The Stockout Show: Logistics challenges abound in Mexico
(Image: FWTV)
On Monday’s The Stockout show, Grace Sharkey and I interviewed Troy Ryley, president, Mexico, at Echo Global Logistics. Ryley joined Echo in his current role 10 months ago with the objective of turning a basic truck brokerage model into an integrated logistics model. What that means is he intends for Echo to serve as a single point of accountability to shippers – one that is well equipped to handle the many challenges that arise with Mexico logistics.
Those risks include security, insurance, customs, warehousing, strikes and natural disasters. Cargo insurance in Mexico is particularly tricky with low liability limits and collection issues; Echo partners with Reliance to offer insurance solutions. Despite the challenges, Ryley remains bullish on the trajectory of Mexico manufacturing given its geographic and cost advantages. He expects significant growth in Mexican manufacturing across numerous shipper verticals in a manner similar to the auto industry, which already has a very large presence in the country.
Monday’s show can be seen here. Catch up on the full The Stockout playlist here.
Retail crime – no longer amateur hour
(Image: FWTV)
Grace Sharkey and Isaiah Buchanan discuss retail crime in this The Stockout Community Spotlight. Retailers have seen a rise in theft in recent years. What’s different is that it’s no longer the purview of bored teens but instead run by sophisticated crime rings. Similar to freight fraud, the problem flies below the radar of many lawmakers because the individual crimes do not rise to thresholds that would prompt a stronger response.
Declining ocean spot rates more stable on China to US West Coast than China to US East Coast
The white line shows the spot rate to move a 40-foot container from China to the U.S. East Coast. The red line shows the spot rate to move the same container from China to the U.S. West Coast. (Chart: SONAR)
Freightos ocean spot rates from China to the U.S. are shown in SONAR via the FBXD tickers – FBXD.CNAW for the rate to move a 40-foot container from China to the U.S. West Coast and FBXD.CNAE for China to the U.S. East Coast. Between the two, the rate to move from China to the U.S. East Coast is almost always higher, reflecting the greater cost associated with the longer sailing time and shippers’ desire to get closer by water to the largest consumption centers. However, the rates crossed this month, with rates from China to the U.S. West Coast slightly higher than those from China to the U.S. East Coast.
That seems to be a temporary phenomenon driven by a few factors. This time of year, speed becomes more important ahead of holidays, and ocean routing to the West Coast is faster by about two weeks. In addition, vessels with routings from China to the U.S. East Coast likely have extra capacity as a result of the lingering impact of shippers avoiding the U.S. East Coast due to the International Longshoremen’s Association strike or hurricane concerns. (Bookings on vessels are typically made well in advance of departure dates – Container Atlas shows an average lead time of nine to 13 days.)
Spot rates can change quickly so this phenomenon may be short-lived. The general trend for ocean spot rates right now is for them to decline due to the seasonal demand decline in the second half of the fourth quarter combined with capacity coming into the industry. (Ocean carriers estimate a 2%-3% capacity increase each quarter.) So, while rates for China to the U.S. West Coast have held relatively steady for now, pressure seems likely in the weeks ahead to move the spread versus the China to U.S. East Coast rates to more normal levels.
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