales surged in Q2 due to restocking and consumer spending. However, rising credit card debt, iIncreasing rates of vehicle repossession, and declining consumer sentiment point to potential economic challenges. While manufacturers are hopeful for improvement in the second half of the year, overall sentiment remains cautious due to persistent inflationary pressures and economic uncertainty.

With this being said, there are concerns about the sustainability of current retail sales growth due to rising consumer debt and decreasing consumer confidence. Combined with ongoing inflation and uncertainty in manufacturing, businesses face a challenging operating environment.

❗ To succeed, companies must proactively monitor consumer trends, economic conditions, and global factors. Adaptable supply chains and data-driven strategies are crucial for long-term success.

⚠ The two biggest companies that move goods by rail in Canada, Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) have announced plans to lock out to nearly 10,000 Teamsters union workers. ⚠

They'ren engaged in a labor dispute with their employees, who are seeking improved wages, working conditions, and workplace safety measures.

⛔ A rail shutdown would have severe repercussions. Rail transportation is the backbone of Canada's supply chain, carrying essential goods such as food, fuel, and industrial materials. Disruptions could lead to widespread product shortages and inflationary pressures. Beyond the substantial financial losses, the rail disruptions could also cripple trade throughout North America.

🚇 To date, the government has opted for a hands-off approach, allowing the parties to negotiate independently. However, with significant differences persisting between the two sides, a resolution appears increasingly unlikely. A prolonged work stoppage could have far-reaching consequences for both Canada and the United States, given the interconnectedness of their economies.

A rail strike would have a devastating impact on shippers. Disruptions to rail transportation would result in significant delays, increased costs, and potential losses due to spoiled or damaged goods. Shippers would struggle to find alternative transportation options, leading to skyrocketing shipping costs and severe supply chain disruptions.Additionally, the uncertainty caused by a strike would make it difficult for businesses to plan and forecast their operations, obstructing economic growth.

1. Increased shipping costs: Truck transportation, as an alternative, is generally more expensive than rail.

Product shortages: Essential goods could become scarce due to transportation delays.

2. Supply chain disruptions: The ripple effects of a rail strike could cause widespread chaos in the supply chain.

3. Economic slowdown: Decreased efficiency and higher costs can stifle business growth and job creation.

Source: https://edition.cnn.com/2024/08/19/business/canada-rail-strike/index.html

📈 Truckload rates have increased with few options in sight to avoid them.

📊 According to Coyote Logistics’ FTL August Snapshot, compared to last months FTL rates, there’s been a slight downward shift of 1.2%. Notably, dry vans and open decks experienced a 2.0% decline, while re**ers remained steady at 0%.

🚛When we take a step back and compare this year to the last, FTL data reveals a consistent upward trend into inflationary territory driven primarily by increasing fuel costs, driver wages, and truck maintenance expenses.

Truckload rates have increased across the board:

📈 An overall rise of 6.4%
📈 Dry vans up by 6.7%
📈 Reefers by 6.9% and
📈 Flatbeds by 2.3%

This detailed understanding of the trends offers you valuable insights into market movements, allowing you to anticipate changes and make more informed decisions.

Avoiding increased costs altogether is will be challenging however shippers do have options available to them to still get their freight out and moving for the lowest cost that they can:

✅ Negotiate aggressively: Leverage the information about carrier costs and market conditions to negotiate better rates.

✅ Mode shifting: Evaluate the feasibility of shifting some freight to other modes of transportation, such as rail or ocean, if applicable.

✅ Load consolidation: Combine smaller shipments into larger loads to achieve economies of scale and potentially lower rates.

✅ Carrier diversification: Spread your freight across multiple carriers to reduce reliance on any single provider and potentially secure better rates.

Even though truckload rates are dropping due to market imbalances - discrepancies between supply and demand for transportation services.

These imbalances can lead to fluctuations in freight rates, capacity shortages, and operational challenges for both shippers and carriers. It's crucial to understand that carriers bought supplies when inflation was high, leading to reported financial losses. This information is vital for negotiating with carriers and ensuring that you make the most informed decision.

⏰ We're 2 days away from the 12th Annual Global Supply Chain Excellence Summit at USC Marshall School of Business!

The list of speakers presenting this year is the best yet. The Technology pannel specifically will feature freight and logistics' brightest minds tackling the questions of digital transformation and modernization in the field.

Freight Right's Robert Khachatryan will be presenting alongside Nick Vyas from USC's Marshall School of Business, Sam Vahie from Advatix , Kimon Drakopoulos and many more on the latest technological developments in freight and supply chain tech.

We're also pleased to be one of this year's Diamond-tier sponsors and sponsoring the event alongside a whose-who in freight and logistics including Maersk, project44, Röhlig Logistics, Port of Los Angeles, Port of Long Beach and more.

Don't miss out this August 15th-16th in Long Beach, CA!

https://lnkd.in/evmFkNgW

The 12th Annual Global Supply Chain Excellence Summit is quickly approaching at University of Southern California Marshall School of Business.

The list of speakers presenting this year is the best yet. The Technology pannel specifically will feature freight and logistics' brightest minds tackling the questions of digital transformation and modernization in the field.

Freight Right's Robert Khachatryan will be presenting alongside Kimon Drakopoulos and Nick Vyas from USC's Marshall School of Business, Jochum R. from FERO.AI , Sam Vahie, MBA from ADVATIX - Advanced Supply Chain and Logistics and Manju Devadas from Pluto7 .

Don't miss out this August 15th-16th in Long Beach, CA.

https://globalsummit.uscsupplychain.com/speakers-2024/

📦 In today's competitive business landscape, swift service delivery is paramount, particularly within the retail sector.

Proper and timely fulfilment demands a strategic embrace of lean management practices and meticulous inventory oversight to curtail waste and mitigate shortages. Inventory management emerges as a linchpin, orchestrating the seamless flow of goods from procurement to sale while adeptly discerning market dynamics and promptly fulfilling orders—a prerequisite for nurturing customer satisfaction.

Within this milieu, achieving operational efficiency entails a nuanced understanding of top-performing products, optimal stock thresholds, and judicious reordering strategies, all aimed at trimming costs.

Insights from Freight Right Global Logistics's Robert Khachatryan in a piece from Plaky's blog on inventory management highlight the tangible benefits of effective inventory management, including heightened customer satisfaction and substantial cost savings.

Inventory Management: Overview, Types, and Methods Inventory management involves tracking the flow of stock from the suppliers to the customers.

🚢 The recently concluded freight contract season, primarily wrapping up in the first two weeks of May, has left a turbulent wake in the shipping industry.

This season was marked by an aggressive tug-of-war between forwarders, carriers, and BCOs.

Despite initial appearances of stability with agreed rates around $1550 per container (Asia base ports to US West Coast), the aftermath reveals a landscape fraught with broken commitments, skyrocketing rates, and a palpable tension between key players.

As the dust settled on the contract agreements, it became apparent that many of these commitments, we hav noticed, were not upheld.

Containers that were supposed to move at the agreed-upon low rates did not, as forwarders blamed carriers for not releasing space, while carriers quickly implemented General Rate Increases (GRIs) and Peak Season Surcharges (PSS). This maneuver effectively doubled the Freight All Kinds (FAK) rate from about $3000 in mid-April to an astonishing $6200 by June 1st.

The fixed rate also saw a significant increase from $1550 to $2550 per container, not exempt from the PSS which currently stands at $1000 per container.

This abrupt change in rates has significantly disrupted the logistics plans of many companies. Businesses that budgeted for shipping costs based on initial contract rates are now facing unexpected financial strain. The volatility in shipping costs has also led to delays and inefficiencies in the supply chain, as companies scramble to adjust their logistics strategies.

Through extensive analysis and discussions with industry experts, clients and organizations, we've identified 3 possible solutions to this problem. Each are summarized below but go into greater detail in the link below and make up the thesis of Freight Right's Strategic Contracting™ offering:

🔵 Enforcing Accountability; Penalty-Based Obligations.

Transparent contract terms, a more collaborative experience to negotations instead of a zero-sum game, both shippers and carriers aim for a win-win, allowing for adjustments based on market conditions and/or stronger industry regulations to discourage predatory pricing.

🔵 Index Linking; Adapting to Market Fluctuations

Linking contract rates to a verified index, such as the Freightos Baltic Index (FBX), can help align contracted rates with market movements, reducing the incentive for carriers and shippers to renege on agreements.

🔵 Stabilizing the Market; Introducing Futures Contracts

Freight derivatives like FFAs help companies hedge against volatile freight rates. Trading futures offsets actual freight purchase losses with derivative gains, offering financial protection.

The volatile freight industry needs transparency, fair profits, and accountability for stable partnerships. Strategies like accountability, index linking, and freight derivatives help secure reliable agreements and stabilize the industry.

https://www.freightright.com/news/ocean-freight-rates-2024

⚠️ Major container freight changes ahead in the wake of the Francis Scott Key Bridge collapse in Baltimore. ⚠️

Port of Baltimore is closed for vessel traffic until further notice. As expected, east coast ports, including Port of New York, Philadelphia and Norfolk, are likely to experience significant congestion as ships reroute and adjust in the meantime.

The Maryland Port Administration (Maryland Port Authority) is advising that the port will remain closed for at least one month as of 3/26/2024.

🚢 For Export containers, no new export bookings will be accepted from Baltimore until further notice.

🚢 Shippers should prepare to be the ones to shoulder incoming re-routing costs for re-routing cargo to an alternate load port.

🗽 For Import containers, shippers with containers in Port of Baltimore's waters should prepare for those containers to be discharged at an alternate port.

🗽 Import containers not yet booked and not yet loaded at origin, shippers should be in close contact with the origin booking office for alternate routing options.

Forwarders, partners and 3rd parties associated working with shippers and should remain in close contact throughout this as it continues to develop. Customer service and account management teams should be prepared to field questions regarding new costs and arrival times for displaced containers and shipments.



Photo credit: Reuters

📢 The latest joint webinar with Freightos and Freight Right Global Logistics is now live!

Judah Levine from Freightos and Robert Khachatryan from Freight Right get into the latest in the world of freight and help shippers navigate:

🔵 Operational impacts in ocean and air logistics

🔵 Air and ocean rate impacts

🔵 Outlook for Lunar New Year and more

Follow the link below to watch the whole webinar 👇

Global Shipping Shifts: Impact from the Red Sea Crisis & Lunar New Year | Freightos The Red Sea crisis continues and Lunar New Year is approaching. Take a data driven look at how diversions away from the Suez Canal and the Chinese New Year are impacting the freight market. | Aired February 8th, 2024.

📦 Without question - the world of freight is busy right now.

From the Panama Canal's El Nino-driven drought and the global conflict spilling over to the Suez Canal and Red Sea affecting trade routes for the first time in decades in a significant way, all on top of a COVID hangover for many large shippers, geopolitical tensions and more.

Join Judah Levine from Freightos and Robert Khachatryan from Freight Right Global Logistics February 8th 12pmET for a webinar sure to break down all the challenges and events currently in the world of freight and what it means for shippers and carriers of all sizes. Expect to hear insights on:

✅ Operational impacts in ocean and air logistics
✅ Air and ocean rate impacts
✅ Outlook for Lunar New Year and more

Sign up here 👉https://freightos.zoom.us/webinar/register/5417067737379/WN_yepjCDhIQ7Ciibaces5EPA #/registration

📄 Freight insurance is among the lesser discussed topics in freight - until recently. 📄

A recent The Loadstar piece from Alex Whiteman delved into the subject, https://theloadstar.com/insurance-refusal-and-higher-premiums-adds-to-pressure-on-carriers/

Amid escalating Houthi attacks in the Red Sea, insurers are increasingly hesitant to provide coverage for vessels linked to the US, UK, or Israel.

War-risk premiums have spiked, surging from 0.01% of vessel value in early December to 1% currently. Some insurers are reportedly refusing war-risk coverage for vessels associated with the mentioned countries transiting the Red Sea.

While there's debate about actual insurance withdrawals, higher premiums are anticipated due to intensified attacks and carriers opting to avoid the region.

Diversions around the Cape of Good Hope, though a longer route, present challenges, as prolonged sea time increases exposure to risks. CMA CGM, accompanied by French warships, continues Red Sea transits, but others, like APL New York, are diverting around the Cape.

Insurance in the freight and logistics is unique in that there are two different kinds. The first is freight insurance, insurance used for forwarders to protect themselves against liabilities on their part that leads to lost or damaged goods, and cargo insurance, insurance used by shippers to insure their goods.

For the enterprise shippers cargo insurance is often a no-brainer considering the volume and stakes associated with the cargo but for smaller shippers it's often overlooked or seen as an excessive cost. One study published by Flexport found that approximately 80% of shippers are underinsured, https://lnkd.in/dWSMNiZs .

It's not surprising why for smaller shippers: it's another cost. Another cost on what is already a rapidly increasing price tag just to ship containers up 40% from pre-war times conservatively, https://lnkd.in/dukBeXeB (Freightos).

This is all on top of already squeezed margins for other outstanding macroeconomic conditions and air freight, soon, likely to experience similar price increases despite staying low for now, https://lnkd.in/eekm-vgb and the gamble itself that comes with insurance, a bet that something will happen to make the coverage worth it.

Insurance refusal and higher premiums adds to pressure on carriers - The Loadstar Insurers are refusing US, UK, and Israeli carriers cover for their vessels transiting the Red Sea, but alternative routes also risk premiums.

✈ Air cargo continues to become the next-best-option for shippers as rates continue to skyrocket for ocean containers - for now.

IKEA, Abercrombie & Fitch Co. and other major retailers towards the end of December have already begun pivoting away from ocean containers in instances where air cargo can suffice to dodge the price hikes, https://www.bloomberg.com/news/articles/2023-12-20/ikea-faces-delays-possible-supply-shortages-from-red-sea-snarl .

Others are now beginning to do the same according though that shift hasn't yet made its way to air cargo rates according to a piece earlier today released from The Loadstar & Alex Lennane but that reality could emerge sooner than later.

Increased demand for air cargo will drive rates up at a time when ocean cargo rates will likely remain elevated for the foreseable future.

The compounding effect will surely continue to put the squeeze on shippers and forwarders but for different reasons. Shippers will have to endure higher costs through any international means of moving freight, eating into what could already be reduced bottom lines as a result of larger macroeconomic conditions and prompt additional cost cutting and tough business decisions.

Forwarders will face a customer base dealing with those tough decisions but from the shipping side. Customers who can't afford not to ship by air or sea will likely opt for shipping less whenever they can to offset higher costs. The reduced freight volume will squeeze forwarders' bottom lines and force them into tough business decisions.

For the moment, both groups benefit from air cargo remaining the more affordable option. Forwarders should be cognizant for opportunities to advise their customers to consider air cargo if the option makes sense for the shipper in addition to the takeaways below.

1. Strategic Airfreight Adoption: Shippers should consider a surgical shift to airfreight as a solution to navigate Red Sea-related sea freight disruptions. Assess the urgency of shipments and, where feasible, opt for air transport to mitigate potential delays.

2. Monitor Rate Dynamics: Keep a close eye on airfreight rates, anticipating an impending change in response to the shifting logistics landscape. Expect rates to adjust as the impact of the Red Sea crisis begins to reflect in pricing, influencing decisions on transport methods.

3. Flexibility in Logistics Planning: Maintain a flexible logistics strategy by balancing the advantages and limitations of air versus sea transport. Evaluate the necessity and feasibility of using airfreight strategically based on specific shipping needs, keeping in mind potential disruptions in sea freight.



https://theloadstar.com/shipper-switch-to-air-freight-will-see-rates-take-off-next-week/

Red Sea Crisis Disrupts Ikea, Abercrombie & Fitch Shipments Ikea faces possible shortages of some products as shipping firms reroute vessels away from the Red Sea, while clothing retailer Abercrombie & Fitch Co. plans to shift to air freight to avoid snags.

🚢 As 2024 begins, the conflict in the Red Sea and Suez Canal looks like it will continue to have knock on effects for shippers and carriers for the months ahead.

Kareem Fahim, Leo Sands, Bryan Pietsch and Evan Halper published a new piece yesterday at the The Washington Post detailing the latest in the region around the US military & Houthi rebels, diplomatic and strategic initiatve underway for resolution and managing global shipping.

Freight Right's founder and CEO Robert Khachatryan, Margaret A. Kidd, CMILT, CPE™, program director and instructional associate professor of supply chain and logistics technology at the University of Houston, John Kartsonas, managing partner at Breakwave Advisors and Mohammed Basha, senior Middle East analyst at Navanti Group were among those that shared their thoughts on the latest firefights between the US armed forces and Houthi groups, and the implications for global shipping and commerce.

Shippers and carriers in the nearterm should be cognizant of these ideas while planning, advising and discussing the conflict with customers and partners:

🔵 Tenuous Diplomatic Balancing Act: The Biden administration faces a delicate diplomatic challenge, navigating tensions between the Houthi rebels and U.S. interests while Saudi Arabia pursues a peace deal with the Houthis in Yemen. The administration's cautious approach, balancing U.S. involvement and ongoing negotiations, reflects an attempt to avoid escalation but invites criticism from various quarters.

🔵 Implications on Global Trade: The Houthi attacks in the Red Sea have disrupted major shipping routes, compelling a redirection of vessels and posing a threat to critical commercial waterways. This disturbance exacerbates existing challenges in the shipping industry, adding strain to global trade post-pandemic, where shipping costs were already on an upward trajectory.

🔵 Complex Regional Dynamics: The ongoing conflict intertwines with broader regional dynamics, including Israel's military operations in Gaza, adding complexity to the situation. The interconnectedness of these geopolitical events highlights the potential for ripple effects across diplomatic relations and global trade, signaling a need for careful navigation amidst escalating tensions.

U.S. firefight with Houthi gunmen heightens shipping risk in Red Sea Sunday’s firefight, in which 10 Houthi militants were killed, appeared to be the first direct engagement between the U.S. and Houthi forces since Oct. 7.

🚢 The Suez Canal's knock-on effects are already starting and likely to continue for the short and medium term.

Among them - empty containers in wrong place when they're needed most.

Charlotte Goldstone from The Loadstar went in more detail on this very topic with insights from Lars Jensen, CEO of Vespucci Maritime, Robert Khachatryan, CEO of Freight Right Global Logistics and recent commentary from Flexport.

Here are 3 key points for shippers and carriers during this time:

🔵 Impending Container Shortages: Disruptions in the Red Sea will lead to imminent shortages of empty containers, impacting the global supply chain and intensifying around the Chinese New Year.

🔵 Vessel Rotations and Supply Disruptions: Vessel routes are expected to double due to diversions, causing immediate rate hikes and delays. Equipment deficits and port congestion are anticipated, affecting Asia's container availability as early as late January.

🔵 Strategic Preparedness Required: Shippers are advised to secure equipment well in advance, adjust inventory timelines, budget for increased transport costs, explore alternative routes, and closely monitor updates from logistics providers to navigate the forthcoming container scarcity.

https://theloadstar.com/empty-boxes-will-be-stuck-in-all-the-wrong-places-for-new-year-peak/

Empty boxes will be stuck in all the wrong places for new year peak - The Loadstar Empty container shortages are expected following diversions in the Red Sea, which could have ramifications into Chinese new year.

🚢 Businesses could be better equipped to handle the challenges facing trade through the Suez Canal than they think they are but there's still unquestionably headwinds ahead.

Freight Right's CEO Robert Khachatryan was on Fox Business' The Big Money Show earlier today to discuss the implications for business and commerce with Brian Brenberg, Kelly O'Grady and Jackie DeAngelis.

There are 5 key takeaways for logisitics professionals, shippers and carriers:

✅ Global shipping faces upheaval due to disruptions in the Suez Canal, driven by a severe Panama Canal drought and re-routing via the Suez.

✅ This shift from Trans-Pacific to Trans-Atlantic routes increases transit times by 20-30%, hiking operational costs and drastically reducing vessel capacity by 50%.

✅ Importers are redirecting cargo to the US West Coast, reminiscent of 2020's strain, overwhelming port and labor infrastructure.

✅Despite challenges, excess vessel capacity and new deliveries expected in 2024 offer hope, while recent disruptions have honed the industry's crisis management.

✅ While the disruption aligns with a slower quarter for ocean freight, concerns persist about impacts on restocking orders and potential supply chain disruptions.



Watch the full segment below:

Shipping costs could rise 20% due to Israel-Hamas war | Fox Business Video Freight Right Global Logistics CEO and founder Robert Khachatryan details how conflict in the Middle East can disrupt shipping routes through the Red Sea.