School is out for the summer and kids are playing outside. Part of that could be due to a shortage in video game consoles. Nintendo is struggling to break out of a frustrating sales slowdown, selling 33 percent fewer units of Switch game systems in the April-June quarter than a year ago in Japan due to a crippled supply chain. Supply chain disruptions also slashed sales of rival Sony Group’s PlayStation 5 consoles by 26 percent to about 200,000 units, spurring concerns that the companies risk missing out on a holiday-season opportunity at the end of the year. Although the company has not disclosed details, it is believed to be having trouble procuring parts for Bluetooth wireless communications components used in the controllers and main units as well as analog chips for controlling currents. Nintendo is having negotiations on procurement, but the outlook is uncertain. The company, which fully outsources parts production and machine assembly, is battling smartphone manufacturers and carmakers over the vital components. And now on to this week’s logistics news.
Amazon will deliver packages to customers by bike and on foot for the first time in the UK as the retailer announces new methods of reducing emissions. The company said its new “micromobility” hub in London will lead to a million more customer deliveries each year, while others are expected to open across the UK in the coming months. Delivery drivers will ride e-cargo bikes and walk to customers’ homes and offices in central London, replacing thousands of traditional van journeys in the city’s congested roads. Amazon has taken steps to electrify its fleet with 1,000 electric vans now on UK roads, as it strives to deliver half its shipments with net-zero carbon by 2030 and all by 2040. According to Amazon, “the new e-cargo bikes, walkers and growing electric vehicle delivery fleet will help us make more zero emission customer deliveries than ever before across London and the UK in the coming months.”
This week, Walmart announced that it would charge some of its suppliers a new fee to transport goods to its warehouses and stores. This is another example of how businesses are looking to offset rising costs for things such as transportation and fuel. Companies that use Walmart to transport goods to the retailer’s warehouses and stores will be charged a fuel surcharge and a “collect pickup charge” starting Aug. 1, said the memo. The shift “is a result of Walmart adapting to the significant transformation and increased cost seen in the transportation industry over the past few years.” The collect pickup charge is calculated as a percentage of the cost of goods received by Walmart, the memo said. The fuel surcharge is based on the cost of fuel to transport the goods.
The top five most expensive global ports for detention and demurrage (D&D) fees on cargo containers are all in the US, where such charges have increased during 2022 even as global average fees have fallen from their record highs of 2021, according to a report from logistics technology provider Container XChange. Those most expensive ports are New York, Long Beach, Los Angeles, Oakland, and Savannah, as ranked by the fees imposed on US shippers by container lines. And the gap is growing, with all five ports being more than 2-3 times more expensive than Hong Kong in 7th spot, and 20 times more expensive than Dalian in China and Busan in Korea, the report found. The growth comes despite increased US regulatory scrutiny of such charges, highlighted by the June passage of the Ocean Shipping Reform Act (OSRA), a U.S. law which grants giving federal regulators more power to exert control over maritime carriers.
The union and employers negotiating a new labor contract for more than 22,000 US West Coast port workers said high stakes talks that are being closely watched by industry and the White House would continue after the agreement expired late on Friday. The agreement covers 29 Pacific Coast ports stretching from California to Washington State that handle almost 40 percent of US imports. When the contract expired, so did its “no strike” clause, said Peter Tirschwell, vice president of maritime, trade and supply chain at S&P Global Market Intelligence. Hours before the expiration, more than 150 business groups implored Biden to push for a smooth and swift resolution. Groups representing industries from agriculture and apparel to trucking and toys asked the president to work with PMA and ILWU to extend the contract, commit to ongoing good-faith negotiations, and avoid any activity that would cause further disruptions. The labor faceoff has been on Biden’s radar for months. He took the unusual step of meeting with the ILWU and PMA in Los Angeles on June 10. His labor secretary makes weekly check-ins with both sides, which kicked off talks in May.
Labor slowdowns and strikes at the German and Netherland ports are creating a massive pile-up of export containers bound for the US that will take months to clear out. According to the bills of lading found through ImportGenius, some of the items that are exported out of these ports are critical components to the auto sector like lithium batteries, fully assembled automobiles, as well as a wide variety of auto parts, and chassis. Mercedes, BMW, and Ford were listed in recent US Customs filings. “U.S. importers need to look four to five weeks in advance to see if there is a vessel available,” said Andreas Braun, Europe, Middle East, and Africa ocean product director of Crane Worldwide Logistics. “This is not normal. Also, if you are lucky to book a slot on a vessel you then have to locate an empty container which can be in the hinterland.” The congestion, which has shrunk the availability of containers, is not only a source of concern for importers, but the perceived lack of containers can push up rates. These costs are passed over to the consumer, which adds to inflation.
Trucking fleet owners are warning that freight transportation costs will soon begin to rise after the US Supreme Court today handed a win to labor unions by declining to hear a challenge from the California Trucking Association to AB5, a law requiring fleets in the state to classify their drivers as employees instead of independent contractors. The high court’s decision means that a lower court will now dissolve a 2020 stay that had frozen the law during its appeal, freeing the State of California to enforce AB5 against motor carriers within the state. Passed by the state legislature in 2019, Assembly Bill No. 5 (AB5) was originally centered on ride-sharing models like Uber and Lyft and on the broader “gig” economy, but would also affect owner-operators of full-sized freight trucks. Supporters such as the International Brotherhood of Teamsters say the law will stop companies from dodging payment of certain benefits to employees, such as labor laws and minimum wage guarantees.
President Joe Biden may announce a rollback of some US tariffs on Chinese consumer goods — as well as a new probe into industrial subsidies that could lead to more duties in strategic areas like technology. Biden has not yet made a final decision, and the timing could slip, according to people familiar with the deliberations, who asked not to be identified without permission to discuss private conversations. It would mark his first major policy step on trade ties between the world’s two biggest economic powers. The president in recent weeks held a number of meetings with senior economic advisers where options for a decision on the Trump-era tariffs were discussed, according to the people. Hints that the Biden administration is considering an easing in some of the tariffs on $300 billion in Chinese imports have multiplied as inflation has accelerated, putting pressure on US officials to find ways to tamp down prices paid by consumers for everyday merchandise.
That’s all for this week. Enjoy the weekend and the song of the week, Eddie Cochran’s Summertime Blues.