Sky High Ocean Freight Rates From Asia Attract Government Scrutiny
Ocean carriers have been skipping sailings to shore up their bottom line during the virus-induced downturn in manufacturing and consumer demand. Tactical blank sailings combined with record breaking rate spikes in the trans-Pacific trade have increased carrier profitability now that manufacturing and demand are coming back online. Decreased capacity and increased rates are helping ocean carriers recover at the expense of the global economy while suppliers struggle to meet pent up consumer demand. Government regulators have begun to exert pressure on ocean carriers to restore capacity and restrict rate increases. It has been customary to blank sailings during the Chinese Golden Week holiday, however the threat of intervention will surely impact carrier cost manipulations and capacity decisions.
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(Photo credit: OOCL)
Walmart And Amazon Drones Battle For Last-Mile Delivery Supremacy
Walmart and Amazon are engaged in a war of delivery drones. Although Amazon may be the largest e-commerce retailer, Walmart may have a structural edge enabling them to deliver groceries and household items by drone more quickly. Both players introduced short-range drones to transport small packages up to 5 pounds. According to Amazon, about 90% of products they sell weigh under 5 pounds.
Walmart claims they have a store within 10 miles of 90% of Americans. Amazon, by contrast, delivers from its fulfillment centers, usually located near major cities. That gives Walmart an edge until Amazon ramps up their rural presence.
Meanwhile, Amazon has patented a futuristic Jetson-style idea for distribution towers that look like beehives. The towers would function as fulfillment centers with landing pads for delivery drones, strategically located near high-density residential towers.
The current need for social distancing has accelerated a paradigm shift from brick-and-mortar stores to online shopping with contact-free delivery.
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(Photo credit: Amazon, via FreightWaves, and Walmart, via FreightWaves)
The Largest Energy Project In Canadian History Requires Import Of 1 Million Tons Of Oversized Construction Equipment
Shipments of massive excavators for the $40 billion LNG Canada energy project are shipped on board roll on/roll off ships to the Port of Tacoma, Washington. The equipment is driven on and off the ships via an enormous ramp with under-deck access. After arrival in Tacoma, they are hauled to Kitimat, BC for construction of the LNG facility and a 420 mile pipeline. The removable goose-neck trailers are fitted with 7 to 9 axles because transport is restricted to 34,000 lbs per axle most of the year. In snow and freeze/thaw conditions, the trailers are upgraded to 10-12 axles to redistribute the weight of the heaviest equipment.
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(Image: Spruce Hollow Heavy Haul moves an excavator from Port of Tacoma to Kitimat, BC, on a 9-axle rig. Photo credit: Spruce Hollow Heavy Haul.)
Airlines Retrofit Passenger Aircraft To Handle Cargo
Cathay Pacific supplements their cargo capacity and cuts some of their losses related to the pandemic by removing economy seats from Boeing 777 planes to transport more medical supplies, PPE and other critical shipments. They are required to keep the front and rear seat rows in place to protect the aircraft from cargo that could shift due to turbulence. Cargo is placed in fire-retardant bags because passenger cabins aren’t equipped with fire-suppression systems. The airline follows in the footsteps of Air Canada and Lufthansa who have reconfigured some passenger planes for cargo.
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(Image Credit: Cathay Pacific)
Drone Delivery System Aims to Make Mid-Size Retail Chains Competitive With E-Commerce Giants
Deuce Drone announced a test of their last mile delivery system which is intended to make delivery directly from stores to consumers faster and more affordable. Rouses Market, which operates 64 grocery stores in the south, has partnered with Deuce Drone to test a same day delivery system by drones in order to make last mile delivery faster and less costly than vans, so they can compete with Amazon.
(Image courtesy of: Commercial Drone Professional of Deuce Drone)
New Drone System Developed For Long Distance Delivery
Civil drone operators are currently restricted to line-of-sight operation of one drone at a time to avoid collisions. Satellite operator, Inmarsat Group Holdings, has partnered with Altitude Angel LTD to operate drones over long distances safely by integrating a backup satellite connection for areas with no land-based communications . If they can prove safe operation to regulators, fleets of remotely operated drones could be deployed to transport tons of goods. Read more about this development at:
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(Photo Credit: Chip Chipman/Bloomberg News)
Drone Manufacturer Asks FAA To Approve Unmanned Medical Supply Flights In Response To Pandemic
Zipline is offering to setup a drone-based supply chain across the US for distribution of emergency supplies such as medicine, PPE gear, test kits and even blood to ease supply chain blockages. The drones are launched by catapult and recovered by an arrestor system. The company has been operating the drones to deliver emergency medical supplies to remote locations in Africa for several years. Medical supplies are dropped by parachute to healthcare workers and rushed to areas suffering severe shortages.
(Photo credit: From Zipline via AOPA:
Manufacturers Who Cut Inventories And Profit Margins To The Bone Are The Most Vulnerable To The Current Crisis
In order for western manufacturers to remain competitive, many components are sourced from China. When China delays manufacturing, western manufacturers’ ability to finish their products and deliver them to market is impeded. To compound that problem, inventories are typically stockpiled for just 15-30 days due to cost-saving inventory management methods such as “just in time delivery”. That spells double trouble for manufacturers and consumers alike.
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(Photo credit: Julius Silver)
Trade Continues Despite US Border Closures with Canada and Mexico
Recent announcements of US border closures with Canada and Mexico state that the borders remain open for trade. Canada’s Transport Minister Marc Garneau explained that truck drivers, train and airline crews are exempt from the restrictions.
Read more about the border closures at: https://www.ttnews.com/articles/us-canada-agree-close-border-remain-open-trade
(Photo credit:Trucks on the road. (John Sommers II for Transport Topics)
Passenger Travel Ban From Europe Causes Severe Disruption Of Air Freight Industry
Some US importers are unaware that the travel ban for passenger flights from Europe will impact their air cargo shipments. The reality is that over 60% of air cargo is carried by passenger aircraft. As a result of the travel ban from Europe to the US, shippers are competing for space on a handful of freighter aircraft, pushing up rates, delaying cargo and diverting traffic through non-European airlines.