**Will the Biden Administration Back Down?**
Last week in this newsletter, I discussed a surprising report that the Biden administration would not invoke the Taft-Hartley Act to prevent or end a strike by the International Longshoremen’s Association (ILA). I remain skeptical, especially if the strike lasts for an extended period; I believe the government might take action. Container shipping companies estimate that each day of the strike could lead to five to ten days of congestion and delays, with impacts compounding over time.
The latest news this week is that the United States Maritime Alliance (USMX) stated they were unable to schedule a meeting with the ILA and believe the ILA has decided on striking.
I found an article in Sourcing Journal that well describes what would happen if Biden indeed invoked the Taft-Hartley Act to avoid a long-term strike. Here are my notes:
– There is precedent for invoking the Taft-Hartley Act—President George W. Bush used it in 2002 to stop a strike by the International Longshore and Warehouse Union.
– If the Biden administration invokes this act, subsequent steps would include:
– (1) Workers return to work during an 80-day cooling-off period while negotiations continue.
– (2) Assuming no agreement is reached within 60 to 75 days, USMX will submit its best and final offer to the National Labor Relations Board (NLRB), which will vote on it.
– (3) If NLRB deems the proposal acceptable, the result goes to the Attorney General. If not, the President would recommend Congressional action.
Before the holiday weekend, there was no increase in ocean bookings. This suggests that retail freight may have indeed been moved ahead of seasonal standards as some experts advised.
For the latest updates, visit FreightWaves.com and articles tagged with ILA. Here are the latest pieces on ILA:
– Port details strike contingency plans
– Experts say dockworker strike unlikely to impact holiday retail season
– FMC concerned about potential East Coast and Gulf ports strikes
– Six days until 45,000 East Coast and Gulf port longshoremen could walk out
**2025 Could Be a Very Different Year for the Ocean Market**
Ocean spot rates have been gradually declining in the third quarter but remain high following price shocks from Red Sea attacks and port congestion.
This year’s ocean market has been one of the most volatile sectors. During an online seminar earlier this week, Flexport presented several insights on the ocean market that many may not fully grasp:
– All ocean carriers have two sets of route plans for scenarios where the Red Sea is open or closed. For instance, Gemini Cooperation (Maersk and Hapag-Lloyd) stated they need 300 vessels to meet demand if the Red Sea is open and 340 if it’s closed.
– By 2025, an additional capacity of two million TEUs is expected. The largest contributors are MSC and CMA CGM. In a recent earnings call, Maersk estimated quarterly capacity growth at 2%-3%.
– Port congestion constrains ocean capacity more than most realize. Recent estimates show that 10% of the global fleet is absorbed by congestion—this does not account for potential impacts from an ILA strike on capacity.
– The reorganization of ocean alliances means fewer carriers per alliance, giving them more control over actions like cancelling sailings to manage capacity.
In summary, additional capacity entering the market in the next few quarters could loosen the ocean market further, exacerbated by reduced port congestion and/or reopening of the Red Sea—even if carriers do not expect these events. Through capacity management measures such as canceling sailings, carriers can mitigate some of these effects.
**Roadtex Deploys Temperature-Controlled LTL Plan**
In Monday’s episode of The Stockout, Grace Sharkey and I interviewed Frank Hurst, Roadtex’s Vice President of Less-Than-Truckload (LTL). Roadtex is a subsidiary of Echo that specializes in temperature-controlled LTL shipments, particularly those requiring temperatures between 35 to 55 degrees Fahrenheit. Industries served include food/grocery, confectionery, and pharmaceuticals.
Hurst suggests that consumer goods companies and large retailers should leverage the expertise of leading logistics providers to address many complexities and pitfalls involved in transporting temperature-sensitive products. He believes shippers should utilize more LTL consolidation and direct shipping to increase efficiency and reduce carbon emissions by minimizing intermediate stops. To avoid on-time delivery and full charges, Hurst advises consumer goods companies to hire experienced logistics suppliers who can screen carriers with good service records.
Click here to watch this episode and view the complete The Stockout playlist.
**Union Pacific Bolsters Intermodal Services**
During last week’s investor meeting, Western Class I railroad Union Pacific (UP) outlined plans for developing its intermodal business, including strengthening historically dense and emerging routes. Here are some of the initiatives proposed by the railway:
– Enhancing service on the Los Angeles to Chicago route by reducing transit time by two days (see above image).
– Increasing capacity at its Inland Empire Intermodal Facility.
– Adding an intermodal facility in Phoenix.
– Expanding port intermodal services in Houston.
– Extending service from Mexico into the Southeast U.S.
– Increasing lift-on/lift-off capability.
– Opening a new intermodal terminal in Kansas City, Missouri.
To a large extent, these plans seem to be competitive responses to last year’s Quantum program from J.B. Hunt, which also increased service levels and routes through collaboration with BNSF. Nevertheless, the projects discussed by UP should make intermodal more competitive against long-haul trucking.
### Michael Baudendistel
Mike Baudendistel is FreightWaves’ Head of Multimodal Solutions and author of The Stockout, focusing on rail intermodal, consumer goods, and retail industries. Before joining FreightWaves, Baudendistel was a senior sell-side equity research analyst tracking publicly traded railroads as well as companies manufacturing and leasing rail equipment, trucks, trailers, engines, and parts. His experience in the freight transportation industry also includes trucking, Jones Act barges, and domestic logistics sectors. He is a Chartered Financial Analyst (CFA) charterholder.
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Source: FreightWaves
