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Industry Insights, News, News & Thought Leadership, Publications

Posted

June 27, 2023 at 3:57 pm

Industry Insights – June 2023

Supply Chain Industry Insights

June 2023

Welcome to the PGL Industry Insights report for June 2023. 

This month’s report highlights significant developments in labor talks across various modes of transportation and offers predictions for the second half of the year.

A tentative contract agreement has been reached between maritime employers and the International Longshore and Warehouse Union (ILWU) for all 29 ports along the US West Coast. This resolution ends 13 months of contentious negotiations and disruptive job actions that affected port operations. However, the shortage of lashers and other essential labor positions has left many vessels stranded at berth, impeding their departure and preventing new vessels from entering and unloading.

Although the tentative agreement is positive news, the repercussions of the labor issues will continue to be felt in the near future. The timing of this agreement is particularly crucial as some ocean freight traffic has been diverted to the East and Gulf coasts while Panama is experiencing its worst drought since 1950. This drought restricts ships’ drafts in the Panama Canal, and the Panama Canal Authority (ACP) warns of further water level declines and inevitable economic impacts.

On the heels of a report earlier in June revealing that UPS Inc. has agreed to install air conditioning in package cars purchased after January 1, 2024, UPS Teamsters voted overwhelmingly on June 16th to authorize its leadership to call a strike in the event a contract cannot be reached by the deadline of July 31. 

In other labor news, less-than-truckload carrier, the Yellow Corporation, has informed the Teamsters union that it will run out of funds by August if a proposed change of operations isn’t approved. The union argues that the company has been mismanaged for years and asserts that it will not bail Yellow out again, having already given substantial financial support in the past.

A recent FreightWaves SONAR report indicates a further decline in US containerized import volumes for the second half of 2023. The inventory disruptions caused by the “bullwhip effect” and the risks associated with consumer spending contribute to importers exercising caution during the peak season. Additionally, the weakening global macroeconomic conditions further heighten the risks of declining import volumes.

While ocean container bookings have been on par with 2019 levels in the first half of 2023, a departure from those levels is expected in early Q3, leading to a significant drop of 10% to 20% below the volumes experienced during the second half of 2019. This decline is projected across the Top 10 US ports.

With the latest in supply chain news, labor contracts continue to have a big impact on the industry as high inventories and economic uncertainty continue to fuel speculation that, whatever normal is, we’re not there yet. In the meantime, PGL will continue to keep you moving, 24/7/365.

Follow us on social media at @ShipPGL

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News, News & Thought Leadership

Posted

June 1, 2023 at 5:26 pm

PGL Video Newsletter – May 2023

Welcome to the May edition of the PGL monthly newsletter! This month has been action-packed, starting with our sponsorship and participation in the annual Freeman golf tournament and R. Lee Ermey Memorial Golf Classic.

As usual, we have informative video to share with our monthly Industry Insights report and this month our Featured Product Video is highlighting the magic that we make happen with our Kitting Services. We also have a helpful tip for you to get the most out of your kitting efforts.

Enjoy this recap of the month and in the meantime, PGL will continue to deliver peace of mind, 24/7/365.

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Industry Insights, News, News & Thought Leadership, Publications

Posted

May 30, 2023 at 5:31 pm

Industry Insights – May 2023

Supply Chain Industry Insights

May 2023

Welcome to the PGL Industry Insights report for May, 2023.

In this month’s report, it appears that in many ways the industry is settling back into a pre-pandemic state. The challenge there is that as you likely recall, 2019 was not a great year for the Supply Chain industries.

FedEx Freight, the less-than-truckload unit of FedEx Corp., plans to close 29 service locations in the U.S. as part of ongoing efficiency efforts. The closures will be completed by August 13, with affected operations consolidated into other locations.

The price benchmark for diesel fuel, used for setting fuel surcharges, has hit a low not seen since early 2022. The drop in diesel prices is attributed to broad macroeconomic factors, including China’s reopening not generating the expected results and limited evidence of crude supply cuts agreed by OPEC+. However, diesel demand and inventories in the U.S. remain relatively near normal levels.

In the labor sector, both WestJet and Norfolk Southern, players in the air and rail cargo spaces, successfully avoided union strikes through negotiations.

The Logistics Managers’ Index reported that transportation capacity continues to expand while rates remain depressed. Transportation utilization showed signs of improvement, moving into expansion territory, and transportation prices contracted at a slower pace compared to the previous month’s all-time low. This could be attributed to warehousing capacity loosening up as inventories decrease in the consumer goods and retail sectors.

Sealed Air, the manufacturer of Bubble Wrap, experienced a significant decline in volume, indicating decreased packaging demand. This, along with decreased demand for boxes has been a good economic indicator in the past, as it is historically sensitive to economic conditions.

U.S. containerized import volumes in 2023 have been tracking alongside 2019 levels, suggesting a return to a pre-pandemic state. However, caution should be exercised in assuming a second-half rebound during peak season, as import volumes may have already bottomed for the current downcycle.

U.S. imports did see upward movement in April, reaching or surpassing 2019 levels, although still higher than pre-COVID inventory-to-sales ratios, monthly imports continue to increase, if not at the rate we would all like to see.

With the latest in supply chain news, the overall feeling is that we’re all bracing for an uncertain 2023 that isn’t going to be the rebound we’ve all been hoping for. In the meantime, PGL will continue to keep you moving, 24/7/365.

Follow us on social media at @ShipPGL

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News, News & Thought Leadership

Posted

May 2, 2023 at 2:16 am

PGL Video Newsletter – April 2023

Spring has sprung and we at PGL are thrilled to share our April newsletter with you! From attending trade shows across the country to celebrating holidays such as Easter and National Pet Day, it was a month packed with excitement.

In this newsletter, we’ll give you a sneak peek into what we’ve been up to, including attending some of the most important trade shows in the industry, and showcasing our Contract Logistics department. We’ll also provide some helpful contract logistics tips to help you optimize your supply chain operations.

Additionally, we’ll recap some of the key insights and events that have shaped the supply chain industry over the past month.

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Industry Insights, News, News & Thought Leadership, Publications

Posted

April 28, 2023 at 3:30 pm

Industry Insights – April 2023

Supply Chain Industry Insights

April 2023

Welcome to the PGL Industry Insights report for April, 2023.

Is the supply chain back to normal? In this edition, we explore the factors that inform the answer to this question.

The Global Supply Chain Pressure Index (GSCPI), published by the New York Federal Reserve, suggests that supply chain conditions are returning to normal. However, other factors such as reduced consumer spending and full warehouses continue to affect the flow of goods. Eased port congestion is certainly a good thing, but the reasons why are cause for concern.

One key factor is U.S. West Coast labor agreements which have been in negotiations since the previous contract expired in July of 2022. The International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) have reached a tentative agreement on certain key issues for a new labor contract, but details have not been disclosed. This is good news, but until a new contract is in place, anxiety remains high.

In addition, the recent agreement by the OPEC+ group to cut oil output by 1 million barrels per day starting in May has led to an increase in diesel fuel costs. This comes after a period of declining prices since October 2022, posing further challenges for transportation and logistics.

The ocean market has rebounded from the drop in volumes during the Lunar New Year, but the recovery has not been robust. While carriers have implemented rate increases in April, commercial and labor headwinds are affecting the medium-term outlook. Blank sailings, which have cancelled out up to 25% of weekly capacity deployed on trade lanes, have helped maintain high load factors to the West Coast. However, weaker vessel utilizations are observed in the East Coast and Pacific Northwest services.

While some carriers are planning to raise spot rates again on May 1st, it is not yet a trade-wide initiative. East Coast rates may also slip in the coming weeks, as load factors remain underwhelming, even after recent rate increases brought them closer to long-term contract rate levels.

With the latest in supply chain news, we’re seeing something approaching normalcy when it comes to port activity, but the future is not yet written and as we see, many factors influence the grand scheme of things. In the meantime, PGL will continue doing what we do best, delivering peace of mind, 24/7/365.

Follow us on social media at @ShipPGL

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News, News & Thought Leadership

Posted

March 31, 2023 at 12:24 am

PGL Video Newsletter – March 2023

PGL Video Newsletter – March 2023

PGL had a great month of March. Here’s a glimpse at some of the moving parts.

  • This month we celebrated the U.S. Navy Reserve’s Birthday, International Womens Day, St. Patricks day, and National Vietnam War Veterans Day.
  • PGL attended several trade shows in March, including the ISTAT in San Diego, the HAI Heli Expo in Atlanta, and the PB Expo in Miami.
  • We participated in several golf events such as the Spirit Charity Golf Classic, PB Expo Golf Tournament, and the MCLANAMM Golf Tournament – all in Miami, Florida.
  • And as the official logistics partner of the Texas Rangers, we celebrated opening day together with some dang good BBQ.
  • Plus, a look at our Trade shows department and some helpful trade show tips.
  • Take a look at the key insights and events that helped shape the supply chain industry this month.
  • Are you interested in a career path in the supply chain industry? PGL is hiring! Visit the Careers tab on our website to find job opportunities in your area.

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Industry Insights, News, News & Thought Leadership, Publications

Posted

March 28, 2023 at 3:38 pm

Industry Insights – March 2023

 

Supply Chain Industry Insights

March 2023

Welcome to the PGL Industry Insights report for March, 2023.

We in the global logistics industry continue to live in interesting times as the near-future outlook for international shipping provides both hopeful and pessimistic potential outcomes.

One major concern for tans-Pacific ocean carriers exists in the acceleration of blank sailings to prevent container spot rates from falling further, while the industry braces itself for an unprecendented influx of new container ships that will be entering service with a surge in deliveries in the second quarter of this year and continuing throughout 2024 and 2025. This fleet expansion threatens to increase capacity concerns moving forward.

Due to increased capacity and a favorable outlook in future activity later in the year, there are concerns that fixed rate trans-Pacific contracts may not hold up to in-the-moment pricing. This could leave lower-bidding, pre-existing contracted cargo left behind on the docks at the first sign of tightening capacity. We’ll continue to monitor the situation.

It’s not all doom and gloom, however, as several reports are pointing toward recovery.

February data points to overall market improvement in terms of seasonality and a better-than-expected rebound after China abandoned it’s Zero-Covid policy leading to stabilizing production conditions.

The world’s largest ocean freight line, Mediterranean Shipping Company is seeing positive signals for trade demand as the U.S. and Europe make positive strides in curbing inflation and China is poised for recovery.

Despite decreases in both imports and exports, Vietnam still enjoyed a trade surplus of $3.6 billion in the first month of 2023 and ties between American companies and manufacturers in India deepen.

No one knows for sure how these factors will stack up in the long run, but we will have our finger on the pulse of the industry, and we’ll keep you posted. In the meantime, PGL will continue doing what we do best, delivering peace of mind, 24/7/365.

Follow us on social media at @ShipPGL

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Industry Insights, News, News & Thought Leadership, Publications

Posted

March 1, 2023 at 9:41 pm

Industry Insights – February 2023

 

Supply Chain Industry Insights

February 2023

Welcome to the PGL Industry Insights report for February, 2023.

Continuing effects of the global pandemic present themselves as businesses came to rely on airfreight during the pandemic as a way to circumvent lengthy delays caused by port congestion. Now, with ocean congestion clearing, demand for pricier air cargo services has declined. Simultaneously, new vessels are being added to ocean fleets, further complicating things in a time where trade growth is softening.

In China, while trade is opening up following the easing of the “Zero Covid” policy, China is now facing a sluggish market with weak demand and heightened competition from overseas as companies around the globe have explored alternatives such as Vietnam, Mexico and others.

China’s exports fell by 9.9 percent in December compared to the previous December, with some analysts warning that shipments could continue to contract until the middle of the year.

Cathay Pacific Cargo and the Cathay Pacific Cargo Terminal have become the first carrier and first cargo terminal operator to have cargo shipments accepted in Dongguan and transported to Hong Kong International Airport by ship for outbound airfreight. This enables full upstream sea-air intermodal export cargo handling between the Greater Bay Area and Hong Kong.

Turkey’s Iskenderun port was closed for four days due to fire following the devastating string of earthquakes.
In the U.S., talks for a new labor pact between West Coast dockworkers and their employers have stretched into a 10th month. With no agreement in sight & volumes dropping, patience is wearing thin.

The International Air Transport Association said last week that air shipment traffic slid 8% last year from record highs in 2021 and was 1.6% less than in 2019, a relatively weak year for the cargo sector. It predicted air cargo volumes will fall further this year to 5.6% below 2019 levels. Global cargo capacity increased 11% last month from a year ago and is now only 2% below 2019 levels.

We in the shipping and logistics industry continue to live in interesting times, and we’ll be here to bring you peace of mind, 24/7/365.

Follow us on social media at @ShipPGL

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News

Posted

January 31, 2023 at 6:01 pm

PGL Video Newsletter – January 2023

PGL Video Newsletter – January 2023

Welcome to the PGL Video Newsletter, where we give you a brief recap of all of the activity from the prior month. January was full of activity, and here’s a peek at just some of it:

  • We celebrated Lunar New year and attended the SHOT Show in Las Vegas in January.
  • Next, we hear from Jodi Flynn of PGL Customs who gives us customs tips and talks about PGL’s unique capabilities.
  • Preview: In this Special Report by Tim Gundlach, we explore many factors involved in the current state of the logistics industry and provide our analysis on what it means moving forward into 2023.
  • PGL Is Hiring! We are looking for great people to join our fun and dynamic team. We are hiring at multiple stations across the U.S..

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Industry Insights, News, News & Thought Leadership, Publications

Posted

January 23, 2023 at 2:50 pm

Industry Insights Special Report: Moving Past 2022 and Looking Ahead to 2023

 

Industry Insights Special Report: Moving Past 2022 and Looking Ahead to 2023

January 2023

By Tim Gundlach

As a leading logistics service provider, PGL does more than move cargo for our client/partners. Much of our “value add” is in keeping them advised of current conditions and offering our best advice on what we see coming that can have an impact on their business. As such, thank you for watching and allowing us to share some thoughts on what lies ahead.
First let’s discuss 2022…

It was another highly challenging year for all of us involved in the global supply chain. The story of 2022 cannot be told without discussing “Black Swan Events”. “Black Swan Events” are defined as an unpredictable event that is beyond what is normally expected of a situation but that has potentially severe consequences. The truth is that “Black Swan Events” are nothing new to the logistics business. However, the frequency and severity of facing so many events within such a short period is unprecedented and a “Black Swan event” in itself. In 2022, these events included things such as Chinese covid lockdowns of entire cities, massive port and rail congestion, actual or threatened labor strikes, geopolitical events such as the war in Ukraine, blockage of the Suez Canal, etc. All of these events would have profound consequences on their own, but when combined caused additional layers of complexity resulting in a “bull whip” effect going from one extreme to another in a short period of time.
As we enter 2023, let’s examine the current status of the two of the major modes of international transportation:

Ocean Transportation:
With the sudden rise in capacity and drop in demand, rates have plummeted reaching near pre-pandemic levels. With the abundance capacity, Steamship Lines are increasing blank sailings to help mitigate further collapse in rates. Labor issues have been pushed down the line for now, and rail congestion issues are clearing up.

Air Freight:
Air Freight volumes ended 2022 with nine consecutive months of decline. Some of the factors leading to this decline are related to the return of supply on the ocean transportation mode as a more cost-effective option for non-urgent or low valued merchandise. The drastic fall in ocean rates is pulling many shipments back to the ocean freight mode. Additionally, the return of increasing capacity via belly space on passenger aircraft now that travel recovery is gaining momentum. Although considered weak by the pandemic era, performance in many regions remain 85% above the pre-covid levels.
Looking to the future, the following are thoughts on what we might expect on the industry and the major events that impacted us in 2022.

Ocean Freight:
Demand should remain well below 2022 level at least until major retailers have cleared out the stockpile of inventory carried into 2023. Growth in capacity can be predicted accurately with an increase in fleet growth by ship builders to the tune of 7% in each of 2023 and 2024; however, it could in fact be as high as 10% if projected vol of fleet scrapping doesn’t take place as expected. On-time performance, which has shown improvement in late 2022 due to a clearing of the port and rail congestion, will continue improvement only hampered by the increase in blank sailings again adding some level of schedule unpredictability although at a much lower level than 2022. Pricing should remain near current levels with some industry experts even predicting a rate war between carriers sometime in 2023.

Air Freight:
For air cargo, the first part 2023 continues with decreased demand due to the economy and increasing supply with the resurgence of passenger travel. Normally, one would expect rates to decline under these conditions however, fuel and inflation are expected to push back resulting in a slow stabilization and the return of near pre-pandemic pricing.

Rail:
There are many challenges facing the rail industry in 2023. One of the biggest is how to improve service and address labor issues. Both shippers and unions are pressing Congress to pass legislation that would give the Surface Transportation board more regulatory authority.

Economy:
Although predictions by financial institutions vary greatly, most have agreed that some degree of recession is on the horizon. Global growth in 2023 is expected to be below 2% which would result in one of the weakest years in nearly four decades. Experts disagree on the severity of the recession and the timeframe for recovery; however, many US companies are now announcing mass lay-offs as a precautionary cost saving measure driven by the weakening economic forecasts.

Labor Strikes:
There were 374 worker strikes started in 2022, representing a 39% increase over 2021. To name only a few there were actual or potential strikes by US Longshoreman, Portuguese rail workers, Airport Workers in the UK, and lockout of tugboat crews in Australia. Fueled by anger over working conditions and high inflation, the low employment rate and worker shortages gave workers more leverage, but this isn’t the whole story. One of the biggest factors was led by wins of other labor unions. The belief being that conditions were right and if your labor union doesn’t secure its biggest raises now, they are leaving money on the table.

Global Conflict:
The Russia-Ukraine conflict has affected the global logistics market on every level. The war has impeded the flow of goods, fueled cost increases and product shortages, and created catastrophic food shortages around the globe. Russia has been destroying Ukraine’s agricultural infrastructure, thereby disrupting the entire supply chain. The Black Sea and Azov Sea had been blocked by Russia, and the Ukrainian grain shipments were hijacked in the early months of the attack. In July, Russia and Ukraine signed a United Nations (UN) deal to unblock Ukrainian grain exports from three Black Sea ports to ease shortages. Despite the deal, Russia attacked Odesa’s seaport with cruise missiles hours after signing the deal. The uncertainty has had a snowball effect on supply chains across the globe.

China Covid Lockdown Policies:
China has reversed its pandemic policies. Even with a 30-40% decline in orders, logistics managers are still having to warn clients of delays in their factories being able to complete orders. This is because with the reversal of these policies, there is now a massive wave of infections impacting the labor force there. Some projections have this as high as 75% of labor being impacted and unable to work. As we enter Lunar New Year celebrations where migrant workers return to their hometowns, the further spread to more rural areas seems imminent. This is already impacting the major Chinese ports. Continued disruption after the Lunar New Year holidays are expected but should gradually improve as China’s population develops some immunity to the virus.

Global Protectionist Strategies:
More and more countries are implementing, or considering implementing, protectionist strategies to stem exports and protect domestic needs. The Chartered Institute of Procurement and Supply (CIPS) says the trend is one of global concern. It has identified food and oil as common targets for protectionist schemes, but that the range of product categories affected is expanding. These schemes are intended to offer protection during a crisis, but the continuing rise in their adoption can have a huge impact on the freight forwarding industry.

Nearshoring:
The wave of crises that arose over the last five years –from COVID and the China-US trade conflict, to high inflation and the Russian invasion of Ukraine– gave pause to developed economies in the West who have for long been overly dependent on Asia as a source of raw materials and cheap, manufacturing power. Consequently, the terms “nearshoring” and “friendshoring” gained prominence. A recent survey conducted by Capterra which surveyed 300 Small to Medium sized businesses show that 88% plan to or are currently switching at least some of their suppliers closer to the US in 2023. The big lesson for manufacturers in 2022 was: to not put all of their eggs in one basket. Many are considering a “China +1” policy meaning to continue sourcing from China but to also have other suppliers in other countries to diversify risks.
In conclusion: We view 2023 as not the end of the pandemic era, but perhaps the beginning of the end and a return to something resembling a new normal. However, we should remain diligent in remembering lessons learned with one key takeaway: “Always expect the unexpected”. PGL will do our part to keep you updated. As always, my colleagues and I remain available to discuss your particular needs or concerns at any time. We are here for you, please let us know how we can help.

Follow us on social media at @ShipPGL

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News, News & Thought Leadership, Publications

Posted

January 16, 2023 at 10:55 pm

China’s “New Normal”: Managing Manufacturing & Supply Chain Expectations for 2023

 

China’s “New Normal”: Managing Manufacturing & Supply Chain Expectations for 2023

January 2023

On the heels of China abandoning their “Zero Covid” policy, businesses and investors are expecting a surge of Covid cases that will likely cause manufacturing and supply chain disruptions in the first half of the year, if not longer. Savvy businesses will make moves to mitigate the impact of these issues, but it’s not all bad news, as we will explore here.

The two major factors that will have the greatest impact are labor shortages and disruption in logistics.

For the workforce, the challenges come in the form of a spike in Covid cases leading to lost hours availability and technology implementation which could be more difficult to institute with skilled workers to install and maintain this technology being in shorter supply.

When it comes to logistics, trans-pacific trade has evolved to address the impact of Covid in general. The global supply chain shifted from “just in time” logistics and instead implemented “just in case” logistics. This has lead to an industry-wide scramble to obtain warehousing stateside, thereby adding cost. In addition to this, we can expect higher freight pricing and extended timeframes.

To stay ahead of potential supply chain disruptions, companies should explore these three options:

  1. Inventory materials and plan ahead. Whether that’s stockpiling raw materials or key components, having greater-than-usual stock on-hand can make the difference when it comes to keeping manufacturing online.
  2. Identify alternative suppliers. Doing this work in advance and having “Plan B” conversations can help grease the skids if your primary supplier hits a roadblock.
  3. Invest in technology. Simply put, automation, while not an antidote, can have a significant impact on mitigating the effects of the unknown.

Is China’s delayed pandemic too hot to handle for your business? If so, relocating some or all of your production to Vietnam can be a viable alternative. Due to their proximity to China, affordable workforce and well-developed trade agreements, many are finding this option attractive.

So what is the good news, you ask? There are reasons for optimism in the future, taking the form of relaxed travel and quarantine restrictions, allowing for the exploration of new partners that has been limited since the Pandemic began, and, perhaps best of all, lower cost of doing business with expected moves such as tax breaks, government incentives, and free trade agreements.

Though the situation isn’t without its challenges, if the last few years have taught us anything, it’s that business keeps moving, and PGL is here to keep your business moving. Visit ShipPGL.com, and let us help you find peace of mind with your logistics and supply chain concerns.

Follow us on social media at @ShipPGL

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News

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December 20, 2022 at 10:19 pm

Merry Christmas 2022 from PGL

Merry Christmas 2022 from PGL

When you’ve had enough of the old standards, give this one a spin. Here at PGL, we’ve got the spirit year-round!

 

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