Port Strikes in Europe

Port Strikes in Europe

International shipping has encountered many recent challenges to its normal operations. Ongoing conflicts have added complexity to transporting goods, and the COVID-19 pandemic wreaked havoc on supply chains and transport systems. Port strikes in Europe are the latest threat to international shipping and trade.

Why Are Port Strikes Happening?

Workers in many industries seek to improve working conditions to help offset problems with the high rates of inflation we see today. With rental prices, food, and electricity prices jumping due to recent events, including the invasion of Ukraine, the introduction of monetary stimulus packages, and supply chain bottlenecks, collective bargaining disputes plague various industries ranging from air transport to port workers. The main conflict in many of these disputes includes an automatic adjustment of compensation levels based on inflation rates.

Where Are Port Strikes Happening?

 Port strikes are taking place throughout Northern Europe to improve the working conditions of port workers. Germany faces the most significant disruption in operations, while Belgium and other areas are also experiencing difficulties due to port strikes.

Germany

Ver.di, a prominent German labor union, and the Central Association of German Seaport Companies (ZDS) have been negotiating contract terms in response to current economic conditions in Germany. However, one of the most significant impasses in reaching an agreement is linking worker pay to the inflation rate.

Ver.di accounts for about 12,000 workers at important ports throughout Germany, including Hamburg, Bremerhaven, Emden, Brake, Bremen, and Wilhelmshaven. To apply pressure for an agreement to be reached, port workers in Germany have engaged in numerous strikes, two in June 2022 and a more prolonged strike in July 2022. These strikes have caused hardships for port operators, shipping companies, and exporters.

Belgium

While the effects of port strikes in Belgium have been mild compared to those in Germany thus far, it is essential to take note of recent events. There have been two port strikes in Belgium, one at the end of May and the other in June 2022.

The ports of Zeebrugge and Antwerp began working as a single entity in April 2022. This makes the port the biggest in Europe and the most extensive carport on the continent.

Therefore, the recent occurrence of port strikes in Belgium threatens the operations and costs of many exporters, shipping companies, and port operators.

What Are Port Strikes Affecting?

Strikes throughout Europe have had profound effects on international trade and shipping. Port strikes have disrupted operations in Germany, increased port congestion, lengthened the waiting time of vessels to berth, and increased the yard capacity of ports throughout Europe.

Port strikes have already caused disruptions to key exports, and further port strikes in Germany could cause significant challenges to global supply chains.

Port Strikes Pose a Serious Threat

Collective bargaining disputes over inflation-adjusted pay rates for port workers are ongoing. Port strikes are already negatively impacting shipping operations in Europe, particularly Germany.

It is essential for shipping to return to full capacity to help dampen the inflationary impacts of the scarce supply of goods resulting from underutilized international shipping activities. Prolonged port disruptions are not just a problem for Europe but a global problem that needs a quick solution.

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Port Strikes in Europe

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The 2022 Shipping Reform Act: What It Means for Ocean Carriers

The 2022 Shipping Reform Act: What It Means for Ocean Carriers

On 16 June 2022, President Joe Biden and a number of prominent senators, led by Senator Maria Cantwell, Chair of the Committee on Commerce, Science and Transportation, gathered in Washington D.C to sign the first major revision of US maritime legislation in two decades. The Ocean Shipping Reform Act (OSRA) of 2022 will usher in a new era for international trade that is bound to have far-reaching consequences for huge numbers of people around the world. 

The primary goals of the Ocean Shipping Reform Act are to strengthen the maritime supply chain and unclog overloaded U.S. ports that have seen goods languishing for days and sometimes weeks. It aims to do this by empowering the FMC to ‘protect the interests of U.S. businesses that rely on ocean transportation.’

Economics is central to the new legislation. With recession looming, legislators are looking to take bold steps. Clearly, inflation has emerged as the biggest concern that the administration is facing, and the lawmakers who drafted OSRA clearly believe that driving down shipping costs will be a decisive blow to the runaway inflation that is being felt worldwide.

But the new legislation has come in for a fair amount of criticism from some important quarters, in particular the World Shipping Council. This body represents most international ocean carriers. After all, these carriers are the ones that shouldered most of the blame for the rising shipping costs of the last few years.

What Led to the Ocean Shipping Reform Act?  

A lot has changed since 1998, politically, economically, and technologically and it’s no surprise that laws that were drafted in the last century would leave gaping holes in the brave new world of 2022. Clearly, an update to the law was long overdue.

The Ocean Shipping Reform Act, championed by Senator Cantwell, was introduced into the Senate in February 2022, passed by the Commerce Committee on March 22nd, unanimously passed through the senate at the end of March, and was signed into law by President Biden on 16 June.

In a press release, the Senate Committee on Commerce, Science, and Transportation boldly stated that it intended to provide equal opportunities for both American importers and exporters using the bipartisan Ocean Shipping Reform Act of 2022.  It aims to do this by providing the FMC with various tools for effective oversight in the hopes that this would help the FMC crack down on unfair practices that are harmful to both American businesses and consumers.

It’s no surprise that shipping costs have skyrocketed since the Covid-19 pandemic turned the world upside down in January 2020. Bloomberg News reported that the average cost of shipping a 40-foot container from China to the U.S. West Coast is $7,980 – more than double what it would have cost a year ago. And near-term movements are just as bad, having risen by 47% year-on-year. 

Clearly, this situation is unsustainable, and action needs to be taken.

Encouragingly, the same article reported that there had been some price relief in recent weeks. Lee Klaskow, a senior transport analyst at Bloomberg Intelligence, sums it up neatly by explaining how the rising threat of a prolonged recession , not to mention strict coronavirus-related lockdowns in China — has contributed to lower rates.

In trying to regulate the industry more aggressively, the new Act has given more power to the Federal Maritime Commission (FMC), the independent federal agency that is tasked with regulating international ocean shipping and certain carrier practices to promote the growth and development of U.S. exports “through a maritime system that is transparent, efficient, and fair.”

Ocean Carriers Not to Blame for the Shipping Reform Act 

The media was quick to blame the steep rise in costs on ocean carriers that, in their view, were exploring the situation for profit. But the overall situation is far more nuanced than that, and it requires a detailed understanding of the complex dynamics at play in international trade. 

Many of the cost pressures have come from unexpected quarters that could not possibly have been planned for. For example, very few analysts predicted President Putin’s invasion of Ukraine and the united response from the West, which excluded Russia and Ukraine from the well-established international order. 

The World Shipping Council came out strongly against this characterization of ocean carriers as being to blame, stating in no uncertain terms that “recent weeks have seen several attempts to demonize ocean carriers by deploying ‘us versus them’ rhetoric. That is not only inaccurate but dangerous, as it undermines the ability to understand and work towards solving the root causes of America’s supply chain problems.”

The council went on to illustrate how ocean carriers are a vital, long link in the global supply chain and play an incredibly important role for American businesses, government, and consumers. The statement from the Council explained how, even though it was understandable for regulators to ask questions about the current market conditions, liner shipping is already a very closely monitored sector of the economy and that carriers have already those questions. They said that “ocean carriers actively compete against one another in the global marketplace, including on the shipping lanes most relevant for U.S. trade.”

In its response, the Shipping Council went to great lengths to make sure that people understand that there is a confluence of factors at play, such as the ongoing war in Ukraine and the very strict lockdowns in the port of Shanghai, and strike action in the United States ports. Each of these global issues is contributing to rising prices, and to lay the blame at the feet of ocean carriers comes across as a form of scapegoating and cherry-picking the facts.

In fact, earlier in the year, the FMC themselves seemed to acknowledge that ocean carriers were not the only reason for the high costs when Commissioner Dye released the Final Report for Fact Finding 29, which stated clearly that while markets are competitive and the high ocean freight rates in the United States have been determined by unprecedented consumer demand, the supply of vessel capacity was overwhelmed. 

No doubt there has been a lot of frustration about rising prices in the markets, but it does come across as political posturing to lay the blame on ocean carriers. Senator Cantwell’s remarks play well to the very important farming lobby. In her remarks at the signing ceremony, she noted that American farmers cannot be expected to carry the burden of skyrocketing shipping costs and that the new law will “level the playing field between big international shipping lines and agricultural exporters.”

In the next section, we’ll take a closer look at some of the consequences of the new bill for those involved in global trade.

Potential Consequences of the Shipping Reform Act 

As mentioned earlier in the article, the Act gives the FMC far more power to take a more proactive role in investigating the behavior of ocean carriers, enforcing carrier obligations, and establishing and enforcing the rules governing detention and demurrage charges. 

Long term, the consequences of the Act will be determined by how the FMC responds to its new role.

The burden of far greater transparency is going to be laid at the door of shippers in the coming months as the legislation requires international ocean carriers to report to the FMC regarding how many empty containers are being transported.  Furthermore, the burden of proof regarding overcharging certain fees has been shifted from the complainant to the international ocean carriers in an attempt to level the playing field.  

A senior supply chain analyst at research leaders Gartner, Brian Whitlock, summed up the consequences neatly when he noted that the problems are structural and that the long-term benefits that OSRA will bring won’t be immediately apparent when it comes to the market challenges that logistic leaders face right now, such as port congestion and high shipping rates. 

 

Conclusion 

There is no denying that soaring shipping costs have contributed to the inflationary environment, which is causing economic pain around the world, and that ocean carriers have a role to play in trying to contain those costs. But the reasons behind these cost pressures are complex, and no single act of Congress will change that overnight. The change will take time and require good faith from all the players. 

In the short term, ocean carriers will be able to contribute to lowering prices and easing tensions in the industry by closely managing the detention and demurrage costs and by providing greater visibility tools that offer real insight into the workings of the industry. Hopefully, the fact that new legislation has passed will help solve some underlying problems and bring down the level of inflammatory rhetoric, which has risen almost as high as prices over the last two years.

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Port Strikes in Europe

International shipping has encountered many recent challenges to its normal operations. Ongoing conflicts have added complexity to transporting goods, and the COVID-19 pandemic wreaked havoc on supply chains and transport systems. Port strikes in Europe are the latest...

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Not only has the war in Ukraine had a devastating impact on the people of the country, but it has also sent profound shockwaves through global supply chains that were already reeling from years of disruption caused by pandemic-induced lockdowns. 

Famine is Stalking the Planet

Together, Russia and Ukraine account for 25% of the world’s wheat production, as well as 60% of global sunflower oil and 30% of global barley exports. As a result, food prices everywhere are soaring everywhere.

Energy Costs are Skyrocketing

Widespread bans on the import of Russian oil and gas are leading to rising energy prices that have a knock-on effect across supply chains and the global economy. 

Microchip Production Has Been Throttled

Tier 2 inputs, such as neon, have dried up. 70% of all neon is used in semiconductor chip manufacturing, and more than 50% of the world’s neon supply comes from Ukrainian factories, which have all shut down production.

Over 300,000 US Businesses are Scrambling

Deloitte reports more than 336,000 American businesses were heavily reliant on Russian suppliers and forced to quickly find alternative suppliers. 

Ocean Exports Have Been Devastated

By some accounts, there has been a 54% decrease in vessel volumes near Russian ports and a 40.2% drop in daily peak TEU vessel volumes.  

The war is having an impact all the way up and down the supply chain. Patience with providers, kindness and agility are key in maintaining good relationships and finding solutions to the crisis that few could have imagined or planned for at the beginning of the year. 

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Port Strikes in Europe

International shipping has encountered many recent challenges to its normal operations. Ongoing conflicts have added complexity to transporting goods, and the COVID-19 pandemic wreaked havoc on supply chains and transport systems. Port strikes in Europe are the latest...

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The Business of Shipping Pet Food  

The Business of Shipping Pet Food  

While the shortage of baby formula has been grabbing the headlines for months, the issues around importing pet food have been slightly overlooked, but they have also gotten more complicated due to the many forces that have been buffeting the global supply chain, such as COVID-19 and the war in Ukraine.

It’s a massive sector of the economy. USA Customs Clearance reports that Americans spend over $70 billion on pet food annually, and a lot of that is imported from overseas. 

Specifics of Shipping Pet Food

We cherish our pets and worry about them almost as much as our children. The family pet is a huge part of most American households. Feeding them well is so important, and the trade in pet food is well regulated and something that people should know more about. 

The FDA regulates the quality of pet food coming into the country. The agency requires pet and animal foods to be safe and wholesome, contain no deleterious, harmful, or unapproved substances, and be truthfully labeled. Products are subjected to examination when they cross the border, and if they do not meet standards, they may be prohibited from coming in. 

Shipping pet food to the USA can be lucrative if you work with the right shipping company, and make the effort to comply with all the regulations required.        

What is the Process for Shipping Pet Food?

As worries of zoonotic diseases like Covid have become so prevalent around the world, the shipping of animals and animal products is being more highly regulated and carefully watched. 

Most pet food distributors have no interest in global supply chain logistics. It’s not what they do. So when it comes to shipping pet food, most people partner with a company that has consolidated experience in the field of shipments, that can offer the highest levels of protection along the entire supply chain, and can guarantee the safety and integrity of the merchandise for the good of the clients and, of course, all of our beloved pets.

Important Considerations in Shipping Pet Food

When you import pet food into the U.S, it is vital that you comply with regulations from the FDA and other government agencies and that pet food is properly labeled. That means HTSUS codes and commercial invoices, clearance bonds, bills of lading, and much more. 

Mistakes in certification are costly, resulting in the shipments being detained, delayed, or in some cases, destroyed. The amount of detailed paperwork and strict regulations involved is considerable, and it requires a steady hand that understands the interconnected nature of global trade. Getting one or two digits wrong of the HTSUS codes on your shipments, for example, will lead to costly delays.

Of course, it’s not just in the US where demand for pet food is increasing. It’s a global phenomenon. The Worlds Top Exports website reports that Germany exports over $2 billion of pet food annually, accounting for 12.7% of the global market, followed by the US ($1.7 billion) and France, and importers need to pay careful attention to the changing market costs and the vagaries of the supply chain. 

Great business for those who do the work

Pet food imports make up the biggest section of the pet supplies market.  If you learn to navigate the supply chain properly and you are conscious of the ingredients you are importing, then you can do very well importing pet food. 

Understand the regulations, work with a trusted, experienced partner like OL USA, and with a few good choices, you’re well on your way to creating a great business. 

 

Interested in shipping pet food? OL USA is the right company!  Did you know that pet supplies will always require a customs bond regardless of the size or value of the shipment? Those kinds of details are important to get right.

We will ensure that all government regulations are adhered to. And don’t forget, OL USA is C-TPAT certified.

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Port Strikes in Europe

International shipping has encountered many recent challenges to its normal operations. Ongoing conflicts have added complexity to transporting goods, and the COVID-19 pandemic wreaked havoc on supply chains and transport systems. Port strikes in Europe are the latest...

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While the shortage of baby formula has been grabbing the headlines for months, the issues around importing pet food have been slightly overlooked, but they have also gotten more complicated due to the many forces that have been buffeting the global supply chain, such...

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How to Protect Your Business Against Supply Chain Disruptions 

How to Protect Your Business Against Supply Chain Disruptions 

Everyone knows the saying, “a chain is only as strong as its weakest link.” 

The last two years have been a sledgehammer pounding the global supply chain with a series of blows coming from the pandemic, lockdowns, and now the devastating war in Ukraine.  

The chain is still holding, but there is no doubt it’s been weakened, and it’s the responsibility of every business owner to know how to protect their organization against supply chain disruption. 

Overview of Current Supply Chain Disruptions

The disruptions that have roiled global trade over the last few years are a result of profound changes in consumer behavior, supply chain availability, and changes to routes as a result of war and lockdowns. There is no one single factor in a chain this complex, but bottlenecks, extended lockdowns in key ports such as Shanghai, embargos, blockades of Russian companies, food shortages, and more have all piled on top of each other to create an enormously tricky operating environment for global suppliers.

Protecting Bottom Line During Disruption 

How you protect your bottom line against supply chain disruptions depends very much on your own particular circumstances. Every business has a unique set of challenges, and opportunities, with which to contend. 

But here are three fundamental strategies that you must apply to your situation to ride the current crisis successfully: 

Understand the Risks

The last thing you can afford is to be caught flat-footed at this time. That means developing a deep understanding of your supply chain; at Tier 1, 2 and 3 levels. Make sure you know who is operating your supply chain, who manages the ocean freight, the state of the ports your goods are using, where problems may occur, and so on. 

When you understand the risks, then you know how to manage them. 

Mitigate Delays

You can lessen the impact of supply chain disruption by improving your planning well in advance. That could mean better forecasting of demand, or it may mean slowly moving away from Just-in-time inventory management to a more long-term solution. Perhaps you need to employ a new combination of transport modes to help manage the crisis – all of this is doable when you face your challenges head-on and don’t look away. 

Enact Proactive Strategies 

Don’t wait for a situation to turn into a crisis. Act fast and aggressively early on before the problem becomes an existential threat. Partner up with logistics firms that have a long track record, or invest in forecasting technology that will help you see what’s coming down the road. 

Risk Management Efforts from COVID to Conflict

Since the emergence of a fast-moving virus in China two and a half years ago, through the Russian decision to invade Ukraine,  enormous pressure has been headed on the backs of global companies and the companies that keep the supply chain moving. 

Managing risk has become a necessity for companies that hope to survive and emerge stronger. No crises last forever, and the lessons learned during this challenging time will stand you in good stead when the good times roll around again.

Sign up for OL USA's weekly Industry Snapshot

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Port Strikes in Europe

International shipping has encountered many recent challenges to its normal operations. Ongoing conflicts have added complexity to transporting goods, and the COVID-19 pandemic wreaked havoc on supply chains and transport systems. Port strikes in Europe are the latest...

The 2022 Shipping Reform Act: What It Means for Ocean Carriers

On 16 June 2022, President Joe Biden and a number of prominent senators, led by Senator Maria Cantwell, Chair of the Committee on Commerce, Science and Transportation, gathered in Washington D.C to sign the first major revision of US maritime legislation in two...

5 Supply Chain Consequences of the War in Ukraine

Not only has the war in Ukraine had a devastating impact on the people of the country, but it has also sent profound shockwaves through global supply chains that were already reeling from years of disruption caused by pandemic-induced lockdowns.  Famine is Stalking...

The Business of Shipping Pet Food  

While the shortage of baby formula has been grabbing the headlines for months, the issues around importing pet food have been slightly overlooked, but they have also gotten more complicated due to the many forces that have been buffeting the global supply chain, such...

How to Protect Your Business Against Supply Chain Disruptions 

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Advancements in Supply Chain Visibility 

The increased globalization of manufacturing and recent events such as the Covid-19 pandemic have placed a greater emphasis on supply chain management. Now more than ever, being able to deliver goods anywhere and anytime is crucial to satisfy your customers and...

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Logistics has long been a male-dominated industry, with very few women at any point along the supply chain. The truth is though, women are an incredibly valuable asset in the logistics talent pool, and companies eager to obtain top talent should be tapping into this...

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The Chip Stops Here: How the War in Ukraine Impacts the Semiconductor Market 

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