Looking for a quick summary of the top supply chain and logistics news and trends making waves this week? Read our weekly "Supply Chain Snapshots" for helpful summaries and commentary to get you up-to-speed on the news you need to know.
#1 Biden Signs Bill to Force Labor Agreement on Rail Workers, Averting a Legal Rail Strike
According to a FreightWaves article from Thursday, 12/1, the Senate voted 80-15 to intervene on a potential rail strike, but the bill did not include sick leave—a crucial demand by the rail union.
On Friday, 12/2, President Joe Biden signed an agreement into law that ends the possibility of a legal rail strike.
A rail strike is estimated to cost Americans around $2 billion per day and potentially impact manufacturing, agriculture, and access to clean water.
The tentative agreement provides average employee compensation and benefits of more than $160,000, according to the Association of American Railroads (AAR).
This agreement provides a 24% wage increase covering 2020-2024—the largest raise in decades.
However, the new bill falls short of the union's demand for 15 days of paid sick leave, making it challenging for workers to take time off for health or family emergencies.
#2 Consumer Spending Jumped in October as Inflation Eased
In preparation for the holiday season, American households ramped up spending this October to take advantage of a jump in income and a slight easing of the still-high inflation.
Consumer spending increased by 0.8% in October from September—the strongest jump since June. When adjusted for inflation, spending rose by 0.5%.
Households spent more on essentials such as rent, food, and new vehicles.
Personal-saving rates hit their lowest level since 2005, a sign that rising prices are negatively affecting budgets.
Household spending rose faster than income in August, September, and October, indicating that people are tapping into savings or taking on credit card debt to keep up spending.
The trade deficit in goods widened 7.7% in October to a five-month high of $99 billion, as the weakening global economy and a strong dollar impacted exports.
Accoridng to the Census Bureau, the trade gap in goods rose from $91.9 billion in the September where exports fell by 2.6% and imports rose by 0.9%.
Imports of goods rose slightly to $272.7 billion in October, as the U.S. imported more autos and industrial supplies. It is important to note that imports often rise ahead of the holiday shopping season.
“Trade will likely be modestly negative for growth through the rest of the year and in 2023 as slowing global growth and a deteriorating global economic outlook weigh on exports,” explains Abbey Omodunbi, Senior Economist at PNC Financial Services.
#4 LA Port Chief Sees Labor Deal by February Luring Cargo From East
The Port of Los Angeles Executive Director Gene Seroka expects dockworkers to receive a new labor contract by early February.
This new-and-improved contract is expected to remove uncertainty for importers and will ramp up a campaign to bring back cargo lost to the East and Gulf Coast.
Port cargo volumes dropped by 25% in October from the prior year and reached the lowest level since mid-2020, as retailers sought alternatives to avoid disruptions.
To bring lost business back to the West, "we're going to have to be a little aggressive,” explains Eugene Seroka, Executive Director of the Port of LA.
1 in 9 jobs in Southern California and 1 in 50 nationwide (that’s an estimated 1 million people) rely on the success of the port, explains Seroka.
#5 Tesla Delivers its First Electric Semi Trucks Promising 500 Miles of Range
Tesla completed the first deliveries of its Semi truck to customers after the heavy-duty hauler was first introduced five years ago.
The fully-electric truck features an unusual design where the driver sits in the center of the cab rather than on one side.
Tesla has touted the truck’s performance as it accelerates quicker than traditional diesel-powered semi-trucks—even when stocked with a full load.
The semi also features a 500-mile range on a single charge, regenerative braking that recharges the truck's battery with its own motion, and it can pull up to 82,000 pounds.
#6 Christmas Trees are Expected to Run Out Due to Supply Shortages
Deck the halls early this year, folks! Christmas tree buyers are saying there will be fewer trees available for trimming this year.
The tree shortage is due to record-breaking high temperatures and wildfires in the West, while increased demand is impacting stock in the East.
“Unfortunately, we do have a shortage of trees this year. My order was cut by about 30% from what I wanted to have,” explains Ron Meadows, VP of Meadows Farms Nursery. “Trees have definitely gone up in price in the last four years. Our cost has tripled."
Whether your tree is real or fake, labor shortages and higher trucking prices are boosting costs by about 30%.
We’ll be back next Friday for another edition of Supply Chain Snapshots.
