DJ Logistics Report: Growing Supply Chain Contagion; Chartering Around Logjams; More Seafarers Abandoned

Supply Chain Contagion; Chartering Around Logjams; Seafarers Abandoned By Paul Page

The bottlenecks locking down supply chains around the world are starting to choke off economic recovery in some regions. The logjams are triggering shortages of components and surging prices of critical raw materials that are squeezing manufacturers, the WSJ's Chuin-Wei Yap, William Boston and Alistair MacDonald write, as signs grow that the supply chain networks that enable economic activity now are creating headwinds from factories to retail floors. Part of the problem is a global economy that has been thrown out of sync because of the pandemic. Companies in recovering Western countries are pressing for finished products and industrial components, while suppliers in Asia and elsewhere are in the throes of Covid-19 lockdowns and facing restrictions such as quarantine mandates for ships arriving in China.

Labor shortages are adding to the disconnect, and some countries already are showing signs of economic contraction heading into the critical fourth quarter. Around the world, sectors from mining to the automotive business are struggling to find parts and workers. With some 497 large container ships anchored off ports in Asia, Europe and North America waiting for berth space last week, relief before the end of the year looks increasingly unlikely.

Supply Chain Strategies

Some of the biggest U.S. retailers are trying to buy their way around the delays that are bottling up supply chains. Merchants including Walmart, Home Depot, Costco and Target have been paying to charter ships, the WSJ's Sarah Nassauer and Costas Paris report, in a stopgap tactic aimed at keeping shelves stocked heading into the holiday season . The strategy is an expensive effort that signals the pain that supply-chain bottlenecks are inflicting on the retailers' distribution strategies and the high stakes for stores this fall following a year of pandemic-driven turmoil in sales. The chartered vessels are generally small, with capacity for the equivalent of only about 1,000 containers each, and they are going for many tens of thousands a day. The effort also adds complications as companies have to scale up inland transportation links in trucking and rail markets that can be as strained as the maritime sector. Transportation

Seafarers can't buy their way out of the stresses in ocean-going transport. The shipping industry has left in its wake what appears to be a record number of cargo-ship castaways, the WSJ's Drew Hinshaw and Joe Parkinson report, as cases of abandonment grow even as earnings at the sector's biggest operators skyrocket to record levels . Cases of abandoned crews and sailors more than doubled to 85 last year, and this year is on track to be worse. The incidents leave behind human suffering as seafarers like the 14 workers on the bulk carrier MV Aizdihar wait for months as food and fuel run out. A transport workers' union official calls it "a global humanitarian crisis," with some 1,000 seafarers abandoned on container ships and bulk carriers. Sailors face strains even on working vessels as ships keep goods moving amid extensive pandemic restrictions at ports.

Number of the Day In Other News

U.S. crude rose in early trading today to a seven-year high of $81.50 a barrel. (WSJ)

The U.S. added a below-expectations 194,000 jobs last month as the labor force shrank by 183,000. (WSJ)

Nearly 140 countries agreed to a sweeping overhaul of global tax rules in a bid to curtail tax avoidance. (WSJ)

Employment in Canada returned to a pre-pandemic level with the addition of 157,100 jobs in September. (WSJ)

The number of active oil and gas rigs in the U.S. rose to 533, more than double the level of a year ago. (MarketWatch)

U.S. wholesale inventories rose 1.2% in August after a 0.6% rise the month before. (Dow Jones Newswires)

A unit of India's Tata Group took control of money-losing Air India for $2.4 billion. (WSJ)

The Biden administration's trade-policy engagement with China kicked off with a virtual meeting. (WSJ)

Authorities investigating a California oil spill ended their probe of a Hapag-Lloyd container ship but are still looking at other vessels. (WSJ)

China fined food-delivery giant Meituan more than $533 million for anticompetitive practices. (WSJ)

A gauge of commodities spot prices soared to an all-time high. (Bloomberg)

China ordered dozens of coal mining companies to boost production. (Financial Times)

Attorneys general in 19 states and the District of Columbia are seeking to block a 10-year budget-cutting plan at the U.S. Postal Service. (National Public Radio)

Third-quarter revenue at Orient Overseas Container Line more than doubled to $4.3 billion despite slipping volumes. (Shipping Watch)

China's Cosco Shipping Holdings is projecting a third-quarter profit of about $4.7 billion. (CGTN)

Authorities are investigating allegations of rape and sexual harassment of trainees at the U.S. Merchant Marine Academy. (Splash 247)

Tesla CEO Elon Musk says the semiconductor shortage will likely push production of its electric Semi truck to 2023. (Commercial Carrier Journal)

Electric truck maker Nikola and Canadian pipeline operator TC Energy will work together to build and operate hydrogen fuel hubs. (Reuters)

Trucker Old Dominion Freight Line is adding a $1,000 surcharge for oversize freight. (Journal of Commerce)

The overseas freight unit of the U.K.'s Royal Mail is buying Canadian trucker Rosenau Transport for about $286 million. (Evening Standard)

Nissan is aiming to eliminate carbon dioxide emissions from its global manufacturing sites by 2050. (Nikkei Asia)

U.K. grocery-automation company Ocado is investing the equivalent of $13.6 million in self-driving startup Wayve. (TechCrunch)

Walmart plans to cut its use of virgin plastic in packaging by 15% in the next four years. (Progressive Grocer)

About Us

Paul Page is editor of WSJ Logistics Report. Write to him at [paul.page@wsj.com].

Follow the WSJ Logistics Report team: @PaulPage , @jensmithWSJ , and @pdberger . and @LydsOneal . Follow the WSJ Logistics Report on Twitter at @WSJLogistics .

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

October 11, 2021 07:08 ET (11:08 GMT)

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