Maersk North America Market Update (October 2022)

Your supply chain’s well-being is our top priority. We at Maersk aim to provide you the most relevant and up-to-date information to help you navigate this period of heightened volatility.

West Coast Highlights

There have been improvements on the West Coast ports with the exception of Oakland where the backlog of vessels stands at 16 ships. Vessel wait times are up to 25 days, in part due to two cranes being down for maintenance. The vessel line up, yard congestion, and rail status markers are in the red.

Los Angeles and Long Beach have both seen improvements. The number of vessels within 150 nautical miles of San Pedro Bay has remained below 10 vessels for several weeks and wait times have been reduced to under a day. Currently there are 44 vessels heading towards the Bay, with 22 allocated for each port. Rail availability continues to stabilize and improve.

As shared in a Sep 28 Customer Advisory, Maersk has optimized its network to merge its TP3 service into the Transpacific 2 (TP2) with the rotation from North Eastern China that now includes stops in Ningbo and Shanghai as well as Busan, Korea before arriving at Long Beach. The intent is to keep waiting and transit times in the Pacific Southwest low. Updated transit times can be viewed by logging onto Maersk.com and searching point-to-point port calls in the “Schedules” tab.

Congestion and delays continue in the Pacific Northwest, particularly at Centerm in Vancouver where vessel waiting times range up to 28 days. We have been working with customers to redesign services into the region that better address current customer shipping needs. Details of the service upgrades were posted in an Oct 17th Customer Advisory. In summary, we are merging our TP9 into an updated Transpacific 1 (TP1) that connects ports in Northeast China and Busan, Korea to weekly service into Vancouver and Prince Rupert. In addition, we are adding Seattle as a regular weekly stop on our TPX service in late October so that customers have a stable service they can rely upon as they plan for their shipping needs going forward.

As always, network services are monitored and adjusted to meet customer demand and improve schedule reliability, whether by improving or relaunching service lines or sailing extra loaders as needed.

East Coast Highlights

With the shift of cargo volumes to the East and Gulf Coast several ports remain congested. Houston is experiencing congestion with vessel wait times up to 15 days at Bay Port with its three available berths. Barbours Cut is faring better with just 2-to-4-day vessel wait times for its six berths. In September, Port Houston handled its second highest month ever following its August 2022 record month. September year-over-year volumes were up 31%.

There are approximately 30 container ships at anchor in Savannah, six of which are Maersk vessels. Vessel waiting time ranges from 10-20 days. The Port of Savannah stated that it expects to clear the need for vessels to wait at anchor by the end of November. Anticipated improvements are due to higher productivity forecasted before the upcoming holidays and decreased import volume.

We continue to see improvements at Newark PNCT and Elizabeth APMT. Vessel wait times for both terminals are down to 0-4 days, though there are approximately 10 ships at anchor. In partnership with our 2M alliance we have negotiated an agreement with Newark PNCT to secure priority discharge for our TP11 service, which connects Singapore through ports westward into Newark and other East Coast ports. This enables us to achieve transit times of 31 days into Newark, cutting nearly seven days from current performance. The New Jersey ports continue to experience import rail congestion that has persisted for several months due to heavy volumes.

APM Terminals Mobile, Alabama Update: Port operations and port labor are working normally and business as usual. In mid-October, there was some inaccurate reporting on labor issues and the inaccurate use of an APM Terminals Mobile photo. APM Terminals Mobile is a container terminal and is not associated or impacted by the Alabama stevedore company called CSA, which had some port labor concerns with a breakbulk terminal. APM Terminals Mobile and the International Longshoremen’s Association (ILA) enjoy a strong and prosperous working relationship in the Port of Mobile, underscored by a local contract that extends through September 2024, which includes a no-strike/no-lockout clause for the duration of the agreement. The USMX/ILA Master Contract, which also extends through September of 2024, includes a no-strike/no-lockout clause as well.

Air Update

Changing consumer demand patterns have been tied to a shift away from goods and towards services, along with the effects of rising inflation and higher interest rates. However, reporting indicates that some air cargo industry executives expect greater air freight activity in November and December.

Maersk is expanding its own controlled air freight capacity between Asia and the U.S. with the addition of three new Boeing B766-300F freighters. Each aircraft has a payload of 50 tons. Once under operation in early 2023, the aircraft will add 900 tons of cargo capacity on 18 flight sectors (two-way) between Hangzhou Xiaoshan International Airport (HGH) and Shenyang Taoxian International Airport (SHE) in China; Incheon International Airport (ICN) in South Korea; and two U.S. gateways – Chicago Rockford (RFD) and Greenville-Spartanburg (GSP).

See our Maersk Air Freight pages for more information on our air network and expansion.

Landside Update

Employee Retention Essential for Growing Warehousing and Transportation Labor Demands

It’s no surprise that some companies are struggling to meet their warehousing labor needs. However, the solution lies not necessarily in finding new employees, but rather building stronger ties with the workforces in place. Just as the old adage goes that it is less costly to keep a customer than to find a new one, the same applies for labor. In “The State of Warehouse Labor” survey published by Instawork, analysts reported that the number one strategy for addressing labor shortages was implementing and improving retention strategies. This tactic surpassed both “increasing headcount” and “improving recruiting” by 8 percentage points.

As businesses head into the Q4 holiday shopping season, the competition for seasonal employees will begin to heat up. Having a well-established reputation as a good employer will be key to attracting workers. Warehousing operations often see their headcounts double, triple or even quadruple with the number of seasonal temps brought in to reinforce core employees charged with managing the surge of activity. This is the point at which employee retention strategies and people management skills come to the fore. While efficient systems, standardized processes, and leading technologies are important, nothing is as critical to the success of a warehouse and distribution operation than the people themselves making it happen. This entails four fundamental people management practices:

• Treating individuals fairly and with dignity
• Setting reliable full-time work schedules that allow people to better manage their lives
• Engaging core and temporary employees alike for their ideas on improving operations
• Managing employees on a personal level right on the frontlines

The outcome of such management practices is stability of the workforce and high employee retention rates that prove to be key differentiators in the world of supply chain logistics. Organizations that find themselves with high turnover are forever stuck at the ground level in training new hires. Whereas those organizations that can maintain long relationships with its worker base graduate to higher-level activities along the lines of continuous process improvement refinements, productivity increases, higher accuracy, and enhanced customer service, all while building a bench of future leaders that will someday take charge.

As the market begins to normalize, business leaders are just now in a position to finally catch their breath. The task at hand is to take a step back, review their supply chains and consider strategies for sourcing and engaging the talent they will need for whatever comes next in the ever-changing universe of logistics.

Topics, Trends & Insights

Be sure to visit our “Insights” pages where we explore the latest trends in supply chain digitization, sustainability, growth, resilience, and integrated logistics.

Sailing Towards Sustainability with Green Methanol and an Industry Committed to Change

These orders come at an important time for Maersk and the rest of the shipping industry as it looks for ways to reduce its environmental impact. While shipping is the most energy efficient way to move goods, the global shipping industry emits 3% of total global CO2 emissions. In response, the International Maritime Organization (IMO) will soon enact measures agreed to in 2018 that are aimed at reducing the carbon intensity of international shipping.

The IMO’s 2023 rules look to reduce emissions as part of its strategy to cut greenhouse gas emissions by at least 50% from 2008 levels by 2050. The rules require that ships have three new measures in place that track a ship’s efficiency and carbon emissions. As one might expect, ships running on low carbon fuels will score higher ratings than those running on high carbon fuels. The first ratings will be given to each ship in 2024, based on the data recorded in 2023.

For its part, Maersk has set a net-zero emissions target for 2040 across the entire business and has also set tangible near-term targets for 2030 to ensure significant progress. This includes a 50% reduction in emissions per transported container in the Maersk ocean fleet compared to 2020 and a principle of only ordering newbuilt vessels that can be operated on green fuels.

In an October 3rd Financial Times Op-Ed, Maersk CEO Soren Skou emphasized the importance of acting on climate change through partnerships and innovation and making the move away from fossil fuel energy. “Despite the turmoil in the world right now, we should not forget that we are in a climate emergency, and we must act now to make significant progress before 2030… If we want to go far, we need to go together.”

Key Notes on North American Supply Chains

• BMWED rail union rejection of contract deal raises possibility of November strike: While the tentative deal struck in September between the National Carrier’s Conference Committee and 12 rail worker unions averted a general strike last month, membership of several unions have rejected the proposed terms, including the Brotherhood of Maintenance of Way Employees Division (BMWED), which seeks additional sick days and improved working conditions. There is no immediate threat of a rail service disruption as the union has given rail companies until November 19 to renegotiate. If one of the rail unions goes on strike, there is a likelihood that the other units would stay off the job as well, causing a general shutdown that could impact 30% of the country’s freight. To date, about half of the 12 rail worker unions have approved contracts, with membership voting expected to continue through mid-November.
• China implements epidemic prevention measures in the Ningbo Beilun district: On October 14th China implemented measures to manage a local COVID-19 outbreak. The Ningbo port and terminals are in operation with slight impact on terminal productivity. There is a larger impact on landside operations with the suspension of activities at local depots, factories, warehouses and trucking services within Beilun district. The market expectation of this temporary lockdown is short-term. Activity is expected to resume in the last week of October. All other districts of Ningbo are operating as normal. See Maersk Customer Advisory for more information.
• ILWU / PMA Negotiations Continue on West Coast: While the West Coast ports continue to operate business as usual, more than three months have lapsed since the labor contract expired on June 30th. The parties have issued joint releases affirming a mutual desire to avoid any work stoppages. Meanwhile, no strike deadline has been set by the unions as the two parties continue their negotiations in San Francisco. The ILWU and PMA did reach a tentative agreement in late July on healthcare benefits, but no further information has surfaced with the agreed upon news blackout that remains in place.

Resources and tools to support you

Learn what’s happening in our regions by reading our Maersk Europe, Latin America, and Asia Pacific updates.

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