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Avoiding Logjams; Rising Airfreight Costs; Snarled Supply Chains

By Paul Page

 

A general cargo vessel carrying Schneider National intermodal containers leaving China's Port of Humen this week. PHOTO: SCHNEIDER NATIONAL

Frustrated shippers and logistics operators are turning to increasingly creative strategies to get around long delays in container shipping markets. Trucking and logistics provider Schneider National is taking an unusual dive into the use of ship charters, the WSJ Logistics Report’s Jennifer Smith writes, with the use of dedicated general cargo ships to get goods and the company’s intermodal containers across the Pacific. The operation is the first of its kind for Schneider, and it highlights the growing urgency at companies facing long delays, tight capacity and skyrocketing rates on trans-Pacific lanes. Direct shippers Walmart, Home Depot and most recently Dollar Tree have turned to dedicated charter operations to move goods around the bottlenecks. Schneider and other intermodal specialists are particularly hard-hit because they are trying to get 53-foot boxes delivered from China when such empty containers are a low priority for ocean carriers swamped with demand.

 
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Transportation

Freight operations at South Korea's Incheon International Airport earlier this month. PHOTO: YONHAP NEWS/ZUMA PRESS

Growing numbers of companies are looking to the skies for a way around the unrelenting disruptions that have locked down supply chains. Businesses including apparel brand owner VF and children’s clothing maker Carter’s have sharply scaled up their airfreight spending, the WSJ’s Kristin Broughton reports, as they try to meet strong consumer demand amid ongoing production delays and acute congestion in maritime operations. The move toward air transport carries big financial questions for shippers as rates remain high and capacity is tight because carriers are operating fewer passenger flights than before the pandemic. But skyrocketing ocean container rates may be closing the gap with airfreight prices, and U.S. importers fear their store shelves will be bare this fall without quick action. VF plans to spend $35 million more on airfreight this fiscal year than the year before, or $25 million more than it initially planned.

 
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Quotable

“We’re hearing from many of our customers that they’re significantly behind in their shipping. They’re looking for any solution.”

— Jim Filter, Schneider National’s chief commercial officer
 

Supply Chain Strategies

PHOTO: THE WALL STREET JOURNAL

The global supply chain, it turns out, can be squeezed into a single hot tub. Bullfrog Spas has seen demand for its devices soar during the pandemic as homebound consumers upgraded their backyards and sought relief from a stressful environment. The WSJ’s Austen Hufford, Kyle Kim and Andrew Levinson report the company has also absorbed many of the strains that have hit supply chains around the world this year, with goods tied up by snarls that have hit container shipping and trucking. On a typical day, its Herriman, Utah, factory takes delivery of 40,000 gallons of chemicals, 400 sheets of plastic and up to 60,000 additional components, some from as close as 80 miles away but many from far-flung suppliers. For its M9 model, parts come from seven countries and 14 states, and the company estimates they travel a cumulative 887,776 miles to make one hot tub.

 
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Number of the Day

$72.2 Billion

Total North American transborder freight moving by truck, by value, in June, 27.9% more than the same month last year and 10.1% ahead of June 2019, according to the U.S. Bureau of Transportation Statistics.

 

In Other News

The four-week moving average of new U.S. jobless claims fell to a fresh pandemic low. (WSJ)

South Korea became the first developed economy in Asia to raise interest rates since the beginning of the pandemic. (WSJ)

U.K. vehicle production fell 38% last month in its worst July since 1956. (MarketWatch)

Lordstown Motors named Daniel Ninivaggi, a longtime automotive industry executive and lieutenant to billionaire Carl Icahn, as chief executive. (WSJ)

British Airways is considering folding its short-haul passenger operations based at London’s Gatwick Airport into a new subsidiary. (WSJ)

Supply-chain disruptions including parts shortages and an acute labor shortfall threaten to hold back the U.K. economic recovery. (Financial Times)

Shipments of U.S. grains by barge were off 26% last week from the previous week and down 56% from a year ago. (Dow Jones Newswires)

Japanese electronics parts supplier Murata Manufacturing suspended production at a key plant because of a Covid outbreak. (Nikkei Asia)

Tyson Foods plans to build a $300 million poultry-production plant in Danville, Va. (Dow Jones Newswires)

Seaspan is preparing to order 24 medium-size container ships from a Chinese shipyard. (TradeWinds)

Bimco says container ship owners have ordered a record 381 vessels so far this year. (Dow Jones Newswires)

The New York Shipping Exchange raised $15 million to back expansion of its market for mutually enforceable container freight contracts. (Lloyd’s List)

The seafarer’s union at South Korea’s HMM voted to authorize a strike as the container line faces tough negotiations for a new contract. (The Loadstar)

DHL Supply Chain drivers in the U.K. serving retail chain Sainsbury’s approved a strike after an offer of a 1% pay increase. (Motor Transport)

India-based e-commerce delivery company Delhivery acquired business-to-business specialist Spoton Logistics. (Times of India)

Freight forwarder Geodis is starting its own freighter operation with a leased Airbus A330 jet. (Air Cargo World)

 

About Us

Paul Page is editor of WSJ Logistics Report. Write to him at paul.page@wsj.com.

Follow the WSJ Logistics Report team: @PaulPage, @jensmithWSJ, and @pdberger. and @LydsOneal. Follow the WSJ Logistics Report on Twitter at @WSJLogistics.

 
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