The attacks in the Red Sea are having an impact on global trade, aside from rising prices. Global trade declined by 1.3 percent from November to December 2023 as militant attacks on merchant vessels in the Red Sea led to a plunge in the volumes of cargo transported in that key region, a German economic institute said on Thursday. Currently around 200,000 containers are being transported via the Red Sea daily, down from some 500,000 per day in November, the IfW Kiel institute said. Diversions in response to the attacks have led to journeys between Asian production centers and European consumers taking up to 20 days longer. Shipping giants such as Maersk and Hapag-Lloyd have been sending their vessels on longer, more expensive journeys around South Africa’s Cape of Good Hope.

Red Sea diversions mean container lines need more ships to carry the same amount of cargo. The security situation — which is even more precarious in the near term due to coalition air strikes in Yemen — has already driven spot container freight rates much higher. Now it is starting to push up the price container lines pay to rent ships. The initial diversions away from the Red Sea caused delays in return trips to Asia, prompting liners to charter ships for short terms as “extra loaders” to pick up the slack. Now that diversions are more ensconced, liners will need to add additional vessels to service strings to maintain weekly schedules, given the longer voyage distance around the Cape of Good Hope. To the extent new buildings and existing fleets don’t fill the gap, they would need to charter or buy more ships. The Harpex index, which measures six- to 12-month charter rates for ships with capacity of up to 8,500 twenty-foot equivalent units, has risen 12 percent since mid-December.

Industry groups from every corner of the logistics sector are criticizing a White House policy released Tuesday that would swing U.S. Department of Labor (DOL) standards toward classifying many workers as employees instead of independent contractors. The long-running debate over that topic could have a large impact on companies that rely on contractors, including supply chain and transportation companies that hire over the road truckers and gig workers to deliver freight loads. The new Biden Administration standard rescinds a policy known as the 2021 Independent Contractor Rule, a Trump-era policy that logistics experts have called favorable to classifying workers as independent contractors. In its place, the new regulation creates a less predictable framework that increases the likelihood of determining that a worker has employee status under the Fair Labor Standards Act (FLSA), the federal statute that governs minimum wage and overtime pay. The regulation is slated to take effect on March 11, although it may be challenged in court before that happens.

U.S.-based packaging technology provider Hillenbrand Inc. is working with The Coca-Cola Co. and nonprofit group Net Impact to co-host the second Circular Plastics Case Competition, which encourages emerging business professionals to rethink the plastics value chain by designing innovative solutions that help keep plastics in the economy and out of the environment. This year, the case competition is asking participants to explore how to increase the supply of recycled-content polyethylene terephthalate (rPET). Case study submissions are due in March, and in May, finalists will make online presentations that will be broadcast during the NPE event in Chicago. The eventual first-place winner will be awarded $10,000, followed by $2,500 for second place and $1,000 for third place.

That’s all for this week. Enjoy the weekend and the song of the week, Don’t Lose Your Head, Anne Boleyn’s song from the Six soundtrack.

The post This Week in Logistics News (January 13 – 19) appeared first on Logistics Viewpoints.