Wall-to-wall International Longshoremen's Association coverage
With few signs that a work stoppage can be avoided ahead of the strike deadline without government intervention, it promises to be the biggest issue in transportation until the end of the month - and hopefully not long beyond that.
Intermodal volume outbound from Los Angeles has taken off in the third quarter as the U.S. West Coast ports have gained share. (Chart: SONAR)
Eric Kulisch reports that air cargo shipments on Air Canada will be halted on Sept. 19 if pilots follow through on a threat to strike without a new labor deal. See article here.
Shippers to sound off about rail service
U.S. rail carload traffic has not grown in the past five years. During much of that period, many shippers have complained of service levels they consider subpar. (Chart: SONAR)
The Surface Transportation Board, the federal agency that regulates the U.S. freight railroad industry, is set to hear testimony on rail service during a hearing on Sept. 16 and 17. It's clear from written testimony already filed with the STB that shippers will give many examples of service failures that have forced traffic to the highway that would have otherwise been moved by rail. That includes the Private Railcar Food and Beverage Association, whose membership comprises numerous CPG companies, including Frito-Lay, Kraft Heinz and Molson Coors. See John Gallagher's article here.
On Monday's The Stockout show, FreightWaves' retail- and CPG-focused show, Grace Sharkey and I discussed e-commerce and the de minimis exemption, snacking as a major CPG growth area, the freight market, and changes that may be coming to Starbucks under its new CEO.
The hosts speculated that eliminating or downscaling the de minimis exemption, a shipping law relating to the paying of duty and taxes, may be an objective of the next administration and Congress regardless of the outcome of the November elections. Shein and Temu pay no import duties versus around $700 million and $200 million paid annually by competitors Gap and H&M, respectively. The exemption is causing U.S. Customs and Border Protection to use resources inefficiently, and some argue it helps facilitate drug trafficking as smaller packages receive less scrutiny. Plus, eliminating the exemption could be used as a sort of sanction against Shein's supply chain - while opaque, the use of forced labor within it seems likely.
The elimination of the de minimis exemption would likely reduce demand for cheap Chinese e-commerce shipments as prices rise. That would take pressure off the airfreight market, which has been tighter than historical norms in recent months. In addition, it would reduce demand for low-cost parcel services, such as UPS Smart Post, which has seen outsize growth in recent quarters, driven primarily by cheap e-commerce items.
See Monday's show here and check out the full The Stockout playlist.