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Mississippi River water woes, retail overstock trailers: Latest supply chain
stresses for economy
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Mississippi River water woes, retail overstock trailers: Latest supply chain
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State of Freight




State of Freight


MISSISSIPPI RIVER WATER WOES, RETAIL OVERSTOCK TRAILERS: LATEST SUPPLY CHAIN
STRESSES FOR ECONOMY

Published Mon, Oct 17 20224:44 PM EDTUpdated Mon, Oct 17 20228:50 PM EDT
Lori Ann LaRocco@loriannlarocco
WATCH LIVE
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Key Points
 * Mississippi River water levels are so low it is impacting commodities
   transport.
 * Retailers are using portable containers to store unsorted returns, furniture,
   and tires as warehouse inventory overstock piles up.
 * East Coast port congestion led by Savannah results in up to 70% of vessels
   arriving late on the Transpacific trade route, and a rail strike would
   further complicate this supply chain stress.

The towboat Roberta Tabor pushes barges up the Mississippi River in Granite
City, Illinois, US, on Friday, July 9, 2022. Grain transport is down from peak
levels, but water level on the river is now an issue.
Bloomberg | Bloomberg | Getty Images

According to the National Weather Service Memphis Office, the Mississippi River
is projected to tie the all-time record of -10.70 feet, either later today or
tonight. The Mississippi River is a vital waterway for trade and the lower water
levels have impacted the amount of commodities that can be imported or exported
out of New Orleans. Barges cannot be fully loaded. According to the U.S.
Department of Agriculture’s weekly transportation report, southbound barge
tonnages were reduced on the river by more than 20%

Agriculture shippers for corn, soybeans, and wheat use barges as a cheaper
alternative to trucks or rail to move their grain in bulk. Just under half (47%)
of all grain is moved by barge, according to the USDA. Approximately 5.4 million
barrels of crude and 35% of thermal coal are moved on the Mississippi.

watch now
VIDEO0:3600:36
Mississippi River drying up in some areas
The News with Shepard Smith


“While the public and media generally understand that our economy depends upon
viable international ocean shipping, trucking, and rail transportation, the
essential role of our inland waterways is often overlooked,” said Peter
Friedmann, executive director of the Agriculture Transportation Coalition. “Our
members depend upon adequate water levels in the Mississippi River system, to
reach domestic and international export markets. The low water disruption of the
supply chain will be felt not only by our U.S. producers of food, farm, and
fiber but also by U.S. and international consumers as well.”


RETAILERS TURN TO TRAILERS FOR STORAGE

Retailers are moving both large and small items into 53-foot trailers as
alternatives to warehouses, according to logistics experts.

“We are definitely hearing from our clients for the short-term they are storing
larger, bulkier items like furniture in trailers attached to their warehouses,”
said Brian Bourke, chief growth officer of Seko Logistics. “Although we are not
storing regular inventory in 53-foot trailers or containers, we are using
53-footers to store some items like unsorted returns that are less critical, to
focus the warehouse on the outbound shipping to customers.”

In addition to furniture and unwanted items, commodities are also heading into
storage.

“Tires are another big inventory item in storage,” said Joe Monaghan, CEO and
President, Worldwide Logistics Group. “We are also receiving orders for 53-foot
containers to hold the product in pop-up yards for anywhere from one to six
months.”


watch now
VIDEO7:3107:31
The biggest issues warehouses are facing right now
State of Freight


Paul Brashier, vice president of drayage and intermodal at ITS Logistics, tells
CNBC retailers are trying to find creative ways to manage their excess
inventory.

“Many of our client’s distribution centers (DCs) are overstocked and they are
navigating how to deal with that excess inventory and move all the subsequent
freight,” Brashier said. “With that headwind, those DCs that process their
import freight are really feeling the pressure. We are identifying their
high-demand SKUs and taking them out of their terminals to our pop-up transload
facilities. We then load that product into a 53-foot container to move that
inventory further inland so it can reach the consumer faster.”


EAST COAST PORT CONGESTION

Zoom In IconArrows pointing outwards



As more trade continues to move to the East Coast, congestion at the ports
continues to build and the volume of containers heading to warehouses is pushing
up prices, even as demand has declined. Savannah leads the East Coast in the
number of vessels waiting at anchor. Pop-up yards holding containers off the
port are one of the logistics strategies being used to move the boxes out of the
port to speed up productivity.

The East Coast congestion has had a massive impact on vessel reliability.

“Global vessel schedule reliability may be improving but the Transpacific is
stagnant,” said Alan Murphy, founder, and CEO of Sea-Intelligence ApS. “70% of
vessels are not arriving on time on the Transpacific line which has been hit the
worst.”



One of the factors which influences reliability is the number of vessels a port
receives. Ports seeing fewer vessels including Charleston, Long Beach, Los
Angeles, and New York are seeing improvements in vessel reliability, Murphy
said. But for Savannah, which has dozens of vessels waiting at anchor, there are
delays which impact vessel schedule reliability.

“The ports like Savannah are full,” said John McQuiston, managing director,
global head of originations in the Wells Fargo trade and supply chain finance
division. “You have vessels holding inventory while ports process containers.
What took days now takes weeks because of the number of containers coming in.”

“One of my biggest worries right now with this congestion is a railroad strike
knocking out the third leg of transport,” McQuiston said. “The U.S. would have
an element of paralysis in certain sectors of the supply chain if there was a
rail strike. You do not have enough cabs or drivers to pick up the containers
once bound for rail.”



The CNBC Supply Chain Heat Map data providers are artificial intelligence and
predictive analytics company Everstream Analytics; global freight booking
platform Freightos, creator of the Freightos Baltic Dry Index; logistics
provider OL USA;  freight forwarding & logistics services provider Worldwide
Logistics Group; supply chain intelligence platform FreightWaves; supply chain
platform Blume Global; third-party logistics provider Orient Star Group; marine
analytics firm MarineTraffic; maritime visibility data company Project44;
maritime transport data company MDS Transmodal UK; ocean and air freight rate
benchmarking and market analytics platform Xeneta; leading provider of research
and analysis Sea-Intelligence ApS; Crane Worldwide Logistics; DHL Global
Forwarding; freight logistics provider Seko Logistics; and Planet,  provider of
global, daily satellite imagery and geospatial solutions.

 


Related

 1. A second railroad union overwhelmingly rejects deal needed to avert
    nationwide strike
    
 2. New York extends its lead over California as home to nation’s new No. 1 port
    
 3. Wave of LNG tankers is overwhelming Europe in energy crisis and hitting
    natural gas prices
    
 4. China, ‘factory of the world,’ losing more of its manufacturing dominance,
    latest data shows
    
 5. Renewed threat of rail strike has supply chain managers ramping up
    contingency plans
    


MORE IN STATE OF FREIGHT

New York extends its lead over California as home to nation’s new No. 1 port
Lori Ann LaRocco4 hours ago
A second railroad union votes down labor deal needed to avoid nationwide strike
Lori Ann LaRocco
Wave of LNG tankers is overwhelming Europe in energy crisis and hitting natural
gas prices
Lori Ann LaRocco
Read More


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