The following is an archived collection of our weekly insights throughout the month of May. Those who had signed up to our Interlog Insights newsletter received each week’s update to their inbox on the original release date. If you like what you see below, please feel free to sign up yourself to get these updates right as they come!
This month's insights
- Port of Baltimore
- Import Volumes
- 2024 Labor Outlook
Week 3 - Originally released May 17
Insight: Baltimore Bridge Collapse - Initial Findings on Disabled Container Ship Released
Recovery efforts have since been in full swing at the Port of Baltimore following the fatal collapse of the Francis Scott Key Bridge. While officials clear the rubble and the port prepares to gradually welcome back ship traffic, federal investigators have provided their initial explanation on how the Dali, a large container ship, lost control of its functions, ultimately veering into the bridge’s support columns and causing the structure to topple.
On May 14, the National Transportation Safety Board (NTSB) released a preliminary report detailing what caused the Dali to become disabled leading up to the Mar. 26 crash. The NTSB, a U.S. federal agency, found that the 947-foot-long ship suffered two electrical blackouts when electrical breakers unexpectedly tripped, immobilizing the engine and navigational control of the vessel.
Detailed in the agency’s report, the ship’s first blackout occurred at 1:25 a.m., four minutes prior to its impact with the bridge, when its breaker system tripped, shutting down cooling water pumps for the engine and steering gear pumps. With the loss of these functions, the Dali’s main engine ceased and steerability of the ship’s rudder was lost.
In response, the vessel’s emergency generator activated, as the Dali’s crew worked to manually fix the tripped breakers and restore power to the main engine. During this time, the ship’s senior pilot also ordered an anchor to drop, while calling in for tugboats to assist. The distress signal was received by both the Maryland Transportation Authority and the U.S. Coast Guard.
At 1:27 a.m., the ship’s crew was able to restore electrical power, but shortly after, when the ship was only 0.2 miles from the bridge, a second blackout happened. At this point, the main engine remained incapacitated and there was no propulsion to assist with steering.
Two minutes later, at 1:29 a.m., the Dali’s starboard bow struck into one of the support columns of the bridge at 7 miles per hour. Following the collision, six spans of the bridge subsequently toppled into the harbor.
The NTSB said it will continue to investigate the failures in the ship’s breaker system. The agency will also continue examining damage to the ship once debris are cleared and the vessel is moved to a shoreside facility.
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Insight: Updates on Labor Negotiations in North America
Since our insights last Friday new information has come out regarding contract labor negotiations on the U.S. East/Gulf Coast and in Canada.
Canada
The Canada Industrial Relations Board (CIRB) has been called to assess whether a potential strike by CN CPKC rail workers could impact the wellbeing of Canadians, the JOC reports. The CIRB has issued May 31 as the deadline for the parties to submit information and rebuttals – Central Alberta Online reports.
Right now, this has temporarily put a stop on the potential for a strike to occur. Before this, the earliest a strike could have happened was as early as May 22. It is unclear when a resolution will be reached. This continues to be a fluid situation and we expect more information to come out soon.
U.S. East/Gulf Coast
Local negotiations involving the International Longshoreman’s Association and the United States Maritime Alliance are expected to wrap up on May 17, the JOC reports. An important note: this does not mean the full master contract has been agreed to, this just refers to the local contract negotiations wrapping up and the full master contract negotiations to continue.
In a joint statement from leadership of both parties, they remain confident that a master contract will be reached without delays and disruptions to cargo shipments. This is a more optimistic tone than previous statements from the parties’ respective leadership.
Again, the situation remains ongoing, and a lot can happen between the contract deadlines. But things, so far, remain on an optimistic track.
Week 2 - Originally released May 10
Insight: Retailer Group Upgrades U.S. Import Forecast Yet Again
Yet again, trade association National Retail Federation (NRF) has revised its U.S. import forecast, anticipating even more inbound volumes coming through the country’s gateways.
In a May 8 release of its Global Port Tracker (GPT) NRF upgraded its outlook from positive in April to outright confident in May. The association now forecasts that monthly import volumes at U.S. ports will stay above two million twenty-foot equivalent container units (TEUs) through the summer and into early fall.
“We haven’t seen numbers this high for this many months in almost two years,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said.
The latest forecast indicates NRF’s assuredness that, despite uncertainties over the greater U.S. economy, the demand to move imports will remain steady as retailers situate their inventories to account for more consumer spending.
“Regardless of what headlines about the economy might say, consumers are shopping and retailers are making sure they have merchandise on hand to meet demand. The supply chain has adjusted to recent disruptions and retailers will work to keep the flow of goods moving smoothly as the back-to-school and holiday seasons approach,” Gold added.
NRF now expects May imports to tally at 2.06 million TEUs, 6.8 percent higher than May of last year. When compared to the association’s April forecast, the upgraded year-over-year gain is more than a single percentage point higher. Last month, NRF expected a 5.5 percent increase for May 2024.
The summer months, all forecasted to be above two million TEU volume, are also expected to enjoy year-over-year gains: 10.7 percent for June; 5.5 percent for July; and, 7.1 percent for August. For September, NRF anticipates a monthly volume of 2.04 million TEUs, a marginal increase of 0.5 percent year-over-year.
August is expected to be the best-performing of the first nine months, and likely the entirety, of 2024 as NRF posts an anticipated volume of 2.1 million TEUs.
NRF has yet to release forecasts for the closing three months of the year—October, November, and December.
Insight: Dealing with Potential Labor Strikes
Industry labor negotiations in the last couple of years have become more at the forefront. While labor negotiations are common practice (in other industries as well), we have seen these issues being brought to our attention more than usual.
A little over a year ago, labor negotiations on the U.S. West Coast were on everyone’s radar. How was this going to play out? How much cargo volume would be shifted to the East Coast? How did we get to this point? What happens if a strike does occur? Those questions and more were at the top of some industry stakeholders minds.
Here we are again.
On the East and Gulf Coast dockworkers and their employers continue their contract negotiations. Their contract expires at the end of September and union leadership has expressed to go on strike, if an agreement is not reached by the day of expiration.
In Canada, rail unions earlier this month, voted to authorize a strike. As we discussed last week, those parties are currently in the “cooling-off” period for 21 days, during which the unions cannot go on strike and their employers cannot issue worker lockouts. One of the key issues in their negotiations is worker pay.
Whether a strike happens, remains unclear. However, if one occurs, it certainly would impact freight rail and operations at the Port of Vancouver and Prince Rupert.
Having contingency plans in place is important, you never know when something unexpected may (or may not) happen. Interlog will continue to stay up to date on this.
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Week 1 - Originally released May 3
Insight: Canada Rail Union, Employers Reach an Impasse in Labor Talks
Negotiations between Canadian rail unions and their employers have yet to reach an agreement on a new contract.
The contract between the parties expired at the end of 2023. At the beginning of March, federal mediators came into the picture to try to assist with the talks, but no resolution has occurred.
Who?
Unionized rail workers represented by Teamsters Canada Rail Conference (TCRC) and their employers Canadian Pacific Kansas City Southern (CPKC) and Canadian National railroads.
The rail union represents almost 10,000 workers with CPKC and CN – this includes conductors, engineers and yard workers, per the JOC.
What’s next?
On May 1, the rail unions released the results on whether to authorize a strike. They overwhelmingly voted yes (98 percent).
As of now, the parties are in a mandatory 21-day “cooling-off” period. The rail unions may not issue a strike, nor the employers issue a worker lockout, until the “cooling-off” period ends.
CPKC said in a press release that they are set to meet with TCRC leadership this week and again the week of May 13.
What happens if the union wants to go on strike?
Once the “cooling-off” period ends and IF the union wants to go on strike, they would need to give CPKC/CN a 72-hour notice before striking – this could happen as early as May. For example, if the strike notice is issued on May 19, a potential strike could occur on May 22.
What are key issues in these negotiations?
Scheduling/time-off and wages are two key issues.
CN railroad has offered scheduling to provide consecutive days off in advance for their workers, plus an hourly pay rate for their mileage-based workers. They say workers will not lose money on this proposal.
CPKC railroads have offered similar proposals. They seeks set days off for their workers, plus time-based wages.
The rail unions say these hourly rate proposals would have a negative impact on some of their members pay.
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Insight: Port of Baltimore Eyes Return to Ocean Freight Service by the End of May
On March 26, Baltimore’s Francis Scott Key Bridge collapsed following a disabled containership striking into its support columns. After the accident, the prognosis surrounding the Port of Baltimore was grim. The most extreme of outlooks believed it could take several months before the port could safely resume ship traffic to and from its facilities.
However, now weeks removed from the tragic accident, there is promising news for stakeholders of the East Coast gateway.
Carriers resume calls to Baltimore on select Asia services
The Port of Baltimore is anticipating a return to handling ocean freight at the end of May as ocean carriers have begun to accept bookings on Asia services to the port’s terminals, which were inaccessible after the bridge collapse.
The decision from carriers to resume service to Baltimore is a gradual step forward in the port’s ongoing trek to recapture regular operations. The carriers have informed the Maryland Port Authority (MPA) that the port will be included as a call on select services, including Maersk’s relaunched TP20 Asia-East Coast service. Prior to the accident, carriers typically ran six weekly services linking Asia to Baltimore.
Shipping channels to open this month
The decision to resume ocean freight activity at the Port of Baltimore by the end of the month comes as public officials announce progress in restoration efforts. The U.S. Coast Guard said it plans to open the port’s 45-foot ship channel on May 10, while a deeper, 50-foot, channel is scheduled to reopen later in the month. The latter’s opening is crucial for larger ships that are often deployed on inbound services from Asia.
MPA has warned stakeholders that debris remain under the water and pose navigation restrictions for the channels that have yet to be cleared. However, a week after the bridge collapse, the U.S. Army Corps of Engineers said it expected to clear the wreckage from the accident by the end of May.
Before the port’s closure, Baltimore was experiencing considerable growth relative to other East Coast ports. It was one of the few gateways in the country that saw a year-over-year increase in import volumes in 2023.
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