Whether by sea, by rail, or by highway, the nation’s supply chain has never been more complicated. Here’s a quick roundup of recent supply chain developments, in what has become a year loaded with slowdowns.
SEA SUPPLY-CHAIN ISSUES
- On September 9, the world’s third-largest container carrier, CMA CGM, announced it would stop all spot rate increases until February 1, 2022 in an effort to strengthen long-term relationships with customers amid what it called “an unprecedented situation in the shipping industry.”
- CMA CGM noted it expected market-driven rate increases to continue for months, and had increased the capacity of its fleet 11% since December 31, 2019.
- The carrier’s announcement followed news that port berth delays continue to back traffic up at the nation’s top three ports, and that number has steadily risen since July, reported Bloomberg (Sept. 9).
- The report indicated 40 container vessels were waiting to offload in Los Angeles and Long Beach, California as of September 8, with 20 waiting to dock in Georgia’s Port of Savannah. Additionally, the Port to New York and New Jersey’s backlog reached its highest since April.
RAILWAY COMPANIES BOUND FOR RESTRUCTURING
- The drama surrounding the acquisition of the Kansas City Southern railroad continued as it picked Canadian Pacific’s $31 billion bid to purchase it, according to an Associated Press report (Sept. 12). Rival Canadian National had five days to negotiate a revised deal.
- Canadian National had previously offered $33.6 billion for the U.S. railroad, but was rebuffed by the Surface Transportation Board which said it wouldn’t be able to use a voting trust to acquire the company.
- Another Associated Press (Sep. 13) report noted Canadian National was facing increasing investor pressure to drop its efforts in acquiring Kansas City Southern, with London-based investment firm TCI fund calling for a special shareholder meeting, during which it wanted to nominate four directors.
- Capitalizing on the red-hot transportation market, Echo Global Logistics Inc. decided to sell itself to private equity firm Jordan Co. LP for nearly $1.3 billion, reported The Wall Street Journal (Sept. 10). The deal represented a 54% premium over its closing price Sept. 9.
- Echo is the eighth-largest U.S. operator based on 2020 gross revenue in the middleman freight brokerage business of connecting shippers with truckers.
- Amid the high rates, a debate over whether to let people under the age of 21 drive tractor trailers across state lines is dividing the industry. Proposed legislation would lower that limit to 18 years of age to increase the labor pool, but detractors argue it won’t help turnover as the job requires long hours and time away from home for relatively low pay, reported The Wall Street Journal (Sept. 10).