Supply chain round-up: drought in Panama, e-freight trial and Amazon's union woes

Fri 26 May 2023
Posted by: Phillip Adnett
Trade News

Ship passing through Panama Canal

The latest of the IOE&IT Daily Update’s round ups of the latest supply chain news covers the impact of droughts on shipping, the trialing of new air freight technology and updates from the Amazon unionisation drive.

Drought limits canal shipping

Drought is forcing draft restrictions to be put in place along the Panama Canal, limiting the amount of cargo that ships can carry. 

According to Bloomberg, from this week onwards Neo-Panamax vessels – the largest ships that can use the waterway – will be allowed drafts of up 13.56m, and the draft limit will decline again to 13.41m on 30 May.

‘Drafts’ are a nautical term for the difference between the ship’s keel and the waterline and play an important role in determining the safe transit of a vessel through certain waterways.

The change could translate to 40% less cargo on some container ships. In response to this, four ocean carriers have announced weight limits or imposed container fees between $300 and $500 per box, effective from 1 June. 

Meanwhile, the Suez Canal Authority announced yesterday (25 May) that it has re-floated the bulk carrier that was previously stuck in the vital shipping passage.

Two years ago, the canal was blocked for almost a week when the Ever Given carrier ran aground.

Air freight turbulence

Some commentators are predicting a surge in freight capacity demand driven by an uptick in consumer confidence, reports the Loadstar.

Brandon Fried, executive director of the Airforwarders Association, said carriers are adding more aircraft to cope with summer passenger numbers, which will benefit freight forwarders.

However, Maersk’s Asia Pacific market update for May notes a decrease in global air cargo demand in March, albeit at a slower rate than in February and January, with cargo tonne kilometres (CTKs) falling by 7.7% year-on-year.

This is an improvement compared to the annual decline of 16.8% observed in January and double-digit decreases in earlier months.

Capacity grew 9.9% year-on-year, primarily due to the increasing belly-hold capacity from passenger aircraft.

Digital freight trial

The International Air Transport Association (IATA) has announced the results of a trial of its new e-freight programme.

The One Record programme has been trialled by Alibaba’s logistics arm Cainiao Network on its airfreight service between China and Liege.

Cainiao said the trial achieved several breakthroughs including the first application of radio frequency identification technology, which automatically pushes the cargo status to the One Record exchange in real-time.

This eliminates reliance on phone and email communication, while enabling information exchange, unlocking the possibilities of a fully digital air cargo industry which could create opportunities for new services and business models, IATA claims.

According to the Loadstar, Champ Cargosystems and Lufthansa Cargo will begin collaborating on One Record.

Amazon workforce seeks union recognition

Workers at Coventry’s Amazon warehouse are continuing strike action this week as a pay dispute continues into its fifth month.

About 700 staff were set to take action over a “derisory” 50p pay rise offer, reports the Morning Star.

The workers’ union, the GMB, has applied for union recognition at the Midlands warehouse which would give GMB authority to negotiate with the retailer.

More than 51% of the workers in Coventry are GMB members, overcoming the threshold required to obtain union status, reports Bloomberg.

GMB has contacted the Central Arbitration Committee, the official judicial body that deals with workplace disputes, but the process can go on for months and Amazon can challenge the application.

Ukraine and Russia trade accusations

Ukraine accused Russia of effectively preventing the Ukrainian port of Pivdennyi from handling exports of Black Sea grain with Russia complaining that it had been unable to export ammonia via a pipeline to Pivdennyi, reports Reuters.

The Black Sea deal was brokered last July and was extended last week for two months, covering the export of food and fertiliser from the Ukrainian ports of Odesa, Chornomorsk and Pivdennyi. The latter has not received any ships since 2 May, however.

All ships are inspected by a joint team of Russian, Ukrainian, Turkish and UN inspectors, but Ukraine claims Russian inspectors have refused to inspect ships bound for Pivdennyi since 29 April.

Russia had threatened not to renew the deal unless a list of demands about its own exports was met, including restarting the ammonia pipeline.