News

Sep 25
0
Port strike

With Canadian Railway Labor Crisis Solved, All Eyes Turn to the US East Coast

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Today’s global supply chain is one defined by disruption. Whether from geopolitical crises, climate-related closures at major thoroughfares, or black-swan events, the fully globalized nature of today’s logistics industry can result in catastrophic ripple effects. Perhaps the next largest disruption in today’s supply chain is labor disruption. In this article, we’ll look at a recent disruption and analyze what it may mean for shippers that could be impacted by an ILA strike on the East Coast of the United States in 2024. 

Canadian Rail Strike: Significant Ramifications Follow Canadian Rail Strike

In August of 2024, the union representing Canadian National (CN) and Canadian Pacific Kansas City (CPKC) — the two largest rail carriers in Canada  — ordered a strike of their rank-and-file members. Members of the Teamsters Canada Rail Conference voted to strike over a number of disagreements with carriers, including proposed contract terms around shift scheduling, shift duration, and shift availability. 

The strike was resolved within 24 hours after a contentious ruling by the Canada Industrial Relations Board, but the impact on North American supply chain operations was undeniable: 

  • Major Canadian ports like Vancouver and Montreal saw notable increases in congestion as workers struggled to accommodate the backlog of freight. 
  • Manufacturers were forced to adjust production schedules following the labor stoppages, as components failed to arrive on time. 
  • Overland transportation providers struggled to compensate for the influx of volume at major inland logistics hubs. 

Although Teamsters have obeyed the ruling of the Canada Industrial Relations Board (CIRB), union leadership has made clear their intent to continue working toward improved conditions for their rank-and-file. “The right to strike is a constitutional guarantee for Canadian workers. Without it, unions lose critical leverage to negotiate better wages and safer working conditions. Corporate Canada will seize upon this, becoming less inclined to negotiate in good faith, knowing the government can now bust a union on a whim,” a Teamsters communication liaison wrote in a post on their website. “We intend to challenge the CIRB decision all the way to the Supreme Court if necessary.”

While the Canadian rail strike may, for now, be resolved, North American shippers are now preparing for a potential labor disruption with a far more devastating impact on North American transportation operations. 

With One Labor Worry Resolved, All Eyes Turn to the East Coast

For the first time in over 40 years, the International Longshoremen’s Association (ILA) is preparing to announce a strike among its 85,000 rank-and-file members over issues such as compensation, scheduling, and automation at ports. As the largest maritime labor union in the United States, an ILA strike would have an undoubtedly catastrophic impact upon supply chains well beyond the areas served by the union. 

“This administration will not stand by while employers show disrespect to our hardworking members,” ILA President Dennis A. Daggett said during an address on September 20 in New Jersey. “After October 1, they will never again be able to bench our members for 60 or 90 days over minor infractions. We are done with this system of profits over people. We will not accept automation replacing the men and women who built this industry with their blood, sweat, and sacrifice.”

An Oct. 1 ILA strike would see the temporary shutdown of five of the 10 largest ports in North America, with 43-49% of all U.S. imports then forced to divert to other ports, according to CNBC. For shippers, this means significant delays as shipments are rerouted through the Panama Canal to the West Coast of the U.S. Alternatively, some ports are planning on having vessels slow-steam as a means of delaying arrival until an agreement can be reached between unions and carrier leadership.

While port closures would be limited to the range of the ILA — specifically, the East Coast, Gulf Coast, and Great Lakes regions of the U.S. — many experts predict that the ripple effects of these closures could have a significant impact on North American supply chains as peak season approaches. 

“If a strike does occur, that means operations at the covered ports stop. Neither imports nor exports will move, vessels will start to back up outside the ports, containers will sit, and industries from retail to manufacturing to agriculture will be impacted,” Jonathan Gold, Vice President of Supply Chain & Customs Policy at the National Retail Foundation (NRF), said in a recent interview with the American Journal of Transportation. “For retailers, that means holiday shipments might not arrive on time. Manufacturers might not receive parts, materials, and supplies needed for production, which will lead to assembly lines shutting down. And farmers won’t be able to get their products to overseas markets, which could lead to lost sales.”

Despite the catastrophic implications of an ILA strike, a labor stoppage seems to be increasingly likely. Recently, the ILA rank-and-file voted unanimously to authorize a strike. Following this vote, an official representing the Biden administration confirmed that the President would not invoke a ‘cooling-off period,’ as prescribed under the Taft-Hartley act. With union members aligned in their ambition to strike and the federal government loathe to get involved, a complete stoppage of freight along the U.S. East Coast now appears to be all but inevitable.

With Labor Disruptions Brewing, It’s Time to Build Resilience

As shippers prepare for an ILA strike, many are looking for strategies to build resilience. Through a partnership with Gemini Shippers Association, shippers can leverage collective solutions against an increasingly turbulent maritime supply chain landscape.

Diversified Transportation Networks

Gemini Shippers helps members establish and maintain a network of reliable transportation partners, reducing dependency on any single carrier or port. By diversifying the supply chain and having multiple options for routing and logistics, shippers can better adapt to labor disruptions that impact specific routes or facilities.

Advanced Risk Management

With tools and strategies for proactive risk management, including scenario planning and contingency strategies, Gemini ensures that businesses are ready to face unexpected disruptions head-on. These tools help shippers anticipate the fallout of supply chain disruptions and develop plans to mitigate their impact. With proactive risk management through Gemini Shippers, shippers can easily identify alternative supply chain routes and adjust inventory levels to avoid disruptions.

Real-Time Monitoring and Alerts

With Gemini’s advanced digital solutions, shippers gain access to real-time tracking and monitoring of shipments. This visibility enables shippers to quickly identify and respond to disruptions caused by labor issues, adjust plans on the fly, and communicate effectively with partners to minimize delays and maintain supply chain stability.

Gemini Shippers Association: Effective Resilience in a Dynamic Supply Chain

As shippers around the world prepare for the impact of the ILA’s 85,000 rank-and-file going on strike, resilience in the face of major labor disruptions is quickly becoming a vital component of effective supply chain strategies. Through membership in the Gemini Shippers Association, shippers can leverage a diversified transportation network, advanced risk management strategies, and real-time monitoring and alerts to ensure that supply chains remain functional regardless of labor disruptions. Join Gemini today to build resilience in a highly dynamic global supply chain. 

Jul 31
0
Peak Season

Looking Ahead: Strategic Positioning for Peak Season 2024

By | Gemini News | No Comments

Peak season 2024 promises to keep supply chain pros on their toes with the usual blend of ever-evolving market dynamics and the not-so-usual geopolitical curveballs that have already shaped the first half of the year.

The maritime peak season always represents a significant time in global trade, with shippers looking to beat the clock and the competition to get goods across the ocean at the right time and price to meet consumer demand and keep inventories in balance.

The shippers that win this peak season will be those that understand the market dynamics at play and prepare for the potential challenges they may face. We’ll outline those challenges in detail after quickly getting our bearings about peak season.

Understanding Maritime Peak Season

Peak season is an annual time with increased demand, higher rates, and container space shortages as shippers prepare for global holidays and major commercial events. 

Demand typically peaks August through October. It’s also affected by Golden Week (Oct. 1-7 in 2024), when East Asian countries almost completely shut down commercial and manufacturing activities.

During peak season, the price to ship consumer goods, including electronics, toys, and textiles, can quickly rise, with perfect-storm scenarios pushing spot container rates from a few thousand dollars per forty-foot equivalent unit (FEU) to $10,000 and $15,000. Let’s take a closer look at what could influence those levels of rate fluctuation this year.

A Disrupted Market Presents Hurdles for Shippers

Rarely does peak season mean smooth sailing for shippers, but 2024 certainly presents some unique challenges.

Current Conditions in Container Shipping

Red Sea vessel diversions and rising port congestion have eaten into the extra capacity that was available in late 2023, and impending U.S. tariffs and possible East and Gulf Coast port strikes have led many shippers to front-load their peak season shipments. Haunting memories of historic pandemic-era port backlogs are further pulling forward demand, as Bloomberg predicted global shipping strains to extend well into the second half of 2024.

Container rates are now in the range of $7,000 to $8,000 per FEU, with potential to hit five figures in a most likely scenario of a slow decrease in demand later in peak season, but a confluence of ongoing Red Sea diversions, sustained demand, and port strikes could force spot rates higher.

Forecast Trends and Scenarios

High port volumes are projected to continue, including in Singapore, the world’s second-busiest port, where shipments are up nearly 30% year over year. Many are projecting loaded import volumes at the top 12 container ports to remain above 2 million twenty-foot equivalent units (TEUs) through October, a threshold only achieved in two months in all of 2023.

Factors Influencing Peak Season Dynamics

While many economic indicators like U.S. inflation levels would seem to project reduced consumer spending, current consumer activity shows active demand, with shippers happy to meet the demand.

In the midst of a tumultuous election year in many countries throughout the world, changing political dynamics will certainly have their say as well, both in policy shifts and the potential for more fallout from the Ukraine-Russia and Israel-Hamas conflicts.

Of course, climate conditions could have an impact on shipping routes as well, as evidenced by the Panama drought over the last year limiting volumes through the Panama Canal. Hurricane season in the U.S. and any other number of weather events also could impact this year’s peak season.

With peak season 2024 already showing its hand, it’s time for shippers to prepare. 

Building Resilience for Peak Season 2024

While peak season presents its fair share of unpredictability, shippers can take actions to meet the challenges that will inevitably come.

Planning Ahead

Simply knowing what’s happening in the market and planning shipments accordingly can go a long way toward mitigating the impacts of demand peaks and supply chain disruptions. With an earlier start to peak season, shippers are wise to get a head start on securing container space to get optimal container availability.

Rate Stability

Spot rates inevitably fluctuate, but shippers can gain access to greater space allocation and more stable long-term rates via participation in a shippers association. By pooling members’ freight together, a shippers association can leverage the collective power of larger freight volumes to negotiate better rates per FEU and TEU.

Flexibility and Communication

When push comes to shove, flexibility will always need to be a core strategy for shippers with the high number of variables impacting rates. But again by combining volumes via a shippers association, each individual shipper can gain access to more flexible shipping schedules. Proactive communication with logistics partners is always a best practice to achieve optimal outcomes even in less-than-optimal peak season conditions.

Join the Gemini Shippers Association to Optimize Your Peak Season 2024 Results

Whatever happens during peak season 2024, becoming part of a shippers association can give you the leg up you need to navigate the challenges and get your freight where you need it when you need it at the price you want it.

Join Gemini today to unlock your best peak season potential.

Jul 23
0
Market Volatility

Rate Lock Solutions: Shielding Shippers from Market Volatility

By | Gemini News | No Comments

What power would a single boulder have at stopping the powerful waves of a storm surge approaching a vulnerable marina? But piles of boulders together can form a breakwater to shelter boats and shorelines from intense wave energy. There’s power in numbers.

Likewise, what power does a single shipper have at stopping the powerful market forces that drive transportation rates up? But the collective bargaining power of many shippers together can shield vulnerable budgets from the whiplash of market volatility. 

While experienced supply chain practitioners can recognize many of the winds of change driving typical market cycles and stay a step ahead in the delicate rate negotiation dance between shippers and carriers, the COVID moment taught many that another curveball could always be around the next corner.

Let’s take a closer look at the “new normal” that today’s shippers need to navigate, and how the power in numbers can pay off for shippers wanting a better outcome in their next budget.

Today’s Shippers are Tasked with Operating in a Volatile Logistics Landscape

In a previous article on navigating rate fluctuations, we walked through half a dozen factors that contributed to rate volatility in the first half of 2024, from the Red Sea Crisis and geopolitical shifts to weather events and added carrier surcharges. Each included links to articles detailing the impacts on freight rates, so we won’t rehash those in-depth here. One example will suffice: when Houthi rebels attacked cargo ships in the Red Sea, prices on some lanes from Asia to Europe that typically go through the Suez Canal surged nearly five-fold. And that link isn’t from a niche transportation publication. It was J.P. Morgan assessing the global economic impacts of the shipping crisis.

While obviously not the first time piracy has taken place on the open seas, even the best prognosticator probably didn’t have Houthi hijacking on their transportation budget bingo cards. Because nobody could have. Like COVID. Like the Baltimore bridge collapse. Like the Ukraine war.

Manufacturing indices, unemployment reports, inflationary pressures, consumer spending, and countless other global trade trends to watch can be leading and trailing indicators of what will happen to rates overall, but the bottom line is there will always be unpredictable rate volatility driven by real-time, impossible-to-predict events.

A Strong Foundation on Unsteady Ground: Rate Stability for Improved Business Resilience

Market analysis and forecasting are important, but just as a meteorologist can give an indication of what weather may be coming, there’s a difference between knowing a storm is on the way and making tangible preparations for the storm.

Some of the more well-known ways to achieve rate stability include:

  • Carrier Diversification – Just as a diversified investment portfolio reduces risk for future retirees, spreading freight across a variety of capacity providers can minimize risk for shippers.
  • Shipment Consolidation – This is another example of power in numbers, but with cargo itself. Smaller shipments are combined to negotiate bulk discounts.
  • Contract vs. Spot Balance – Shippers often try to secure a mix of contracted capacity over long durations vs. spot market capacity that fluctuates day to day, and shift the amount of each depending on the rate environment at the time, but overplaying a hand in one market condition can come back to bite in another.

But there are some lesser-known ways, like the collective bargaining power of a shippers association, which lets even small shippers band together to bring greater combined volumes to the table, that can then work to secure more fixed rates for longer terms and with more reliable space allocation. But not all shippers associations are created equal.

Gemini Shippers: Stability in Uncertain Times

The Gemini Shippers Association procurement experts secure fixed rate contracts for each member based on individual rate and service requirements. We also go beyond a typical shippers association to streamline the entire process from quote request to shipment arrival with rate search, tracking and tracing, rate auditing, and data analytics tools.

Gemini rate lock solutions provide a shield from today’s increasingly volatile logistics environment, using a simple process that starts with a consultation and continues with ongoing membership resources and customer service.

Shield Yourself From Market Volatility with Gemini Shippers

When the next storm comes and the waves of rate hikes rise, will you weather the storm alone, or will you gain rate security and stability by joining forces with other member shippers via the Gemini Shippers Association?

Join Gemini today to get all the benefits of membership in our not-for-profit collective that’s been serving members for nearly 100 years. We’re eager to serve you in a mutually confidential environment.

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