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The status of major ports and the supply chain situation has evolved a bit since the last check-in published here. And while some of those changes can be counted as improvements - with more capacity generally available and better rates for shippers - there are plenty of issues pointing the opposite direction as well. You've probably heard most of the examples of negative pressures, but in case you haven't - a potential California port strike, Covid-19 lockdowns in China, gas/oil prices and Russia's invasion of Ukraine count as a few of the major ones. For the latest on the good news/bad news combination of leveling off to lower spot rates and considerably higher diesel prices, check out our Intermodal Spot Rate Pricing Trendline Analysis updated every week. Let's go into more depth on some of the other supply chain and port status updates of the day.
Each major freight and logistics transportation mode requires fuel to ship goods, whether by air, by sea, by rail or over the road. While gas prices and oil markets certainly impact everyday drivers, the cost of fuel also has a big impact on freight and logistics budgets. Fluctuating fuel costs can both directly and indirectly affect freight rates (and add fuel surcharges), which in turn affect prices for shippers to move goods and eventually, product prices for the end consumer. Getting back to fuel types, diesel predominates on land, with freight trains used for intermodal transport and semi-trucks both using the same type. Ocean freighters use the less refined marine fuel known as bunker fuel - either high sulfur fuel oil (HSFO) for ships with exhaust gas scrubbers or very low sulfur fuel oil (VLSFO) for those without. And finally, jet fuel is generally kerosene. These fuel types all differ from the unleaded gasoline used in most passenger vehicles.
Everything you need to know about domestic intermodal and how to be successful implementing it into your logistics strategy. Gives tips, tricks and insights on intermodal and what to watch out for when converting from truckload to intermodal.
Just as with any major sporting event, there are plenty of logistics involved in the Indy 500 to make the big race happen on Memorial Day weekend. Organizers and participants have countless logistical factors to consider, including Getting cars and equipment to the Brickyard, on time and ready Getting drivers and teams to Indianapolis Getting food, drinks and merchandise to the track Getting fans to the grandstand, Snake Pit, and wherever they're watching the race Those are sort of macro factors that involve logistics at the Indy 500, with plenty of minutiae to go into each. But when you're organizing and planning the Greatest Spectacle in Racing - and welcoming a full complement of fans and surrounding events throughout the Month of May for the first time in a couple of years - no detail is too small. Just how many people are we talking? There are hundreds, if not thousands, of staff working the event from a variety of angles - including the teams themselves, Indy Car employees, track personnel, vendors and security among others, plus the biggest number, up to 300,000 (or maybe even more) fans. So planners must ensure adequate parking, security, crowd control, ticket takers, working restrooms and anything else that comes with a big crowd. They must also ensure the vendors have enough food, beverages (adult and non-alcoholic), ice to keep things cool and memorabilia. But what about those cars?
Weekly discussion and analysis on the trends in the intermodal spot rate market. For the week of May 9, 2022, domestic intermodal spot rate index: Up 0.5% from the prior week. Up 13.8% from prior year.
Supply chain issues have affected just about every corner of the world lately, causing product shortages, manufacturing problems and oftentimes higher prices. And cars have been no exception. But what does seem a bit exceptional is that even the Indy 500's Indy Car series is dealing with supply chain effects - with hybrid engines originally slated to debut next year pushed back to 2024, and for this May at the Brickyard, a lack of excess teams causing a change in qualifying procedures. Let's take a look at both issues which seem at the very least supply chain adjacent, starting with this year's big race on Memorial Day weekend.
Here in Indianapolis, the Month of May is capitalized, as it brings with it a little auto race called the Indy 500 and many related festivities. One of those festivities is the Indy Mini Marathon - which InTek Freight & Logistics staff will be a part of coincidentally enough - and it brings to mind comparisons to the industry in which we work. When addressing the freight and logistics component of a business, it's tempting to jump right in, look for the lowest spot rate and sprint each shipment to the finish line. However, an approach suitable for a marathon (or a mini marathon in Indy's case) is the smarter bet, as a well-functioning shipping operation requires a steady, measured process and the right preparation. Exploding out of the starting gates at top speed may work for a shipment or two, but that strategy will burn a freight and logistics budget and bandwidth, as moving every load as if it's a fire drill is unsustainable. And you may get a nasty case of shin splints, too.
Freight shipping can be as fast as it needs to be, or can take lengthy amounts of time depending on the mode of transportation, the distance it's traveling, the price paid by the shipper and other factors. If product is needed tomorrow, there are freight modes that can accommodate such a need. If a shipment is working on a looser timeline, a month or more is not unusual for international freight. The fastest freight mode in a vacuum is air freight, while the slowest is ocean freight (not counting some type of horse-drawn, non-powered method). Staying on the ground, truckload is faster than intermodal, though not as drastically as some may think. Delays can of course happen to any type of freight, whether they be weather-related, due to congestion at ports or terminals, because of staffing issues, tied to failed equipment or related in some way - commonly these days - to Covid-19. So, long story short, freight shipping can be fast, or it can be less fast. Let's get to some more precise numbers.
After reading up on green logistics and environmentally friendly practices, let's say a business is sold on the need to implement a sustainable supply chain. But where would one begin? The good news is there are a number of steps to implement a sustainable supply chain that can get a business on the right track, even if it doesn't go from zero to 60 right away. In fact, companies with well-established, efficient operations are probably already at least part way toward supply chain sustainability without even realizing it. How to implement a sustainable supply chain starts with data, and using that information to make smart decisions planning shipping routes, capacity options, the greenest form of transport and inventory needs. All of the data-driven decision-making is made easier by a good TMS (transportation management system) and made even easier when that management is done by experts. These are outlined in more detail in our Sustainable Logistics Practices article. On top of that, sustainable supply chains avoid overproduction - which data can help with as well - and minimize waste, finding ways to reuse materials and returns.
Supply chain sustainability can mean different things to different people, but managing a sustainable supply chain involves accounting for three core elements, also known as the three Ps: People - employee, customer and partner treatment, plus human rights considerations Planet - impact on the environment Profit - long-term financial viability In other words, supply chain sustainability considers social, economic and environmental factors. These elements make up the so-called triple bottom line (TBL) of supply chain sustainability. When discussing a sustainable supply chain, the most typically thought of priority is the third P - Planet, meaning managers make supply chain decisions and implement processes with the strongest consideration for their environmental impact. But ignoring the other elements can make those environmental priorities - you guessed it - unsustainable.
With human-caused climate change accepted science, the polluter pays principle brings the idea of consequences for those causing pollution. In its basic sense, the polluter pays principle states that those who produce pollution should pay to manage and stop it from damaging the environment - or human health. Examples of the polluter pays principle in action include Customers having to pay for plastic bags at stores An oil company footing the bill for oil spill cleanup The "Gas Guzzler Tax" on cars that do not meet fuel efficiency standards The polluter pays principle is widely accepted across the globe, with many countries using it as a key cornerstone and/or the basis for environmental policies. The countries making up the European Union (EU) and Organization for Economic Cooperation and Development (OECD), which also includes non-European nations like the U.S., Japan, Australia and Chile to name a few, have offered strong support for the polluter pays principle borne out in taxation and other policies relating to corporate climate impact. In fact, in its most common form, the polluter pays principle is enforced as a Pigouvian Tax, which is a tax on activities that generate negative side effects.