Supply Chain Updates | July 2022

We put together an overview of key supply chain updates from the first 6 months of 2022. Read in full or choose a topic to look at below!

Import Volume & Consumer Demand

Import volume and consumer demand remain at record highs, as shippers keep an eye on rising inventory levels, inflation, and slip in inbound freight.

Descartes Systems Group reports, “TEU volume in May crept up 7% to 2,622,465 from April, eclipsing the 2.6 million TEU level for the first time.” May marked yet another month of record volumes, year-over-year.a

However, some sources currently show inbound freight levels to be falling. FreightWaves explains that “Container imports bound for the U.S. have dropped over 36% since May 24,” according to a chart that tracks the number of inbound containers headed to the U.S. from their countries of origin. b

Additionally, major retailers such as Walmart and Target have recently disclosed that their inventory levels are too high — a situation exacerbated by rising inflation and fears of an economic recession.

Retail Dive goes into more detail on this subject in their article, “Inventory in 2022: Normal is still nowhere in sight.” c They talk with leaders in the retail sector who are facing both unpredictable consumer behavior and unpredictable supply chain complications in the rest of 2022.


As we look at this data, it’s important to remember pre-pandemic import volume levels and shipping rates to get a sense for how the numbers we’re looking at today are in a whole new category. In 2019, for example, peak season (July) saw the greatest number of imports, and they were still well under 2.4 million TEUs (compare to 2.6 million TEUs that entered the US in May of 2022). The WSJ Logistics Report notes that while China-West Coast rates fell over 30% from the beginning of the year, the rates are still “more than four times higher than in June 2020, and industry observers expect them to remain above prepandemic levels through at least 2023.”d


Congestion and Development at Major Ports

West Coast

  • FreightWaves reports that although the port of Long Beach’s import volume and total throughput of TEUs were lower in May 2022 than May 2021, they were still the second highest in the port’s history.e
  • Shippers are bracing for the possible impact of ongoing negotiations between the International Longshore Warehouse Union (ILWU) and the Pacific Maritime Association (PMA). The most recent contract expired on July 1st, 2022. While both the ILWU and PMA have released statements regarding their intent to continue port operations without issue until they reach an agreement, fears still remain regarding possible disruptions, depending on how long it takes for the next contract to go into effect.
  • The WSJ Logistics Report reported in late June that port congestion has created a ripple effect on intermodal operations, particularly at major hubs like Chicago. Rail backlogs are creating severe delays.f

East Coast

  • Due to severe port congestion on the West Coast and fears surrounding pending union negotiations, many shippers chose to route their shipments to alternate ports over the last few months. As a result, the East Coast saw a significant influx of import shipments.
  • Congestion at the Ports of New York and New Jersey in particular has caused severe difficulty for truckers returning empty containers or waiting to pick up cargo. In Descartes System Group’s monthly report on average delays at the top 10 U.S. ports, NY/NJ topped the list with an average delay time of 13.6 days in May, down from 14.7 days in April.
  • South Carolina Ports reported, “May marked the 15th consecutive month of cargo records at the Port of Charleston, driven by sustained retail imports. Loaded imports were up 18% in May compared to last year.”

Fuel Cost and Shipping Rates

Compared with 2021, the first half of 2022 has provided some stabilization of ocean freight rates and, in some cases even a slight decrease. The decrease is marginal however, when considering where full container rates were a year and a half ago. For shippers moving less-than-container-load freight, the decrease may even seem negligible, given that any decrease will be spread across all shippers in a given container. Though freight rates may have stabilized (albeit at unprecedented levels), other concerns continue to impede international and domestic supply chains – worker shortages, lack of vessel space, lack of equipment (container and chassis), driver shortages, increasing cost of diesel fuel as well as the uncertainty associated with the now expired contract between US West Coast dockworkers and management. On a positive note, both sides of the contract negotiations have indicated that they do not expect work disruptions.

Jason Combs — VP, Indiana Operations | C J International

According to the weekly report on fuel prices produced by EIA.gov, diesel fuel prices are up $2.43 per gallon from a year ago (as of 6/13/22).

Freightos reports that for ocean shipping, “Asia – N. America West Coast rates fell more than 30% in May to $10,762/FEU and East Coast prices fell 20% to $13,796/FEU.”g

As mentioned previously, these numbers have to be compared to pre-pandemic rates. Freightos comments, “Both [rates] remain more than 35% higher than a year ago, but have returned to levels not seen since last summer.”

Key Legislation from January-June 2022

  • President Biden increased the tariff rate to 35% on certain goods from Russia — June 27, 2022
  • The Uyghur Forced Labor Prevention Act went into effect on June 21, 2022 — this legislation is expected to have a significant impact on supply chains, as “10% of companies globally that do any kind of manufacturing touch the Xinjiang region in some ways, according to estimates.” h
  • The Ocean Shipping Reform Act of 2022 was signed into law on June 16, 2022
  • The Suspending Normal Trade Relations with Russia and Belarus Act & Ending Importation of Russian Oil Act were signed into law on April 8, 2022

Looking Ahead

We cannot know for certain what the second half of 2022 will look like for supply chains. It is likely that many of these challenges mentioned above will continue as our industry searches for its new normal. Though we certainly hope for improvements to each of these difficulties in our industry, you can be assured that C J International’s professional staff will continue to provide the best customer service possible, even during these difficult times. We appreciate and thank you for your business.

Jason Combs — VP, Indiana Operations | C J International

Sources

  1. Global Logistics Shipping Crisis: Managing Supply Chain Risk | Descartes
  2. Container shipping data shows US demand for imports is falling hard – FreightWaves
  3. Inventory in 2022: Normal is still nowhere in sight | Retail Dive
  4. One Price Dodging Inflation: China-to-U.S. Shipping Rates – WSJ
  5. Boom times not over yet: US container ports still near highs – FreightWaves
  6. U.S. Port Backups Are Extending Into Freight Rail Supply Chains – WSJ
  7. Shipping Delays & Freight Cost Increases 2022 | Freightos
  8. Xinjiang import ban creates compliance challenges for supply chains | Supply Chain Dive

The information contained in this article has been compiled from various industry newsletters and other public news sources. While we use reasonable efforts to furnish accurate and up-to-date information, C J is not liable or responsible for the accuracy or reliability of any information contained herein.

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