Featured Headlines:
Ukraine Restrain Leads to Global Disdain
Russian Banks Will Be Shooting Blanks
Ukraine’s Expected Export Pain
Exporters Can’t Do the Charleston
Expeditors Expediting Cyber Recovery
Ukraine Restrain Leads to Global Disdain
- On February 21st, President Biden issued an Executive Order (EO) to prohibit the importation of any goods, services, or technology from the so-called Donetsk People’s Republic (DNR) or Luhansk People’s Republic (LNR) regions of Ukraine into the US; the exportation, re-exportation, sale, or supply, directly or indirectly of any goods, services, or technology to the DNR or LNR regions of Ukraine; and any new investment into the DNR or LNR regions of Ukraine.
- The US also announced sanctions to restrict Russia following the invasion of Ukraine on February 24th. The new regulations include financial blocks, export restrictions on technology such as “semiconductors, telecommunication, encryption security, navigation, avionics and maritime technologies” and limits on “military end users.”
- Click here to view the Export Administration Regulations expected to be published in the Federal Register on March 3rd.
- Other countries have also imposed sanctions against Russia this week, including: the European Union, France, Japan, Australia, New Zealand, Taiwan, and the United Kingdom (UK).
Russian Banks Will Be Shooting Blanks
- The US took significant and unprecedented action in response to the invasion of Ukraine this week by imposing severe economic costs that will have both immediate and long-term effects on the Russian economy and financial system.
- In addition to export restrictions, the US targeted the core infrastructure of the Russian financial system by applying full blocking sanctions on Russia’s largest financial institutions, major state-owned companies and elites; the White House also announced it will sanction 24 individuals and companies from Belarus to further hinder Russia.
- Click here to read the full list of actions carried out thus far.
- Click here to view the directive on the Prohibitions Related to Certain Sovereign Debt of the Russian Federation from the Office of Foreign Assets Control (OFAC).
Warehouse Lease Increase
- Nearly 142 million square feet of warehouse space was released to the market in Q4 2021— a year-over-year (YoY) increase of 43.7% – which marks the highest quarterly number on record.
- Growth from Q3 2021 to Q4 2021 was 5%; this rate of growth is expected into 2022.
- At present, there is more than 10 billion square feet of warehouse space in the US; however, it is expected that the total property devoted to warehousing may well eclipse 400 square miles by late 2022.
- Warehouse occupancy rates near major US ports are estimated above 99% and new lease costs have more than doubled in hot markets.
Trucker Protest Contest
- Not to be outdone by their Canadian brothers and sisters, US truckers are planning a cross-country protest that will end in Washington DC next Tuesday – just in time for the President’s State of the Union address.
- Several convoys are reportedly leaving from various origin points and travelling via multiple routes.
- The protesting truckers are calling for an end to vaccine requirements and mask mandates.
Trucking Back Drop Pit Stop
- The American Trucking Association reported that total US trucking tonnage rose 1.2% in January YoY—marking the 5th consecutive month of increases.
- Drayage booking lead times have reached 21-28 days for Houston, Charleston, Savannah, and Norfolk.
- DAT has noted a 37.4% increase in Full Truckload (FTL) spot load requests in January versus December; meanwhile, the supply of spot trucks decreased by more than 11%.
- Normally, the tension implied in these numbers would lead to large rate increases—however, rates for dry vans, flatbeds, and reefer trailers have only increased 2-4%, which indicates that shippers have gained traction on contract moves and have shifted away from accepting spot moves “at any price.”
The Global Grab Bag
- In 2021, global ocean shipping reached 180 million TEUs —a 6.6% increase over 2020’s record volumes.
- Volumes from Asia to North America grew 33% faster than the five-year average growth rate for what is now the world’s busiest trade lane.
- Worldwide steamship schedule reliability dipped from 78% to 63.9% between 2019 and 2020. Buckle up, gang— 2021 global schedule reliability was 35.8%, with US arrivals on-schedule less than 20% of the time!
- China to US West Coast shipping delays were up 114% in 2021 versus 2020. The average time from cargo ready date to out-gate at US ports is now over 110 days—more than double traditional metrics.
- In late January, rates per 40’ from China to Europe crested above $15,000; this is a 903% increase over average rates in January 2020.
Fleein’ European Port Support
- While US ports get all the press, European seaports are struggling with vessel and landside congestion. All three of the largest European gateway ports—Rotterdam, Antwerp, and Hamburg—are currently classified at the second lowest rating for efficiency.
- Despite state-of-the-art technology and equipment, the combination of chronic vessel bunching, dislocation of empties and chassis, and pandemic-related labor shortages have hampered maritime operations across Europe.
- At present, it is estimated that over 2.5 million TEUs are tied up globally by port congestion.
Ukraine’s Expected Export Pain
- American wheat and corn farmers are preparing to boost production with the expectation that Russia may block Ukrainian exports.
- The Ukraine controls 12% of global wheat exports and 16% of worldwide corn exports.
- The largest markets for the Ukraine are in SE Asia, Africa, the Middle East, and Europe. Many countries, like Egypt, depend on wheat imports to provide subsidized bread to impoverished populations.
Exporters Can’t Do the Charleston
- In an unprecedented move, the Port of Charleston has announced a temporary embargo on exports as the port struggles to move enough import arrivals to free space.
- Charleston was prioritizing export-heavy vessels just last week, although that strategy did not work when import containers continued to dwell on port.
- As a result of the embargo, the port didn’t accept loaded dry containers between 5AM and 12PM on February 24 and 25.
- With 31 vessels—carrying 134,000 TEUs of arriving import cargo— currently at anchor, it looks like Charleston’s congestion woes will remain for weeks to come.
Expeditors Expediting Cyber Recovery
- Last weekend, Expeditors International was the latest global shipping victim of a cyber-attack. In response, the firm was forced to shut-down their online operations.
- The logistics giant announced on Monday that the attack would greatly hinder the movement of freight and Customs services.
- While it was labeled a ransomware attack, there is no public information on who is responsible for the latest act of digital terrorism.
- Expeditors has not been able to estimate when they may return to normal operations.
