Bubble Chart showing the flow of good in the supply chain
aerial view of cranes at Port of Long Beach

U.S. West Coast Port Union Contract Negotiators Announce Tentative Deal

A tentative agreement on a new six-year contract covering U.S. West Coast Ports was announced by the ILWU (International Longshore and Warehouse Union), representing 22,000 workers, and the PMA (Pacific Maritime Association), representing 29 U.S. West Coast Port Terminal Operators. The previous contract expired in July 2022. The joint statement issued by the negotiators on June 14, 2023, indicated that the agreement was subject to ratification by both parties, which could take several months. The statement also indicated that the deal was reached with assistance from Acting U.S. Secretary of Labor Julie Su. Details of the agreement were not released. The agreement comes as sporadic interruptions occurred at several West Coast Ports over the last several weeks, including the temporary suspension of container operations on June 10th at the Port of Seattle due to a lack of workers reporting.

In separate negotiations, the ILWU representing Canadian West Coast Ports (Vancouver and Prince Rupert) voted on June 10th to authorize a strike should union leadership and maritime employers fail to come to terms on a new contract, which expired in March. A strike could occur after June 24th, following a mandated 72-hour notice period. Read more at Wall Street Journal (U.S. Unions) and Maritime Executive (Canada Unions)

Container ship in the Panama Canal

Drought at Panama Canal Causes Reduced Loads and Increased Surcharges

The Panama Canal Authority announced temporary restrictions on the draft of vessels using the neo-Panamax locks due to drought and reduced water levels. Containerships using the Canal will have to reduce their draft (e.g., to 44 feet) which is typically 50 feet. To meet the reduced draft, Ocean Carriers will need to reduce the amount of cargo (up to 40% less cargo on some vessels) or deploy smaller vessels. As a consequence, at least four Ocean Carriers have announced weight limits or surcharges effective June 1st (e.g., $500 per Container by Hapag-Lloyd). The increased ocean transit costs could be prohibitive for some Shippers with heavy cargo using the “all-water” route from East Asia to U.S. East and Gulf Coast Ports through the Panama Canal and instead utilize the Suez Canal route or a land bridge via intermodal rail from West Coast Ports. Read More (AJOT)

Trucks crossing the U.S. - Mexico border

U.S. 3PLs Expand Mexico Operations as Shippers Increase Nearshoring

U.S. Third-Party Logistics Providers (3PLs) are expanding operations in Mexico with increased nearshoring by Shippers to shorten lead times and reduce the supply chain risk of disruption of imports from China through U.S. Seaports. According to the U.S. Dept. of Commerce, cross-border trade with Mexico ($661 billion) surpassed China ($656 billion) in 2021.

U.S. 3PLs such as Ryder, Redwood Logistics, and BlueGrace Logistics recently announced the growth and expansion of their Mexico operations. Prologis, the top Industrial Real Estate (IRE) firm in the U.S., reported that the demand for IRE for companies in Mexico supporting nearshoring such as Tier 2 domestic suppliers and 3PLs grew from 15 million sq ft (MSF) in 2019 to 29 MSF in 2022. In Mexico’s main six markets, such a Monterrey, IRE space availability was only 1.1% in Q1 2023 with the highest rent growth in ten years (16% in 2022) and double-digit rent growth expected to continue in 2023. Prologis estimates 5-10 MSF of local logistics real estate demand for every $1 billion invested in Mexico auto factories. The new $5-8 billion Mexico Tesla assembly facility announced earlier this year could result in 25+ MSF of new logistics real estate demand in the region. Read more at SupplyChainDive and Prologis

Schneider electric truck

Schneider Opens SoCal Electric Vehicle Charging Depot

Schneider, a top U.S. Motor Carrier, announced the opening of its Battery Electic Vehicle (BEV) Charging Depot at its Intermodal Operations Center in South El Monte, CA. The 4,900 sq. ft. depot, over half the size of a football field, has sixteen 350 kW dual-corded dispensers, capable of charging 32 Class 8 trucks simultaneously. The chargers are capable of charging Schneider’s Freightliner eCascadias, with a range of 220 miles, at 80% capacity within 90 minutes. The site was funded through the Joint Electric Truck Scaling Initiative (JETSI), a project funded by CA state and local agencies. The charging infrastructure will support Schneider’s fleet of 92 BEVs planned to be fully deployed by the end of the year, all of which have been funded by JETSI and other organizations. The eCascadia has been utilized by customers such as Frito-Lay and Goodyear, to support their companies’ supply chain sustainability goals. Read more at Schneider

warehouse

Freight Forwarder Flexport Completes Acquisition of Shopify Logistics

Flexport, a top global Freight Forwarder, announced the completion of its acquisition of Shopify’s logistics business segment, which includes Deliverr, Inc. The acquisition by Flexport, a global technology-centric firm, with freight forwarding services for air, ocean, and ground service from factories to Ports of Entry, will extend Flexport’s services to the e-commerce market and last-mile delivery to consumers and retailers. In connection with the sale, Shopify received stock representing 13% equity interest in Flexport. Shopify, a global e-commerce company providing internet business infrastructure for millions of businesses in more than 175 countries, will utilize Flexport for its “Shop Promise” feature for fast delivery. The acquisition, which will position Flexport as a competitor to Amazon, includes Deliverr’s nationwide fulfillment network, including 3 million sq. ft. of warehouse space and warehouses within 100 miles of half the U.S. population. Read more at Flexport (prnewswire) and Shopify

DHL Express Air Cargo Plane

VF Launches New State-of-the-Art 1.2 Million Sq. Ft. D.C. in SoCal Inland Empire

VF Corporation, a major apparel company, announced the launch of a new 1.2 million sq. ft. state-of-art Distribution Center in the SoCal Inland Empire in Ontario, CA. The largest and most efficient facility among VF’s global network of 46 Distribution Centers, it will serve the company’s “Vans” and “The North Face” brands across company-owned retail stores, and wholesalers, and provide e-commerce fulfillment for consumers in CA, NV, AZ, and Southern Utah. The facility includes state-of-the-art automation with the capacity to ship 485,000 units per day and employ 550 people during peak periods. The facility is designed to support VF’s sustainability commitments and employee health and well-being, including an employee fitness facility, EV Chargers, LEED Gold, and WELL Gold certifications. Read more at VF Corp

DHL Express Air Cargo Plane

BNSF Railroad Introduces Free Web-Based Site Selection Tool for Rail-Served Sites

BNSF Railroad introduced a free web-based, site-selection tool highlighting rail-served buildings and sites available along its railroad network. The tool, called “LOIS” (Location One Information System), also identifies BNSF Certified Sites, that have been evaluated for rapid acquisition and development, including infrastructure, environmental and geotechnical standards, utility evaluation, and site availability, such as industrial parks located in Shafter, CA and Surprise, AZ. Read more at Railway Age and BNSF (LOIS)