Work stoppages and instability affect ports and airports in the US and Europe

Posted by Francisca Macias

Labor unrest disrupts supply chains from sea to sky, and that’s because after years of stagnant wages, workers want to get paid; especially those in logistics or other frontline industries that kept economies running during the pandemic and are now seeing their incomes evaporate as inflation rises everywhere.

Northern European ports are among the most congested in the world, in part due to covid outbreaks and sporadic cases of work stoppages. With the Terminal feature, you can see how ship bottlenecks are widening from Antwerp, Belgium, to Hamburg, Germany, as clogged inland rail and transport networks fail to keep up with the flow of informed cargo. Bloomberg.

Even the threat of a major port strike can cause congestion, such as ships queuing outside the port of Savannah, Georgia. Part of the reason is tied to importers diverting cargo from Asia to avoid potential labor unrest at the country’s busiest commercial gateways in Los Angeles. The contract for the West Coast dockworkers and their employers expired last Friday and talks continue.

As of early last week, there were 31 container ships anchored in the waters off Savannah, leading to estimated waits of eight to 10 days. In the New York area, delays stretch up to 20 days for ships waiting at anchor.

Perhaps the most visible signs of worker discontent are appearing at airports in the US and Europe, where passenger carriers are canceling thousands of flights due to shortages of ground staff, flight attendants and pilots. The return of a healthy summer travel season was supposed to hasten the return to normalcy, but the recovery is experiencing some turmoil.

That instability may affect the air cargo market, which has tightened considerably in the past two years as so many flights on the ground reduced capacity in cargo holds below passenger cabins. As the Drewry Air Freight Index shows, fares are down a bit from their peaks but are still more than double pre-pandemic levels. Next thing to watch: how air freight rates will fare when Europe’s temporary rules allowing goods to travel in vacant passenger cabins expire at the end of this month.

In addition, any strike on the US West Coast could boost demand for air freight and cause air freight rates to soar again.

What about ground transportation?

Some 70,000 truck owner-operators who form the backbone of California’s trucking industry are in limbo as statewide labor rules begin to apply to them, creating another bottleneck in stressed supply chains. from USA

Nearly a dozen truckers told Bloomberg News they aren’t sure how to comply with California Assembly Bill 5 (AB5), which requires workers to meet a three-part test to be considered independent contractors, or be seen as employees entitled to employment benefits. The trucking industry relies on contractors, who until now have had the flexibility to operate on their own terms, and have fought for years to be exempt from state regulations.

California truck owner-operators must now comply with AB5 after the Supreme Court refused June 30 to review a case challenging legislation establishing tests for employment status classification.

The California Trucking Association, which filed that challenge, estimates that the law may get thousands of independent truckers off the road while they take steps to comply with the new regulations. More than 70% of truckers serving some of the nation’s largest ports, including Los Angeles, Long Beach and Oakland, are owner-operators, and AB5 will govern their relationships with carriers, brokers and shippers in most cases, according to the CTA.

“We have never gotten good answers from any official in California on how this is supposed to be enforced or how our members can comply,” said Norita Taylor, director of public relations for the Owner-Operator Independent Drivers Association.

The law takes effect for truckers in the busiest months of the year, as retailers stock up on back-to-school and holiday products. At the same time, port and rail workers are negotiating contracts with their respective employers. Additional transportation tangles would only worsen the pandemic-era supply chain chaos and increase inflationary pressures, threatening to slow economic growth.

«This denial couldn’t have come at a worse time,» said Eric Sauer, CTA’s senior vice president of government affairs. “We are in the high harvest season. We are also in peak construction season. And this is the time for peak holiday imports arriving at the ports.”


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