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Locked Into Port Logjams; Raising Parcel Rates; Brokering a SPAC

By Paul Page

 

The waters off the ports of Los Angeles and Long Beach in April. PHOTO: LUCY NICHOLSON

The backup off the Southern California ports is only getting worse as more ships join the logjam. The record-breaking flotilla in the Pacific waters surpassed 70 vessels in recent days, according to the Marine Exchange of Southern California. The WSJ Logistics Report’s Paul Berger writes that the relentless growth of the queue shows that shipping lines and cargo owners are effectively boxed in, with no real alternatives to the inbound supply chains that carry thousands of containers a day through the ports of Los Angeles and Long Beach and into distribution networks deep into the U.S. Container lines have diverted ships to West Coast ports including Seattle and Oakland, only to see backups quickly form at those smaller facilities. Shipping goods to the East Coast takes more time and is more expensive. For carriers and shippers, bottlenecks in landside supply chains suggests there’s no place to hide from the congestion.

 
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Transportation

'The carriers are incredibly bullish and confident that they are holding all the cards,' says Trevor Outman of Shipware. PHOTO: MIKE LENNIHAN/ASSOCIATED PRESS

U.S. parcel shipping rates are going up faster than they have in nearly a decade. FedEx is hiking its prices an average of 5.9% next year across most of its services, the WSJ’s Paul Ziobro writes, the first time in eight years that the carrier or rival United Parcel Service has strayed from their lock-step annual increases of 4.9%. The hefty increase signals that FedEx has strong confidence that the red-hot demand for package shipping driven by e-commerce will extend into next year, and that the parcel carriers will continue to have leverage on contracts. Online sellers have already had to cope with price increases during the pandemic, including double-digit increases the parcel carriers imposed last year after lockdowns drove big volumes of home deliveries. FedEx and UPS also have added surcharges and other fees for items like large packages throughout the pandemic that have further increased shipping costs.

 
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Quotable

“It’s a vicious cycle that we are stuck in and until that port can get on top of things I don’t see things stabilizing throughout the trans-Pacific trade.”

— Jordan Haws, supply-chain director at furniture retailer Malouf, on the backups at the ports of Los Angeles and Long Beach
 

Transportation

PHOTO: GETTY IMAGES

The financial makeover of the digital freight sector is picking up steam. Transfix plans to go public through a merger with a blank-check company, the WSJ Logistics Report’s Jennifer Smith writes, in a deal that will bring the digital freight broker around $375 million in new backing and a potentially bigger role in forces reshaping the freight-middleman business. The planned merger values Transfix at $1.1 billion and provides support for more investment in technology and a place in the mergers-and-acquisitions activity companies are using to jockey for market position. With some $184 million in revenue and an adjusted loss of $27 million last year, Transfix has been outpaced by the rapid growth at Uber Freight, which is buying transportation management heavyweight Transplace. Executives at eight-year-old Transfix say they have been waiting for the right moment to scale up. Going public suggests that they believe the moment is here.

 
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Number of the Day

780,000

China’s coal imports from Australia, in metric tons, in the first seven months of 2021, down 98.6% from the same time last year, while China’s coal imports from Indonesia have grown 45.2% to 110.9 million metric tons, according to Bimco.

 

In Other News

CVS Health is racing to hire thousands of workers as staffing shortages prompt stores to reduce services and at times turn away customers seeking vaccinations. (WSJ)

The U.K. is considering measures to soften the fallout from a sharp increase in energy prices that has put power suppliers out of business. (WSJ)

India will resume exports of Covid-19 vaccines starting next month. (WSJ)

More companies are tying the interest rates on their corporate loans to environmental and other sustainability targets. (WSJ)

A shortage of carbon dioxide is wreaking havoc on the U.K.’s meat supply chains. (Financial Times)

Nucor plans to build a $2.7 billion steel mill in the U.S. Midwest to serve Northeast markets. (MarketWatch)

U.S. toy suppliers are racing to outrun severe supply-chain congestion to get goods in stores ahead of the holidays. (Reuters)

Semiconductor experts say fake chips are making their way into the sector’s straining supply chains. (Nikkei Asia)

The U.S. national average price for a gallon of regular gasoline at the retail level is at a seven-year high. (Dow Jones Newswires)

China’s soybeans imports from the U.S. plunged nearly 90% in August as volumes from Brazil surged. (Sprout Wired)

The average time container ships spend in ports world-wide rose 11% in the first six months of the year. (ShippingWatch)

Several bidders are lining up for a controlling stake in the Greek port of Heraklion on Crete. (Lloyd’s List)

CMA CGM is patching a leak in its customer information data after an attempted cyberattack. (Journal of Commerce)

Canadian National Railway is setting an aggressive profit-improvement plan as it faces criticism from activist investor TCI Fund. (Trains)

Surging warehouse construction is boosting Atlanta’s economy, but is adding truck traffic and raising tensions in neighborhoods near the facilities. (Atlanta Journal-Constitution)

Boeing supplier Spirit Aerosystems is building a $45 million, highly-automated logistics center in Wichita, Kan. (Wichita Eagle)

Ahold Delhaize USA opened a 1 million-square-foot distribution center in Manchester, Conn., to serve its Stop & Shop chain. (Supermarket News)

Locus Robotics is acquiring fellow warehouse automation specialist Waypoint Robotics. (Modern Materials Handling)

A study shows a majority of companies have shifted their supply-chain focus from controlling costs to ensuring supply. (DC Velocity)

 

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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