Point of view: The work year – knowing your worth
We all know that commerce doesn’t work without people, from the worker who makes the products to those who transport the coveted cargo.
In recent months, we have seen the men and women responsible for freight transport stepping up and pushing back on wage offers. They become aware of their value and their central role in the world of capitalism. The flow of exchanges unfortunately suffocates in this tug of the purse strings between employers and workers.
Just like beauty, what is considered “right” is in the eyes of the beholder.
The latest strike at the port of Felixstowe in the UK is an example of this. The Unite union rejected the 8% raise offered by port owner CK Hutchison Holding Ltd. goods handled in the port of Hong Kong.
Sharon Graham, Unite’s general secretary, recently said that CK Hutchison Holding prioritizes shareholder profits over worker welfare.
“They can give the workers at Felixstowe a decent pay raise. It is clear that both companies have prioritized making multi-million pound profits and dividends over paying their workers a living wage,” Graham said.
A statement about wearing website said the company was disappointed the walkout had taken place and called its offer of average 8% wage increases fair.
According to CNBC’s supply chain heatmap for Europe, trade has been strangled by the wage dispute.
Based on analysis of trade data by MDS Transmodal, the total value of containers affected by the eight-day strike is estimated at $4.7 billion.
It takes weeks – not days – for the trade to recover. According to Crane Worldwide Logistics, the backlog created by this strike will take at least two months to clear.
“Initial discussions with shipping companies have begun to divert containers,” said Andrea Braun, Product Manager Europe, Middle East and Africa Ocean at Crane Worldwide Logistics. “However, there are few alternatives to move containers to other ports. Shipping lines already face congestion and container mess at other ports.
Maerskthe world’s second largest shipping company, missed three ship calls during the strike. In a reportMaersk said: “We expect the strike to have a significant impact on the range of ships and are working with ship partners to mitigate risk and disruption as much as possible.”
SONAR data shows the drop in maritime bookings from Felixstowe to all ports ahead of the announcement of the planned strike.
Josh Brazil, vice president of supply chain insights for project44, said the supply chain will face more pressure with congestion set to worsen across Europe with increased crossings blanks and container overturns.
“European ports have failed in their attempts to reconcile with their striking workforce. causing ports like Rotterdam, Hamburg and Bremerhaven to struggle to accommodate ships, leading to ships queuing off their coasts,” he said. “The average freight delivery time for the transatlantic route rose to 27 days in July, close to its all-time high of 29 days at the start of the year.”
Antonella Tedora, senior consultant at MDS Transmodal, told American Shipper that this will increase inflation on products moving along this trade route.
“As retailers prepare for the upcoming festivities (Halloween and Christmas), the strike at the Port of Felixstowe has the potential to disrupt the UK supply chain at a crucial time,” Tedora explained. “Assuming other ports in the south of the UK (Southampton and London Gateway) or mainland ports have spare capacity to handle additional cargo, shipping companies could divert their ships. Rerouting, however, would not eliminate the risk of longer delivery times and higher costs, which can only worsen the UK economy already hit by high inflation. This goes beyond a “logistical problem”, as the increased costs can be felt by end consumers. »
If you think this is just a US import problem or a UK inflation problem, think again. This could impact the arrival of holiday products in the United States.
“It takes an average of a week for containers to get out of the port and then a week to schedule a truck pick-up,” a logistics manager said. “You’re looking at the second half of November at the earliest for products to hit stores to be put on store shelves.”
American Shipper reviewed bills of lading and customs data to see the impact. The list is long. Some notable names listed were Amazon, General Mills, Loreal, GSK and Bacardi. Diageo, the company that owns Guinness, and the Suntory drink, which owns Jim Beam, Kellogg and Mars Foods, were also listed.
This strike will also affect US exporters. The timing of their goods arriving in the UK for the holidays is also a concern.
Timber and agricultural exports are also in large supply. Almonds, peanuts, walnuts, pistachios and cranberries are heading to Felixstowe, and the delays are impacting these perishables.
Other product categories handled by Felixstowe are furniture, computers and automotive parts.
The wave of social conflicts is far from over.
In Germany you have the 10th round of talks between the verdi trade union and the Central Association of German Seaport Operators (ZDS). Braun told American Shipper he is worried about another strike now that the court-imposed strike ban has expired. The backlog is so bad for trade that it will take until the first quarter of 2023 to clear up. That’s if a deal is done. Otherwise, this hairball of salary discontent will only grow and spread.
September no better
In September, in Liverpool, England, dockworkers are expected to strike. The options for allowing trade to move smoothly are rapidly diminishing for logistics managers.
Here in the United States, 115,000 American railroad workers are threatening to quit their jobs on September 16. Last week, the White House-appointed Presidential Emergency Council released its recommendations. Both parties have 30 days to agree. If they don’t, the railway workers are allowed to strike.
“A railroad strike would be more damaging to trade flow than the ILWU strike,” a logistics CEO told American Shipper. “It would have a severe impact on trucking.” About 40% of long-distance freight is transported by rail. A third of all US exports are shipped by rail.
The last US railroad strike in 1992 reportedly cost the US economy $50 million a day. The National Manufacturers Association has revised that figure to a daily loss of $7.5 billion.
Fears of a longshoremen’s strike on the West Coast continue to add to congestion on the East Coast. Data from Project44 shows container dwell times on the West Coast are on the rise again, increasing 10% month-over-month in July. The Port of New York and New Jersey is up a staggering 1,153% year over year. Meanwhile, residence times hold steady at roughly 4.48 days on the East Coast and 3.86 days in the Gulf.
Negotiations between workers and employers are different this time due to the pandemic. Employers have made record profits based on the work of the workforce moving historical trading volumes. The unions are flexing their muscles. The question is: will the employer loosen its purse strings? Inflation and the global supply chain depend on a compromise sooner rather than later.The CNBC Heat M Supply Chainap the data providers are the artificial intelligence and predictive analysis company Everstream Analytics; the global freight booking platform Freightos, creator of the Freightos Baltic Dry Index; the logistics provider OL USA; the FreightWaves supply chain intelligence platform; the Blume Global supply chain platform; third-party logistics provider Orient Star Group; the marine analysis company MarineTraffic; marine visibility data company Project44; shipping data company MDS Transmodal UK; Ocean and Air Freight Rate Market Benchmarking and Analytics Platform Xeneta; leading research and analytics provider Sea-Intelligence ApS; worldwide crane logistics; DHL Global Forwarding; freight logistics provider Seko Logistics; and Planet, provider of daily satellite imagery and global geospatial solutions.