Supply Chain & Logistics

LA Harbor Commission approves US$52 million rail expansion project

The Los Angeles Harbor Commission has approved a lease amendment, solidifying plans for a US$52 million infrastructure improvement project aimed at significantly enhancing on-dock rail capacity and reducing emissions at the Port of Los Angeles’ Pier 300 terminal, operated by Fenix Marine Services. Construction is scheduled to begin next year.

“This project enhances cargo capacity and efficiency while improving the sustainability of port operations. It’s yet another step forward toward both our productivity and clean air goals,” stated Lucille Roybal-Allard, president of the Los Angeles Harbor Commission.

This project aims to boost cargo handling capacity and operational efficiency while promoting sustainability at the port. It will add five loading and unloading tracks to the intermodal yard at Pier 300, expanding the on-dock railyard’s capacity. This will allow more cargo to be directly loaded onto trains within the terminal, leveraging rail as the most energy- and fuel-efficient mode of long-haul freight transport in the United States.

“Fewer transfers of cargo results in cleaner operations and more fluidity on our container terminals. This project will make us more competitive and add to our ability to pursue more discretionary cargo headed for the interior of the United States,” explained Gene Seroka, Port of Los Angeles Executive Director.

Additional improvements include grading, paving, fire protection, electrical upgrades, striping, signage, and enhanced storm drain systems to meet Low Impact Development standards.

“This investment ensures that there is adequate on-dock intermodal capacity to accommodate future volume growth, enabling POLA and FMS to further compete for discretionary cargo in an environmentally and community-responsible way,” commented George Goldman, President & CEO of CMA CGM (America).

Funding for the project includes approximately US$18 million from the U.S. Department of Transportation’s Maritime Administration and US$19 million from California’s Trade Corridor Enhancement Program, with the Port of Los Angeles covering the remaining costs.

In January 2022, CMA CGM reacquired full ownership of Fenix Marine Services, a major container terminal at the Port of Los Angeles. As one of the largest US terminals, strategically located with deep-water access and advanced infrastructure, FMS is central to the terminal’s ongoing development and investment initiatives.

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UK cold chain adds £14bn to the UK economy

Reading, UK: The UK’s cold chain industry adds £14bn to UK GDP, supports 184,000 jobs and provides £3.7bn in tax revenue, according to a new report by Oxford Economics.

But rising energy costs, up 46% in 2023 compared to 2022, weigh heavily on the sector despite over a quarter of cold stores running on renewable energy.

The report, Cold Chain Report 2024, launched at the federation’s Cold Chain Live! event this week, updates statistics on cold storage and temperature-controlled distribution.

The cold chain supports economic activity across all regions of the UK due to the geographically widespread nature of the sector. Jobs supported by the cold chain were concentrated in the East Midlands (23,000), East of England (22,000), North West (21,000).

The report identifies little change in maritime trade use of refrigerated shipping containers. Last year, 342,425 were imported into UK ports, which was no change from 2022. London Gateway is the busiest port, with 51% of all traffic. The sector saw a 9% decrease in exports.

Other key numbers include:

The number of cold stores operating blast freezers increased by 3% in 2023, when compared to 2022
The use of CO2 as a primary refrigerant in cold stores increased by 4%, whilst ammonia and HFCs each reduced by 2%
The cost of diesel used in truck and fridges increased by 4% in 2023

The report highlights the cold chain’s vital role supporting UK manufacturing, facilitating £53bn in chilled and frozen food, beverages, and pharmaceutical sales in 2023.

International trade supporting £12bn in UK exports and £32bn in frozen and chilled goods imports.

Regional economies driving economic activity across all regions with significant job concentrations in the East Midlands, East of England, North West, and Yorkshire and the Humber.

The report reveals that nearly half (49%) of all food and beverages produced in the UK – valued at £50bn – require chilling or freezing. This underscores the importance of the cold chain for sectors like food and beverage processing and pharmaceuticals.

The study also highlights the crucial role of the cold chain in the UK’s horticultural sector. Since all horticultural products require temperature-controlled storage and transportation, the cold chain contributes to the production of £1.7bn worth of ornamental plants in 2023.

Prof Toby Peters, professor of cold economy, University of Birmingham, said: “The cold chain has a critical role to play in a future sustainable and prosperous UK and this Report helps shines a light on the criticality of supporting cold chain development and will help ensure the sector finally gets the recognition it deserves.

“The landscape in which the UK’s cold chain operates has undergone profound change in recent years. In the face of a multitude of pressures from external factors such as rapidly changing consumer demands and trade flows following Brexit, the industry is also adapting to a changing climate and the need to be sustainable. There are promising signs of progress but much more still to be achieved.”

Tom Southall, deputy chief executive, Cold Chain Federation, said: “The Cold Chain Report 2024 unequivocally demonstrates the cold chain’s status as a cornerstone of the UK economy, from supporting millions of jobs to facilitating billions in trade, this sector is a vital engine of growth. We urge policymakers and industry leaders to recognise the cold chain’s immense potential and invest in its continued development.”

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Nordstrom pulls back on Pacific Northwest omnichannel center plans

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Dive Brief:

Nordstrom ceased the build-out and planning of a leased omnichannel center in the Pacific Northwest, the company announced in a Q2 earnings call.
The company has improved its operations and found it can serve customers more efficiently with its existing supply chain network while avoiding the added costs of building out the facility, CEO Erik Nordstrom said on the call.
Some improvements the company previously touted included a 5% increase in click-to-delivery speed and lower fulfillment costs, according to a Q1 earnings call.

Dive Insight:

Nordstrom identified supply chain optimization as a top priority back in Q4 of 2022. Now, the retailer is seeing improvement along its supply chain, causing it to move away from its Pacific Northwest omnichannel plans.

“Logistics networks have recovered from the supply chain challenges that began during the pandemic, and we’ve improved our supply chain operations over the last few years,” Nordstrom said.

In addition to previously noted enhancements, the retailer is seeing faster processing times for its inbound merchandise enabling faster returns, the CEO said.

The company also said it is rolling out RFID tags across its fleet. Nordstrom is starting to “get the benefits that that insight gives us,” CFO Cathy Smith said on Q2 earnings call. The inventory accuracy provided by the technology also enhances the customer experience, Smith added.

Even with recent improvements, Nordstrom is still making supply chain enhancement a priority. The company announced it plans to relocate operations from its fulfillment center in San Bernardino, California, to its omnichannel center in Riverside, California, during a Q4 2023 earnings call. The transition will help the company further leverage the Riverside facility’s warehouse automation.

“We’ll continue to look to leverage our existing supply chain network, always balancing the best customer experience we can with speed and cost,” Smith said.

As it shifts its supply chain strategy, Nordstrom’s board of directors is currently considering a $3.8 billion offer from CEO Erik Nordstrom, President Peter Nordstrom and Mexican retail company El Puerto de Liverpool to buy the company.

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Shifting Global Trade Routes and Economic Power: A comparative analysis between Far East and Middle East

In an increasingly interconnected world, the dynamics of global trade routes and economic power are in constant flux, with regions like the Far East and the Middle East playing pivotal roles in these shifts. This geopolitical analysis focused on understanding the evolving relationship between these two crucial regions by considering three key indicators: Liner Shipping Connectivity, Container Port Throughput, and GDP Growth. By constructing a compound indicator from these variables, we aimed to capture the underlying trends driving these regions’ economic and strategic importance on the global stage. The overall analysis revealed several noteworthy conclusions that shed light on the changing landscape of global trade and economic power.

The Middle East demonstrated a greater degree of stability in its maritime connectivity and infrastructure development compared to the Far East. Despite the substantial gap in overall development and connectivity between the two regions, the Middle East has shown a relatively smooth trajectory in its progress, marked by gradual and steady improvements. While the Far East, with its advanced and highly developed maritime infrastructure, exhibits a more dynamic and rapidly evolving pattern, the Middle East’s path reflects a more measured approach.

The analysis reveals a significant disruption in the Far East’s maritime trade dynamics during the 2019-2020 period, primarily attributed to the Covid-19 pandemic. This global crisis caused a sharp decline in trade flows, impacting the previously steady growth trajectory of the Far Eastern maritime system. In contrast, the Middle East experienced only a slight decline during the same period, reflecting its less advanced trade infrastructure and lower exposure to global supply chain disruptions.

A key finding from the analysis is the critical role of shipping connectivity in mitigating the effects of the crisis. For the Far East, the shipping connectivity feature emerged as a crucial factor in the region’s recovery. The Far East’s advanced connectivity, bolstered by significant investments in port infrastructure and logistics, enabled a quicker rebound as trade flows began to normalize post-pandemic. This adaptability highlights the importance of robust maritime connectivity as a buffer against global disruptions and a catalyst for recovery.

For the Far East, its well-developed maritime infrastructure and strategic investments in connectivity played a pivotal role in facilitating a swift return to growth after the initial pandemic-induced decline. While the Middle East experienced a less severe impact, the pandemic demonstrated the strategic importance of robust maritime infrastructure in managing and recovering from global trade disruptions.

The analysis of the trends in maritime connectivity and infrastructure development for the Far East and the Middle East reveals a notable similarity between the two regions’ growth trajectories. This relative similarity suggests an interconnection between their maritime development paths, indicating that both regions are likely to see increased investments in maritime infrastructure in the near future. However, the data also highlights that the Middle East still requires substantial investments to match the advanced level of maritime infrastructure found in the Far East.

The ongoing trend of increased maritime investments suggests that the Middle East is poised to emerge as a prominent maritime hub in the near future. However, it is essential to address the challenges related to maritime safety and regional stability, especially in the Middle East region, which has faced issues such as political instability and security concerns that can impact maritime operations.

Shipping connectivity has emerged as a pivotal finding in our analysis, serving not only as a critical economic factor but also as a crucial element for navigating major crises. The capability for movement and interconnectivity between regions proves to be a powerful tool for resilience, particularly evident during global disruptions such as pandemics or geopolitical conflicts. The analysis highlights that while the Middle East requires substantial investments to enhance its maritime dynamics, the Far East has demonstrated remarkable resilience by recovering to pre-crisis levels of connectivity and trade volume.

Alexandros Itimoudis
Shipping Analyst

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Port of Baltimore creates deputy role to win back shipping business

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The Maryland Port Administration hired Port of New Orleans COO Matt Wypyski to lead commercial development at the Port of Baltimore as it wrestles back lost business following the Francis Scott Key Bridge collapse, the agency announced last week.

Matt Wypyski, Port of Baltimore deputy executive director

Courtesy of Maryland Port Administration

Wypyski, a 33-year maritime industry official, joined the state agency in the newly created role of deputy executive director for commercial development last month.

“Matt is extremely well-respected in our industry and he will be playing a significant role in helping us grow our cargo and cruise businesses as well as overseeing strategic initiatives,” Maryland Port Administration Executive Director Jonathan Daniels said in the announcement.

Wypyski brings leadership experience from public- and private- sector maritime roles — including the world’s largest container shipping line. His hire comes as Baltimore’s auto and roll-on/roll-off recovery outpaces that of its container volumes since the reopening of the Fort McHenry Federal Channel in June.

The role, which expands the port’s leadership from its two existing deputy executive jobs, will carry significance beyond the bridge collapse. The Howard Street Tunnel Project, a $566 million heightening of a CSX rail passageway under the city, is expected to double the port’s container capacity by welcoming double-stacked trains.

Before joining the Port of New Orleans last year, Wypyski served as deputy executive director and COO of the the Mississippi State Port Authority in Gulfport for 13 years.

He previously served as EVP of Mediterranean Shipping Company’s New Orleans and Houston terminal operations.

The Port of Baltimore’s strong leadership, successful history and “strong current business portfolio” enticed Wypyski to take on the new challenge, he said in the announcement.

“Baltimore is very well-regarded as a leading U.S. port for both cargo and cruise activity and I’m looking forward to helping our team contribute to the port’s future growth and success,” Wypyski said.

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First e-truck charging station opens at Port of Hamburg

E.ON has launched its first dedicated charging site for electric trucks in Germany, located on the grounds of the port of Hamburg along the A7 motorway.

This site features four charging stations, each equipped with a 400-kilowatt charger, allowing trucks to recharge during the mandatory 45-minute break required by law.

“When it comes to truck charging stations, we pay special attention to the needs of drivers and transport companies. Our new charging station in Hamburg demonstrates this: convenient charging with enough space for different vehicle types, an easy-to-find location directly on the motorway and a charging capacity of up to 400 kilowatts per vehicle. This means that the break can be ideally used for quick intermediate charging,” stated Ludolf von Maltzan, Business Manager Germany at E.ON Drive Infrastructure.

Depending on the truck model, this charging time provides enough energy for approximately 300 kilometres of driving.

The charging stations are designed with future upgrades in mind, allowing for the installation of megawatt charging technology, which will enable even faster charging times.

The spacious parking and charging bays, measuring three meters wide and 25 meters long, are suitable for articulated lorries, eliminating the need to uncouple trailers or semi-trailers.

Drivers can initiate and pay for the charging process using a charging card, app, or credit card terminal for ad hoc charging.

In addition to these new stations at the Port of Hamburg, E.ON Drive Infrastructure also operates dedicated e-truck charging stations in Sweden and Denmark, with further sites planned in Germany and across Europe.

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Manufacturing production hits 4-year low: August PMI

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The manufacturing sector remained stuck in a holding pattern in August as production levels sunk to levels not seen since the early days of the COVID-19 pandemic.

The Institute for Supply Management’s August PMI remained relatively flat during the month, inching up slightly to 47.2% from July’s mark of 46.8%.

A reading below 50.0% on a PMI index signals economic contraction.

Dragging down the overall index were continued declines in new orders and production. Production was particularly weak in August, with the production index’s 44.8% reading falling to its lowest level since May 2020, according to the ISM. The August figure was also down 1.1 points from July’s production index of 45.9%. Meanwhile, the August new orders index (44.6%) was down 2.8 percentage points from July as “a supply demand timing mismatch” led to a continued climb in inventories.

“Up until three months ago, the fact that we didn’t have demand wasn’t a super problem because we’ve been working on backlog, but now that the backlog is diminished, after 24 months of declining backlog and tracking indexes, we pretty much run out of the order book,” Timothy Fiore, chair of the ISM’s Manufacturing Business Survey Committee, said on a media call Tuesday.

As production decreased, so did staffing levels, with the employment index (46%) remaining in contraction territory once again in August.

“The ratio of hiring versus staff reductions returned to negative territory as companies continue to right size their workforce using layoffs as the primary tool,” said Fiore, although he did note that inputs “overperformed” in August.

While elevated interest rates have held capital investments at bay over the last two years, Fiore continues to believe the September cuts expected from the Federal Reserve will not have a major short-term impact. Instead, Fiore said he doesn’t anticipate any major changes until after the U.S. presidential election.

“Now we’re getting caught up here in the election cycle, where you’re a couple of months away from a huge decision point, not only in terms of who controls Congress, who controls the White House, and so now we’re kind of bunched up,” Fiore said. “It’s like a slinky. Unfortunately, we’re not at the extended slinky cycle, we’re at the compressed slinky cycle.”

Meanwhile, the S&P Global PMI August report, which had been slightly cheerier than its ISM counterpart this year, showed production decreased for the first time in seven months in August. The S&P PMI dropped to a reading of 47.9% during the month, a notable decline from July’s mark of 49.6%, with S&P describing it as “the most marked [decrease] in 2024.”

The production slowdown was a direct result of softening sales and demand, according to S&P, with new orders reducing at a rate not seen since June 2023.

“Slower than expected sales are causing warehouses to fill unsold stock, and a dearth of new orders has prompted factories to cut production for the first time since January,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement.

S&P noted that some companies “showed a reluctance to commit to new projects” because of the fall in demand. In addition, staffing levels fell for the first time this year and purchasing activity decreased at the “sharpest” rate of 2024.

The decrease in demand allowed manufacturers to deplete their backlogs of work for the 23rd straight month, increasing inventory of finished products, according to S&P, further souring the short-term outlook.

“The combination of falling orders and rising inventory sends the gloomiest forward-indication of production trends seen for one and a half years, and one of the most worrying signals witnessed since the global financial crisis,” Williamson said.

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DP World enters retail and fashion logistics with Cargo Services takeover

DP World has completed its acquisition of Cargo Services Far East, a global supply chain provider based in Hong Kong.

Cargo Services is a leader in origin services, managing the movement of goods from the factory to the customer. The company employs over 2,500 people across Greater China, Asia, Europe, South Africa, and the United States.

With this acquisition, DP World’s workforce has grown to over 115,000 employees across more than 800 global locations. By the end of the year, the company will operate over 200 freight forwarding offices, covering up to 95% of international trade flows.

“Cargo Services’ logistics expertise and global network perfectly complement our own footprint and will be yet another tool in our offering to customers. Together, we’ll create a powerful force propelling trade globally. By combining our strengths — technology, a growing logistics portfolio and strategic infrastructure – with Cargo Services’ expertise and network, we will be able to offer unparalleled value to customers seeking to strengthen existing trade ties or enter new markets. We are very excited to welcome our new colleagues, as they join us on this pivotal step in our growth journey,” stated Sultan Ahmed bin Sulayem, Chairman & CEO of DP World Group.

Founded in 1989, Cargo Services was one of the first foreign logistics service providers to enter the Chinese market. Over the years, it has developed a comprehensive range of solutions, including origin purchase order management, ocean freight, air freight, and warehousing, serving diverse sectors. The company also offers sophisticated supply chain management services, particularly for retail and high-fashion clients in markets like the US, UK, Europe, South Africa, Australia, and New Zealand. Additionally, it has expanded into specialised cruise logistics services worldwide.

“By joining DP World, we will gain access to extensive resources and expertise, allowing us to continue delivering top-tier freight-forwarding and logistics services that our customers demand. With a shared vision and strategy, I am confident that our respective teams will come together seamlessly to deliver growth,” commented John Lau, Group Managing Director of Cargo Services Group.

The acquisition is now officially complete, with full integration planned over the coming months. To support a seamless transition, John Lau will stay with the company, taking on a senior leadership role within DP World.

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DHL Supply Chain appoints new chief commercial officer for EMEA region

Bonn, Germany: DHL Supply Chain has appointed Andries Retief as chief commercial officer for the EMEA region (Europe, Middle East, and Africa). He took up his role on 1 September.

Retief will focus on customer-centric supply chain strategies, developing 23 key markets and strengthening services for small and medium-sized enterprises

Retief joined DHL Supply Chain in 2009 and served in various leadership positions across finance, transport, operations, and country management in Africa, Europe, and Asia. Most recently, he led DHL Supply Chain in Southeast Asia, where he spearheaded the company’s accelerated growth initiatives in multiple countries.

“With the growth opportunities here, from multi-sector industries, strategic locations to rapid urbanization and increasing consumer demand, our customers rely on our solutions to simplify and scale their contract logistics operations,” said Retief.

An immediate key focus will be on the peak season, one of the biggest annual challenges for the logistics industry.

“We anticipate the peak period starting earlier this year where our e-commerce & omni-channel, returns operations including aftermarket business, serve in full gear.

“The primary focus will be ensuring scalable capacity for our customers through our network of warehouses, transportation, and value-added services to quickly accommodate fluctuating volumes. Our goal is to collaborate closely with our customers to develop sustainable supply chain strategies, through our Lead Logistics Partner offering, that allow businesses to confidently navigate the surge in demand during one of the most demanding times of the year.”

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CMA CGM introduces port congestion surcharge in Algeria

French ocean carrier CMA CGM has announced a new port congestion surcharge (PCS) to the ports of Alger, Bejaia, Skikda and Oran in Algeria.

The Marseille-based box line will apply a surcharge of US$250 per TEU, effective from today, 2 September for all origins, except of US and Latin America countries where the surcharge will take effect on 30 September.

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