Newsletter – January 11, 2018

OCEAN FREIGHT UPDATES

Yemen’s Houthis Threaten to Block Red Sea Shipping Lane
source: G Captain

Yemen’s armed Houthi movement threatened to block the strategic Red Sea shipping lane if the Saudi-led coalition it is fighting keeps pushing towards the port of Hodeidah it controls, the Houthi-run SABA news agency reported. Yemen lies beside the southern mouth of the Red Sea, one of the most important trade routes in the world for oil tankers, which pass near Yemen’s shores while heading from the Middle East through the Suez Canal to Europe.

While SABA gave no details on how Houthis could carry out any such move, the Bab al-Mandab strait, where the Red Sea meets the Gulf of Aden in the Arabian Sea, is only 20 km (12 mile) wide, making hundreds of ships potentially an easy target. Yemen, one of the Arab world’s poorest countries, is embroiled in a proxy war between the Houthi armed movement, allied with Iran, and a U.S.-backed military coalition headed by Saudi Arabia. Read more here.

 GROUND AND RAIL FREIGHT UPDATES

Navigating the Driver Shortages
source: Inbound Logistics

The industry’s driver shortage is no secret. About 100,000 seats need to be filled at a time when the pipeline for new drivers is getting thinner. But what’s the practical impact on shippers as this shortage gets worse?

Tighter capacity will lead to fewer choices. Regulations mandating the use of electronic logging devices (ELDs) will result in driver productivity losses. Some marginally profitable carriers won’t survive, reducing available capacity. The remaining carriers, including owner-operators, will be more selective about the freight they accept, and shippers will have no choice but to be more carrier friendly.

On inbound freight, the percentage of no-shows is rising, as drivers run out of hours. Warehouses that staffed to receive these incoming loads end up paying idle workers. On the outbound side, loaded pallets accumulate on the dock, as transport delays slow inventory turn times. Companies that have cut tens of millions of dollars of inventory through great planning and just-in-time delivery may need to increase safety stock for the first time in years.

Some carriers, in an effort to fill seats and avoid turning down loads, are hiring less-experienced drivers. While this practice gets freight moving, it creates other challenges, such as higher accident rates and more frequent cargo damage incidents. Read more here.

 INTERNATIONAL BUSINESS – GOVERNMENT UPDATES

Millennials Upset E-Commerce Assumptions
source: Transport Topics

The common assumption that millennials shop only online and avoid brick-and-mortar merchants just doesn’t fit their behaviour patterns, according to a survey from a Texas A&M Transportation Institute researcher. The purchasing behavior of millennials – who now account for about 25% of the U.S. population – impacts freight policy, trade, economic trends and infrastructure, said Sarah Overmyer, assistant transportation researcher at TTI.She disputed the notions that millennials are glued to their smartphones, rent a place in a city and need immediate delivery of their online purchases.

To better understand millennial e-commerce purchasing, Overmyer conducted a panel survey of 1,310 Texans between the ages of 18 and 34, gathering demographic data and questioning them on their shopping preferences. “The survey shows that millennials may not be as different as we thought,” Overmyer said. “They live in the suburbs, they shop in stores, and they don’t require two-day delivery.” Read more here.