Logistics specialists on the U.S. East Coast today are scrambling to find new routes for their shipments as maritime traffic into and out of the Port of Baltimore remains suspended until further notice following the collapse of the city’s Key Bridge, although port facilities on land have remained open for truck transactions.
Triggered by the collision of a massive containership with a central bridge pillar early on Tuesday morning, the deadly accident has resulted in an estimated six deaths and will likely cause supply chain delays through the Eastern seaboard. While trucks are still rolling in and out of the port area, the bridge’s collapse will close that section of I-695 for months or years to come, forcing traffic seeking to cross the harbor onto alternate routes via the city’s I-95 or I-895 tunnels, port authorities said.
Those impacts will play out in the coming weeks, even as emergency efforts continue today to recover victims from the site, maneuver the Maersk/MSC 2M alliance containership Dali away from the wreckage site under the bridge, and then remove sunken bridge girders, passenger vehicles, and shipping containers from harbor waters.
In the meantime, the ripple effects of the disruption will hit logistics flows on several levels, experts say.
In the short term, supply chain managers must accelerate their orders that get delivered via the affected land route, according to Andrei Quinn-Barabanov, Supply Chain Industry Practice Lead at Moody’s. “The tragic Key Bridge collapse will inevitably lead to delays in deliveries that go through the I-95 corridor between Washington DC and New York or through the Port of Baltimore. Supply chain managers who get their deliveries via either of these routes need to immediately accelerate orders that are likely to be affected. Speed of action is critical,” Quinn-Barabanov said in an email.
In the meantime, the removal of the major I-695 corridor will soon create significant congestion on adjacent road routes, adding travel time to most highways in and around the region and potentially increasing trucking freight rates as carriers avoid the area and local capacity decreases, according to a statement from Kyle Toombs, Chief Strategy Officer at Ease Logistics. That congestion could also cut the effective capacity in the region, since a driver that could previously have taken two or three local loads in a day will now be able to take just one or two, putting pressure on freight rates to increase, he said.
And over the longer term, maritime freight could face even longer delays. There are currently more than 40 ships remaining inside the port and at least 30 others still signalling their destination as Baltimore, according to Container xChange. Although Baltimore is one of the smallest container ports on the Northeastern seaboard—handling 265,000 containers in the fourth quarter of last year—those effects will still disrupt the movement of containers.
Likewise, there has been a 50% increase in destination changes for expected arrival vessels to Baltimore in the last two days, as ships divert to the ports of Norfolk, Savannah, or even skip the U.S. entirely, according to maritime predictive intelligence provider Windward. Other ships are now slowing down at sea and delaying their planned estimated times of arrival (ETAs), with shipments that are still planned to arrive at Baltimore expected to be delayed by at least 24 days. And still other vessels have dropped anchor until they get further instructions, with at least 12 vessels now anchored around the port of Annapolis and more near Norfolk, Windward said.
One silver lining to the tragedy is that ocean freight is now in its “slow season” between Lunar New Year and peak season. And with no significant congestion at any of the other major East Coast ports, Baltimore’s volumes should be able to be shifted to other ports without causing too much of a disruption, according to analysis from Judah Levine, Head of Research at Freightos.
A coalition of freight transport and cargo handling organizations is calling on countries to honor their existing resolutions to report the results of national container inspection programs, and for the International Maritime Organization (IMO) to publish those results.
Those two steps would help improve safety in the carriage of goods by sea, according to the Cargo Integrity Group (CIG), which is a is a partnership of industry associations seeking to raise awareness and greater uptake of the IMO/ILO/UNECE Code of Practice for Packing of Cargo Transport Units (2014) – often referred to as CTU Code.
According to the Cargo Integrity Group, member governments of the IMO adopted resolutions more than 20 years ago agreeing to conduct routine inspections of freight containers and the cargoes packed in them. But less than 5% of 167 national administrations covered by the agreement are regularly submitting the results of their inspections to IMO in publicly available form.
The low numbers of reports means that insufficient data is available for IMO or industry to draw reliable conclusions, fundamentally undermining their efforts to improve the safety and sustainability of shipments by sea, CIG said.
Meanwhile, the dangers posed by poorly packed, mis-handled, or mis-declared containerized shipments has been demonstrated again recently in a series of fires and explosions aboard container ships. Whilst the precise circumstances of those incidents remain under investigation, the Cargo Integrity Group says it is concerned that measures already in place to help identify possible weaknesses are not being fully implemented and that opportunities for improving compliance standards are being missed.
By the numbers, overall retail sales in August were up 0.1% seasonally adjusted month over month and up 2.1% unadjusted year over year. That compared with increases of 1.1% month over month and 2.9% year over year in July.
August’s core retail sales as defined by NRF — based on the Census data but excluding automobile dealers, gasoline stations and restaurants — were up 0.3% seasonally adjusted month over month and up 3.3% unadjusted year over year. Core retail sales were up 3.4% year over year for the first eight months of the year, in line with NRF’s forecast for 2024 retail sales to grow between 2.5% and 3.5% over 2023.
“These numbers show the continued resiliency of the American consumer,” NRF Chief Economist Jack Kleinhenz said in a release. “While sales growth decelerated from last month’s pace, there is little hint of consumer spending unraveling. Households have the underpinnings to spend as recent wage gains have outpaced inflation even though payroll growth saw a slowdown in July and August. Easing inflation is providing added spending capacity to cost-weary shoppers and the interest rate cuts expected to come from the Fed should help create a more positive environment for consumers in the future.”
The U.S., U.K., and Australia will strengthen supply chain resiliency by sharing data and taking joint actions under the terms of a pact signed last week, the three nations said.
The agreement creates a “Supply Chain Resilience Cooperation Group” designed to build resilience in priority supply chains and to enhance the members’ mutual ability to identify and address risks, threats, and disruptions, according to the U.K.’s Department for Business and Trade.
One of the top priorities for the new group is developing an early warning pilot focused on the telecommunications supply chain, which is essential for the three countries’ global, digitized economies, they said. By identifying and monitoring disruption risks to the telecommunications supply chain, this pilot will enhance all three countries’ knowledge of relevant vulnerabilities, criticality, and residual risks. It will also develop procedures for sharing this information and responding cooperatively to disruptions.
According to the U.S. Department of Homeland Security (DHS), the group chose that sector because telecommunications infrastructure is vital to the distribution of public safety information, emergency services, and the day to day lives of many citizens. For example, undersea fiberoptic cables carry over 95% of transoceanic data traffic without which smartphones, financial networks, and communications systems would cease to function reliably.
“The resilience of our critical supply chains is a homeland security and economic security imperative,” Secretary of Homeland Security Alejandro N. Mayorkas said in a release. “Collaboration with international partners allows us to anticipate and mitigate disruptions before they occur. Our new U.S.-U.K.-Australia Supply Chain Resilience Cooperation Group will help ensure that our communities continue to have the essential goods and services they need, when they need them.”
A new survey finds a disconnect in organizations’ approach to maintenance, repair, and operations (MRO), as specialists call for greater focus than executives are providing, according to a report from Verusen, a provider of inventory optimization software.
Nearly three-quarters (71%) of the 250 procurement and operations leaders surveyed think MRO procurement/operations should be treated as a strategic initiative for continuous improvement and a potential innovation source. However, just over half (58%) of respondents note that MRO procurement/operations are treated as strategic organizational initiatives.
That result comes from “Future Strategies for MRO Inventory Optimization,” a survey produced by Atlanta-based Verusen along with WBR Insights and ProcureCon MRO.
Balancing MRO working capital and risk has become increasingly important as large asset-intensive industries such as oil and gas, mining, energy and utilities, resources, and heavy manufacturing seek solutions to optimize their MRO inventories, spend, and risk with deeper intelligence. Roughly half of organizations need to take a risk-based approach, as the survey found that 46% of organizations do not include asset criticality (spare parts deemed the most critical to continuous operations) in their materials planning process.
“Rather than merely seeing the MRO function as a necessary project or cost, businesses now see it as a mission-critical deliverable, and companies are more apt to explore new methods and technologies, including AI, to enhance this capability and drive innovation,” Scott Matthews, CEO of Verusen, said in a release. “This is because improving MRO, while addressing asset criticality, delivers tangible results by removing risk and expense from procurement initiatives.”
Survey respondents expressed specific challenges with product data inconsistencies and inaccuracies from different systems and sources. A lack of standardized data formats and incomplete information hampers efficient inventory management. The problem is further compounded by the complexity of integrating legacy systems with modern data management, leading to fragmented/siloed data. Centralizing inventory management and optimizing procurement without standardized product data is especially challenging.
In fact, only 39% of survey respondents report full data uniformity across all materials, and many respondents do not regularly review asset criticality, which adds to the challenges.
Artificial intelligence (AI) tools can help users build “smart and responsive supply chains” by increasing workforce productivity, expanding visibility, accelerating processes, and prioritizing the next best action to drive results, according to business software vendor Oracle.
To help reach that goal, the Texas company last week released software upgrades including user experience (UX) enhancements to its Oracle Fusion Cloud Supply Chain & Manufacturing (SCM) suite.
“Organizations are under pressure to create efficient and resilient supply chains that can quickly adapt to economic conditions, control costs, and protect margins,” Chris Leone, executive vice president, Applications Development, Oracle, said in a release. “The latest enhancements to Oracle Cloud SCM help customers create a smarter, more responsive supply chain by enabling them to optimize planning and execution and improve the speed and accuracy of processes.”
According to Oracle, specific upgrades feature changes to its:
Production Supervisor Workbench, which helps organizations improve manufacturing performance by providing real-time insight into work orders and generative AI-powered shift reporting.
Maintenance Supervisor Workbench, which helps organizations increase productivity and reduce asset downtime by resolving maintenance issues faster.
Order Management Enhancements, which help organizations increase operational performance by enabling users to quickly create and find orders, take actions, and engage customers.
Product Lifecycle Management (PLM) Enhancements, which help organizations accelerate product development and go-to-market by enabling users to quickly find items and configure critical objects and navigation paths to meet business-critical priorities.