Welcome back to Freight Forwarding Weekly!
For shippers, by a shipping container 🙂
This week’s edition was edited by Michael, Freight Forwarding Weekly’s News Analyst. If you’re new, this is a recap of this week’s top news stories in the world of global freight and forwarding.
Let’s dive into this week’s headlines, courtesy of this week’s premium member, Mazin International Logistics.
📈 BY THE NUMBERS: Important numbers impacting freight and logistics.
⛽ Diesel: $4.967 / gal
Compared to a year ago, the average per-gallon price of diesel is up by $1.293. Data via the U.S. Energy Information Administration – Week of Dec. 5.
✈️ Air Cargo Index: 213.5 🔽 (October, FRED)
🚢 Global Container Index: $2,528 (Dec. 2)
🔝TOP NEWS THIS WEEK: Rail union strike averted, sparking labor controversy
A rail union strike was averted due to the actions of Congress and President Joe Biden. Biden, via remarks released by The White House, said that his team “did one heck of a job in averting what could have been a real disaster and…ended up with a good product.” H.J.Res.100, the official resolution, passed both chambers of Congress and was signed into action by Mr. Biden.
The deal imposes on labor unions new contracts that provide railroad workers with an average of 24 percent pay increases over the next five years, between 2020 and 2024. The payment increase is, of course, retroactive and immediate payouts averaging $11,000 are expected via ratification. Unfortunately, a measure that would have added seven days of paid sick leave to rail worker contracts instituted by the House was defeated in an amending vote in the Senate.
Paid sick leave is a major point of contention between railroad operators and rail unions. The deal that Biden signed into law doesn’t provide provisions for paid sick leave, as requested.
Though Biden and the leadership of both chambers heralded the deal as a means to prevent a rail shutdown, the response from organized labor has been generally negative. The International Association of Sheet Metal, Air, Rail, and Transportation Workers (SMART Union) said that the passage of the resolution was an unfortunate development and a slight against organized labor.
“It is extremely disappointing that 43 Senators voted to prioritize the corporate greed of rail carriers and CEOs over the needs and quality-of-life improvements that our members so desperately deserve,” SMART’s Transportation Division said in an official press statement.
“The ask for sick leave was not out of preference, but rather out of necessity. No American worker should ever have to face the decision of going to work sick, fatigued or mentally unwell versus getting disciplined or being fired by their employer, yet that is exactly what is happening every single day on this nation’s largest freight railroads,” SMART added in the same statement.
The union pointed out that they recognize the Constitutional power of Congress to regulate the provision of interstate commerce. Congress, on this basis, has the legal authority to impose the Tentative National Rail Agreement for operating-craft employees of the major railroad operators. H.J.Res.100 also prohibits the unions from striking. Considering all of these factors, what is the solution for providing sick leave as demanded by the unions? What can investors do to help?
Activist investors affiliated with the Interfaith Center on Corporate Responsibility announced that shareholders of Norfolk Southern and Union Pacific filed proposals with the railroads requesting that they adopt paid sick leave policies as a standard and perennial benefit for their employees.
“When you consider how essential these workers are to the U.S. economy and its supply chain – helping move nearly 40% of the country’s freight including critical commodities – asking [the] carriers to provide basic protections seems a more than reasonable request,” said Trillium Asset Management director of shareholder advocacy Kate Monahan. Monahan filed the sick leave plan with Union Pacific, adding that “railway workers face an impossible choice when they are sick: to stay home and risk their jobs, or go to work and risk their health and the public’s health.”
Read more at NY Times.
Other stories we’re following…
💵 IMF and WTO: Don’t “pull the plug” on trade
Leadership of the International Monetary Fund and the World Trade Organization recently called on the rest of the world not to “pull the plug” on international trade. WTO Director-General Ngozi Okonjo-Iweala, in a press conference with IMF Managing Director Kristalina Georgieva, noted that the world’s movement into “two trading blocs” will have a negative impact on global trade. “Retreating from trade, being protectionist will make it harder – not easier – to solve the problems we have now,” Okonjo-Iweala said. “Protectionism, decoupling, fragmentation is very disruptive and it will be very costly.” The global GDP would be reduced by 5 percent, via long-term outlook.
Check out more at Reuters.
⛽Fuel ship prices falling, despite the ongoing Russia-Ukraine war
Amid the illegal military invasion of Ukraine by Russia, ship fuel prices spiked to unprecedented points. Considering relative and other historical conditions, VLSFO and HSFO prices have fallen below prewar levels. Ship & Bunker recently noted that the average price for very low sulfur fuel oil (VLSFO) is about $685.50 per ton, citing the average prices of the top 20 refueling hubs. The average price of high-sulfur fuel oil (HSFO) was $457 per ton. VLSFO is down 39 percent from the all-time high of June 14th, and HSFO is also down 32 percent from the May 5th price high.
Read more at Freight Waves.
🧑✈️IATA: Airlines to see “razor thin” profits in 2023, cargo still pressed
The International Air Transport Association projects a return to profitability for the global airline industry in 2023. Airlines are continuing to cut losses stemming from the global pandemic and its impacts on travel and air cargo. Thin profits are expected, at a net profit of $4.7 billion. This is the first profit for the industry since 2019. Air cargo markets are expected to come under even more pressure in 2023. Revenues are expected to be $149.4 billion. That is $52 billion less than in 2022 but $48.6 billion stronger than in 2019. “With economic uncertainty, cargo volumes are expected to decrease to 57.7 million tonnes, from a peak of 65.6 million tonnes in 2021,” IATA.
Read more at IATA.
🌍 China and COSCO’s rising footprint in Europe causing concerns
The Maritime Executive reports that some are concerned over China’s increasing influence in Europe’s network of ports. COSCO Shipping, a state-owned enterprise of the People’s Republic of China, recently announced a less than 25 percent minority share in the operating company of Container Terminal Tollerort in Hamburg. CCT is owned by Hamburger Hafen und Logistik AG. The German government approved, granting COSCO more of a strategic hold in all of Europe. COSCO has shares in 15 European ports in Greece, Malta, Italy, Spain, France, Belgium, The Netherlands, and Germany. Dr. Francesca Ghiretti, an analyst in the Brussels office of the think tank Mercator Institute for China Studies, wrote in a commentary article with the MERICS senior analyst of economy Jacob Gunter for War on the Rocks that COSCO is simply a tool of Beijing and the Community Party’s strategic plans in the Western Hemisphere, especially in Europe.
Read more at The Maritime Executive.
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This edition of our newsletter was written by Michael M., Freight Forwarding Weekly’s chief news analyst.