Drought Sinks Shipments 🥵
Good morning! Welcome to the October 3rd edition of The Work Day Dash, where the crisp, chilly air of fall is sweeping across the landscape and bringing a refreshing change to the industry. As the leaves begin to don their vibrant hues and pumpkin spice lattes return to our daily routines, we find ourselves in a season of transformation not only in nature but also within the world of supply chain and logistics.
So grab a warm cup of your favorite autumn beverage, cozy up by the fire, and let's embark on this journey of discovery together. ☕️
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Mississippi River's Low Water Woes Impact US Crop Exports
Diminished water levels in the Mississippi River are once again posing a significant threat to America's crop exports. Prolonged dry weather and an exceptionally hot summer have taken a toll on the river, a crucial transportation artery for Midwestern grain and soybean shipments to Gulf Coast ports. Barge operators are now being forced to reduce their cargo loads to accommodate the reduced water levels, impacting the prices paid to farmers for their crops. The situation is further exacerbated by the seasonal pressure from the autumn harvest, which is adding downward pressure on market prices. Additionally, shipping costs for barges along the river surged in September, making US crops less competitive in the global market compared to countries like Brazil, which is already gaining market share.
In Memphis, water levels reached a concerning low of 10.51 feet below base levels, reminiscent of the historic low-water crest recorded in October of the previous year. Shipping company American Commercial Barge Line has warned of potential water levels matching last year's record low by the upcoming weekend, which is expected to result in increased transportation delays. This situation underscores the vulnerability of America's crucial crop export infrastructure to the adverse effects of climate-related challenges, threatening the competitiveness of US agricultural exports on the global stage.
Check out today’s featured article from AJOT to learn more about why the Mississippi River is at a record low and what it means for farmers and exporters. Will this be detrimental to the Midwest and Gulf Coast ports? How long will the water be low?
Featured Article
Mississippi River waters dip toward record low in threat to US crop exports | AJOT
“America’s crop exports are once again at risk due to a diminished Mississippi River.”
Retail & Crime
Retail Industry Hit Hard with $112.1 Billion Losses in 2022 Due to Crime and Violence
The retail industry faced substantial losses in 2022 due to crime, violence, and theft, totaling a staggering $112.1 billion—an increase from $93.9 billion in 2021, according to the "2023 Retail Security Survey" published by the National Retail Federation (NRF). The survey revealed that the average shrinkage rate, which measures losses incurred by retailers over a specific period, rose to 1.6% in 2022, up from 1.4% in 2021, aligning with rates observed in 2020 and 2019. Notably, internal and external theft accounted for a significant portion, representing 64% of the total shrinkage in 2022. Moreover, organized retail crime (ORC) displayed an alarming trend toward increased violence, with 67% of respondents reporting a rise in violence and aggression from ORC perpetrators in 2022 compared to the previous year.
Los Angeles, California, was identified as the city most affected by organized retail crime for the fifth consecutive fiscal year, followed by San Francisco/Oakland, California, and Houston, Texas. The rising crime rates have compelled many retailers to make operational adjustments, with 45% reducing operating hours at some locations, 30% altering the availability of products in stores, and 28% choosing to close certain locations altogether to combat retail theft and crime. The survey underscores the significant impact of theft and crime on the retail sector, extending beyond financial losses, with safety concerns and violence being top priorities for retailers of all sizes and categories, as noted by David Johnston, the vice president of Asset Protection and Retail Operations for the NRF.
Tesla & Strike
UAW Strikes Threaten to Widen the EV Gap for Detroit Three Automakers vs. Tesla
The ongoing UAW strikes impacting the Detroit Three automakers—GM, Ford, and Stellantis—have raised concerns that they could further widen the electric vehicle (EV) gap between these traditional automakers and Tesla. Currently, Tesla holds a dominant 60% share of the EV market. The key distinction lies in labor practices; the Detroit Three utilizes union labor represented by the United Auto Workers (UAW) union, whereas Tesla does not. If the Detroit Three were to meet all of the UAW's demands, it could potentially more than double the current cost of paying a worker, leading to considerably higher labor costs compared to Tesla, which operates without union representation.
Despite Tesla's non-union status, previous efforts have been made by its workers to unionize its factories, though these attempts have thus far been unsuccessful. Notably, recent polls indicate that approximately two-thirds of Americans are supportive of unions, potentially indicating a changing landscape for labor dynamics within the automotive industry. The outcome of these strikes and the decisions made by the Detroit Three regarding labor negotiations may have a significant impact on their ability to compete with Tesla in the evolving EV market.
Let’s Get Global 🌎
Checking out the scoop outside of the United States…
🛳 Panama Canal Limits Daily Ship Transits to 31, Affecting Global Trade Routes. The Panama Canal has recently announced a reduction in the maximum number of ships allowed to traverse the waterway daily, lowering it from 32 in August to the current limit of 31 ships per day. This decision is attributed to a drought that has significantly reduced the availability of freshwater necessary to operate the canal's locks. In normal operational conditions, the canal typically accommodates an average of 36 to 38 ships daily, making this reduction notable. Of the 31 ships allowed, nine will have access to the newer NeoPanamax locks, while the remaining 22 will be directed through the older Panamax locks. To ensure that ships can navigate safely, the Canal Authority has guaranteed a draft of 44 feet, a depth required by approximately 70% of the vessels using the canal.
🇲🇽 Harnessing the Power of Mexico Nearshoring for Supply Chain Success. The article discusses the impact of supply chain disruptions and the potential benefits of nearshoring, particularly in Mexico, for U.S. importers. It highlights the challenges faced by the Asia-Pacific region, especially China, due to supply chain issues, port delays, and increased shipping costs. These challenges have led to shortages of critical goods in the United States. The article emphasizes the need for U.S. importers to build strong relationships with local logistics providers in Mexico who understand the nuances of Mexican customs, regulations, and infrastructure. It also suggests tailoring the choice of logistics providers based on the specific type of goods being imported, such as those with refrigerated shipping capabilities for food items.
iLevel With You 🏡
More topics for the average American household to consider…
🛢 Global Oil Markets Face Supply Shortage from Cushing, Oklahoma. Oil buyers worldwide are experiencing some of the highest premiums for supplies in months due to dwindling stockpiles at the largest U.S. storage hub, Cushing, Oklahoma. This shortage is causing a ripple effect in markets from Asia to the Middle East to Europe. Flagship U.S. crude cargoes bound for Asia are currently commanding the highest premium this year, while the spread between Brent and Middle East oil has reached its highest point since February. The premium for near-term U.S. supply is also near its highest since July 2022. The situation is particularly concerning because Cushing, Oklahoma, is a crucial delivery point for benchmark U.S. crude futures, which have a significant influence on global oil prices. These dwindling inventories at Cushing are occurring at a time when the world is already grappling with a tight supply situation due to production cuts by major oil-producing countries like Saudi Arabia and Russia.
💰 Record $1 Billion Loan Considered by U.S. for Nevada's Massive Lithium Mine. The U.S. Energy Department is currently engaged in discussions to potentially provide a record-breaking $1 billion loan to the developer of one of the largest lithium deposits in the United States. This initiative is aimed at bolstering domestic supplies of critical minerals, with Lithium Americas Corp. working closely with the Biden administration to finalize the terms of the agreement. The funding would cover over half of the expenses associated with the Thacker Pass lithium mine in Nevada, which is recognized as a significant opportunity for lithium production used in electric vehicle batteries, solar panels, and wind turbines. While the loan could exceed $1 billion, it would mark the largest-ever loan awarded by the Energy Department's Loan Programs Office to a mining company. The Thacker Pass project, located 500 miles northeast of San Francisco, is a key part of the U.S. strategy to reduce reliance on foreign sources of critical minerals, particularly as China has dominated global supplies in this sector.
🧑🏽⚖️ Congress Passes Short-Term Funding Bill to Avert Government Shutdown. Congress successfully averted a government shutdown by passing a stopgap funding measure, which President Joe Biden signed into law late Saturday night. The measure extends government funding through November 17 and includes provisions for natural disaster aid but does not allocate additional funding for Ukraine or border security. House Speaker Kevin McCarthy introduced the stopgap proposal after weeks of disagreements among House Republicans and the failure of a GOP stopgap bill. The bill garnered strong bipartisan support in the House and passed with an overwhelmingly bipartisan vote, ultimately receiving an 88-9 vote in the Senate.
Get Smart 🧠
Ramp up that brain power for these advanced topics…
🛻 Ford CEO Accuses UAW of Holding EV Battery Plant Deal Hostage. Ford CEO Jim Farley has accused the United Auto Workers (UAW) union of obstructing negotiations concerning future electric vehicle (EV) battery plants. Farley made these remarks during a press briefing after the UAW expanded strikes to include two additional assembly plants, one for Ford and one for General Motors. He criticized the UAW's targeted strike strategy, suggesting that the actions were premeditated and that the union was not interested in reaching a deal before the September 14 deadline. The negotiations have been a source of tension between automakers and the UAW. While Farley believes a compromise could have been reached on pay and benefits, the union is prioritizing discussions about battery plants. He expressed concern that if the situation continues, an impasse may be reached.
🔋 Werner Enterprises Takes a Cautious Approach to Electric Truck Adoption. Werner Enterprises Inc. is approaching the adoption of electric trucks cautiously due to financial concerns and infrastructure challenges, according to Chairman, President, and CEO Derek Leathers. While the company is committed to reducing its carbon footprint by 55% by 2035, Leathers emphasized that the economics of long-haul electric vehicles (EVs) are currently challenging, and the industry relies heavily on subsidies. He also highlighted concerns about the environmental impact of EV raw materials, supply chains, and the significant challenges associated with building charging infrastructure and enhancing the electric grid. Werner Enterprises, one of the leading for-hire trucking companies, plans to remain technology-agnostic and continue testing various alternative technologies, including hydrogen, dual-fuel, electric, and renewable natural gas. The company believes in deploying the best technology based on practicality and cost-effectiveness.
🚛 What Penske Is Discovering Through Its Electric Truck Test Bed. Penske Logistics' Ontario, California facility is participating in the North American Council for Freight Efficiency's Run on Less Electric - Depot trials to evaluate light-, medium-, and heavy-duty electric trucks. Lessons learned include the need for charging infrastructure expansion, the importance of predictive planning for future operations, and the significance of charging software for managing charging times, intervals, and prices. Penske's fleet in Ontario includes Ford E-Transit step vans, GM BrightDrop step vans, International eMV box vans, and Freightliner eCascadia tractors. Driver feedback has been positive, with drivers praising the quiet and emissions-free nature of electric trucks. Penske is remaining "tech-agnostic" and will continue to test various technologies, including hydrogen, dual-fuel, electric, and renewable natural gas, to determine the best fit for its operations.
The Workday Dash is an aggregation of articles regarding the transportation logistics, trucking, and supply chain industries for November 22, 2024, from iLevel Logistics Inc.