Spotlight on the US Transportation Department’s (USDOT) initiative called the Freight Logistics Optimization Works (FLOW) program, and how it plans to fight port congestion.
Highlights on inflation slowing down, major container lines making profits despite bleak initial forecasts, increasing average wages for drivers, and more.
Trending discussion on falling national average costs of diesel, at 14.5 cents below last year’s level.
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The U.S. Transportation Department (USDOT) has initiated a supply chain pilot data-sharing project. The main reason for this is to ease bottlenecks at congested U.S. ports. With port congestion spilling into roadways and railways, this severe issue threatens to destabilize supply chain networks across the US. As a result, freight is delayed, rates fluctuate and disruptions have become commonplace.
Black swan events like COVID-19 and the Russia-Ukraine conflict continue to pressurize the supply chain. The lack of accurate data on such disruptions directly results in port congestion at various facilities, with ships waiting for days before berthing. To solve this issue, USDOT is planning to serve as an independent steward of supply chain data across a largely privately-operated enterprise. The project includes shipping lines, ports, terminal operators, truckers, railroads, warehouses, and beneficial cargo owners.
USDOT announced the planned project in March with truckers, shippers, wholesalers, retailers, and ports “to develop a digital tool that gives companies information on the condition of a node or region in the supply chain.”
The effort known as the Freight Logistics Optimization Works (FLOW) program includes 36 participants like FedEx, UPS, C.H Robinson, Albertsons, Target, as well as the Ports of Long Beach and Los Angeles, and ocean carriers CMA CGM and MSC and Fenix Marine Terminal and Global Container Terminals. The project also includes DHL, part of Deutsche Post DHL Group, long-haul trucker J.B. Hunt, Maersk, Samsung, Procter & Gamble, and Prologis.
Key Takeaway
Over the last two-plus years, the US economy has fought its way through a steady stream of harmful supply chain disruptions. This variation has challenged production and inventories in every facet of the economy. It was hoped that port congestion previously had peaked at the beginning of 2022 and appeared to finally be easing in May and early June, but now things are worse than ever.
Changes in consumer buying trends, new regulations at major ports, worker strikes, labor protests, and a lack of accurate data on disruptions, among other factors, are responsible for the omnipresent congestion. Fixing this problem will require cooperation with many stakeholders across the supply chain. There needs to be a long-term solution to ease this issue. Data sharing will, hopefully, enable timely cargo delivery and probably provide a solution to various other disruptions.
Highlights
- July’s consumer price index is expected to show that inflation is coming off its peak and price gains may slow in the coming months, according to a critical inflation report. Falling gasoline prices are a big factor behind forecasts for lower July CPI, which is expected to dip to a headline pace of 8.7% year-over-year from 9.1% in June.
- The world’s biggest container lines are on course to post profits in 2022 that will top last year’s record by 73%, according to a new forecast, buoyed by logistics and labor strains that are squeezing capacity amid sustained US retail demand for imports.
- The American Trucking Association said in its annual salary survey that average wages for drivers and employees reached about $69,700 last year, up 11% from the previous year. This double-digit raise arrived as companies paid hefty salaries to recruit workers amidst tight labor conditions and high freight demand.
- The state of Washington agreed to dismiss an appeal of a decision that found the state’s truck driver meal and rest break (MRB) rules are preempted by federal hours-of-service (HOS) regulations. Washington’s MRB rules require a 30-minute meal period for every 5 consecutive hours of driving as well as a 10-minute rest break for every 4 additional hours.
Trending
The national average price per gallon of diesel, for the week of August 8—at $4.993—fell 14.5 cents annually, according to data issued this week by the Department of Energy’s Energy Information Administration (EIA).
This was observed following declines of 13 cents, for the week of August 1, and 16.4 cents, for the week of July 25, which represents the steepest annual decline going back to the week of October 27, 2008, when it fell 19.4 cents, to $3.288. These declines were preceded by a 13.6-cent decline, to $5.432, for the week of July 18, which, at that time, represented the steepest annual decline going back to the week of December 22, 2014, when the national average fell 13.8 cents to $3.281 per gallon.
An increase or decrease in diesel prices per gallon may be a result of various factors including supply chain disruptions and economic movements across the globe. As per the Economist, a 10% hike in fuel charge brings a 2% increase in the cost of delivering the goods. Because diesel fuel is a major transportation fuel, the demand for diesel fuel generally follows economic trends.
High diesel prices combined with increased material and labor costs have led the inflation in the United States to a four-decade high. As a result, companies across the manufacturing and logistics industry continue to encounter problems.
