Railroad Union Agreement Adopted by Congressional Resolution
The U.S. Congress and President acted to force a resolution to the railroad union contract negotiations which lasted 3 years. On Dec. 2nd, the President signed a resolution passed by Congress requiring the Class I Railroads and railroad workers to adopt the Agreement established by the Presidential Emergency Board on August 16, 2022, in accordance with the Railway Labor Act. The action averted a potential rail strike on Dec. 9th, after four of the twelve rail unions voted to reject ratification of the agreement (BMWED, BRS, IBB, SMART-TD (less Yardmasters), representing a majority of the 115,000 national railroad workers. The 5-year Agreement retroactive from 2020, expires in 2024.
Several of the unions representing the 115,000 national railroad workers voted on the ratification of the tentative labor agreement made by union leaders with the Class I railroads in September. Of the twelve unions which must ratify the agreement, two have rejected the contract (BMWED & BRS), seven have approved the contract (ATDA, BRC, IAM, IBEW, NCFO, SMART-MD, TCU) and three have yet to vote (BLET, IBB, SMART-TD). The remaining three unions are scheduled to vote by November 21st. The unions which have rejected the agreement continue to negotiate citing paid sick leave as an issue and have set December 9th as a deadline before labor action could occur, which is after the return of Congress from Thanksgiving break, should they act to avoid disruption.
New CA Law Limits Equipment D&D Charges on Truckers & Shippers
A new CA law effective January 2023 (AB 2406) limits Marine Terminals and Equipment Providers from assessing Demurrage & Detention (D&D) fees on Trucking Companies, Shippers, or other Intermediaries which hold equipment (e.g., Containers) beyond the allowed free time (e.g., 5 days) if the causes are beyond their control (Terminal congestion, lack of appointments, etc.). According to Container xChange (www.container-xchange.com), fees for equipment demurrage (within the Terminal) and detention (outside the Terminal) at the Ports of Los Angeles/Long Beach are among the highest in the world (e.g., $2,730 avg. for a container held more than 14 days) and global average D&D charges in 2022 have risen 12% since pre-pandemic levels.
West Coast Port Labor Union Contract Negotiations Continue
Contract negotiations, which began 7 months ago, between the ILWU, representing 22,000 workers at West Coast Ports and the PMA, representing 29 West Coast Port Terminal Operators continued after contract expiration in July. Negotiation details are not made public. Port operations have continued throughout the negotiations without significant disruption. According to the Port of Los Angeles, Oct. 2022 cargo volume decreased by 25% from Oct 2021 and is 6% down from last year’s record pace. The causes include lower current demand, an early shift in seasonal trade patterns, and Shipper diversion of discretionary cargo to East & Gulf Coast Ports to avoid potential disruption from labor action. Gene Seroka, Executive Director of the Port of Los Angeles, stated he expected a deal by the early part of 2023.
A Los Angeles Police Task Force announced they have dismantled two theft rings involved in the theft of $18 million worth of merchandise stolen from railroad cars in the Los Angeles region over the past year. The task force, which included multiple law enforcement agencies, made more than 700 arrests and recovered millions of dollars of stolen goods. Rail operators have increased security measures around rail lines in recent months, including extra security, lighting, more secure locks, and enhanced monitoring and response by specialized agents. Read more at Los Angeles Times
MSC Receives First Aircraft in New Integrated Air Cargo Service
MSC (Mediterranean Shipping Company), the top Ocean Carrier Company, announced the delivery of its first MSC Air Cargo-branded aircraft to be operated by Atlas Air. The Boeing B777-200F Freighter is the first of 4 aircraft, which will fly on routes between China, the U.S., Mexico and Europe early next year. MSC joins Maersk and CMA CGM, the 2nd and 3rd largest Ocean Container Lines, resp. providing air cargo service to complement their maritime container services. The integrated service provides options for Shippers requiring higher delivery reliability to overcome supply chain disruptions, especially important for time-sensitive and high-value goods. Read more at MSC
Tesla Delivers First Production Model Heavy-Duty Battery Electric Vehicle
Telsa delivered the first of its production model Class 8 battery electric vehicles to PepsiCo at a presentation held at its Giga production facility in Nevada on December 1st. The Tesla “Semi”, with a range of 500 miles per charge, is suitable for use for regional hauls, where the truck can return to base on the same day. PepsiCo reportedly ordered 100 units in 2017 and will use the trucks to support their beverages plant in Sacramento and Frito-Lay plant in Modesto, CA, which installed a Telsa “Megacharger” charging station. Telsa has a production target of 100 units this year and 50,000 units per year in 2024 at plants in Nevada and Texas. Fully loaded at 82,000 lbs gross combination weight, the Semi is reported to operate 2.5 times cheaper per mile than diesel (in CA) (< 2kWh per mile), reach 0-60 mph in 20 seconds, achieve highway speed limits up a 5% grade, and recharge up to 70% of range in 30 minutes. The current price for the Semi has not been disclosed. An initial base price of $180,000 was announced in 2017, which is slightly higher than a high-end diesel. Read more at Tesla & TopElectricSUV.com
Prologis Debuts EV Charging Infrastructure Service at 3PL Performance Team
Prologis, the top Industrial Real Estate firm in the U.S., announced the installation of 2 electric truck charging stations at Maersk Performance Team Third Party Logistics facilities in Commerce and Santa Fe Springs, CA. The “Prologis Mobility” infrastructure-as-a-service offering provides turn-key energy procurement, permitting, design, installation, operations monitoring, and maintenance of EV charging stations at Prologis and non-Prologis-owned facilities. The installations at Performance Team provide more than 4 megawatts of charging capacity to support simultaneous charging of up to 38 of their new zero-emissions fleet of Volvo VNR Electric Class 8 Trucks serving the SoCal Ports and region. Read More at Prologis & Maersk
Industrial Real Estate Occupier Survey Reveals Major Pain Point: Labor & Skills Shortage
According to the CBRE 2022 U.S. Industrial & Logistics Occupier Survey (November 2022), occupiers expect to keep expanding their real estate footprints despite economic uncertainty, labor shortage, and supply chain disruptions. Survey respondents were asked, “Which of the following factors represents the biggest concern for the growth of your business?” The number ONE answer was Labor & Skills Shortage (61%). Read more