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June Supply Chain News Roundup

July 1, 2024
Key news and trends currently impacting global supply chains.

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Supply chain-related news and events continue to make headlines as organizations work through some of the newer challenges that are emerging in 2024 while also addressing some of the lingering issues that have taken hold over the last few years. Attacks on ships in the Red Sea have been impacting ocean carriers and are now causing some congestion at key ports in countries like Singapore.

According to Reuters, congestion at Singapore’s container port is “at its worst since the COVID-19 pandemic,” and illustrates the impact of re-routing of vessels to avoid Red Sea attacks. Similar bottlenecks are also appearing in other Asian and European ports.

“Retailers, manufacturers and other industries that rely on massive box ships are again battling surging rates, port backups and shortages of empty containers, even as many consumer-oriented firms look to build inventories heading into the peak year-end shopping season,” Reuters reports. 

The publication says global port congestion has reached an 18-month high, with 60% of ships waiting at anchor located in Asia. Ships with a total capacity of over 2.4 million twenty-foot equivalent container units (TEUs) were waiting at anchorages as of mid-June. 

“…ship timetables are being disrupted with missed sailing schedules and fewer port calls, as vessels take longer routes around Africa to avoid the Red Sea,” it continues, “where Yemen’s Houthi group has been attacking shipping since November.”

Shipping Prices on the Rise

With peak shipping season right around the corner, dockworker, longshore worker and rail worker strikes could all impact supply chains during the second half of 2024 and/or even into 2025. The New York Times says dockworkers have threatened to strike on the East and Gulf Coasts of the United States, while longshore workers at German ports have halted shifts in pursuit of better pay. 

“Rail workers in Canada are poised to walk off the job, imperiling cargo moving across North America and threatening backups at major ports like Vancouver, British Columbia,” it adds, noting that the intensifying upheaval in shipping is prompting carriers to lift rates while raising the possibility of more waterborne gridlock. Since October, the cost of moving a 40-foot shipping container from China to Europe has increased to about $7,000, from an average of roughly $1,200.

“That is well below the $15,000 peak reached in late 2021, when supply chain disruptions were at their worst,” NYT explains, “but it is about five times the prices that prevailed for the years leading up to the pandemic.”

Bad Weather Impacts Supply Chains

A spate of weather events affected people, businesses and supply chains in June. The Loadstar says flooding in Northern Europe led to extreme flooding across the region, with five confirmed casualties, and forced the level of the River Danube to double from its usual level of around three meters to more than six meters (roughly 10 feet to more than 20 feet). 

This and other extreme weather have impacted European agriculture, hitting food supply chains. “The frequency of extreme weather events in Europe, including the UK, has seen a significant rise, with occurrences increasing by nearly 50% over the last two years,” Fresh Plaza points out. 

“This escalation has profound implications for agriculture across the continent,” it continues. “The UK’s farming sector, already grappling with the challenges posed by these climatic changes, faces an uncertain future.”

Delivery Drones are Coming

The use of drones for delivery and other logistics tasks has been largely hit-or-miss over the last decade, with some promising technologies proving to be nothing more than just hype. However, this time it looks like the 300-lb gorilla of the e-commerce world may help “normalize” the use of drones in the supply chain.

According to Amazon, the company’s Prime Air delivery service just got the seal of approval from the FAA to operate drones beyond visual line of sight. This will allow Amazon to use drones across longer distances. Amazon pilots can now operate drones remotely without seeing it with their own eyes. The FAA approval applies to the company’s College Station, Texas location, where it initially launched drone deliveries about two years ago. 

Later this year, drone deliveries will begin integrating into Amazon’s delivery network, meaning drones will deploy from facilities next to same-day delivery sites. Amazon is planning to immediately scale its operations in that city in an effort to reach customers in more densely populated areas.

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