Maersk North America has again supplied its transpacific update, dated July 22nd. The release states:
"Your supply chain’s well-being is our top priority. We at Maersk aim to provide you the most relevant and up-to-date information to help you navigate this period of heightened volatility."
Key notes on supply chain
- Mass Covid testing in Shanghai and Tianjin continues: New Covid cases have triggered additional mass testing events in China this month, including in the city of Tianjin, home to the largest port in Northern China and the key economic hub of Shanghai. China’s zero-Covid policy is focused on epidemic prevention and control and has resulted in some areas of Shanghai continuing to be locked down, among others. Reporting indicates that the highly infectious BA.5 subvariant is present in the greater China area including Hong Kong, which is facing a Covid resurgence that is straining public hospitals. Port operations continue as normal, but the risk persists that fresh outbreaks could trigger new lockdowns.
- President Biden averts potential rail freight strike for 60 days: On July 15th, President Biden appointed a Presidential Emergency Board (PEB) to intervene and support negotiations between unions and freight railroads unable to settle on a new contract since negotiations began in late 2019. The action covers ongoing negotiations taking place between 10 labor unions representing 115,000 workers and railroads including BNSF Railway, CSX Transportation Inc, Union Pacific Railroad Co. and Norfolk Southern Railway. The PEB will issue non-binding recommendations after a 30-day period, after which the sides will then have until Sep. 18th to reach a voluntary settlement. Maersk continues to monitor the negotiations and does not anticipate disruptions in rail service at this time.
- ILWU members continue to work beyond expiration of contract: The coastwide contract between the ILWU and the PMA expired on July 1st. The PMA and ILWU issued a press release on July 1st advising that while there was no extension to the contract, cargo would continue to move through the ports as negotiations continue.
- California’s “AB5” law moves forward: The U.S. Supreme Court decided on June 28th to not hear the California Trucking Association’s appeal of the legality of the California law referred to as “AB5,” which means that AB5 has come into effect. AB5 changes the legal standard used in determining whether independent contractors in California should instead be classified as employees. It is not yet known to what extent AB5 coming into effect will impact current supply chains due to the fact that a large portion of the trucking community in Southern California has historically preferred and fought for the right to operate as independent contractors. Maersk has been actively working over the past several years to ensure its operations are compliant and does not anticipate that AB5 will negatively impact its ability to service customers in California.