SUMMER 2023

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THE DISTRIBUTOR’S LINK
CHRIS DONNELL WE’RE BACK? from page 38
In my research, I came across two startling
statistics, the first being individual credit card debt
for Americans grew on average by more than 19%
during the pandemic, and the second being than the
individual household savings decreased by more than
8% compared to right before the pandemic took hold
meaning we’re in a worst spot than what we all were
in before the pandemic. Inflation will be a major issue
affecting buying for quite some time. As we head into
a presidential election year, this will be at the top of
national issues being addressed.
Now, we have seen some significant changes in
the transportation world the past 6 months, some
have gone unreported but I wouldn’t be doing my job
if I didn’t mention a few of them. The first topic is
the FMC (Federal Maritime Commission) which is now
actively investigating ocean carriers and the surcharges
they passed along to both importers and exporters as
well as the legitimacy of the charged in conjunction
with their ocean contracts. It has been widely reported
that during covid, ocean carriers profited an additional
6 billion dollars through these questionable fees. To
date, the FMC has ruled in favor of multiple companies
and forced the carriers to return more than 1 million
dollars to some of those affected. Furthermore, the
FMC is looking into whether or not the ocean carriers
broker their contractual obligations surrounding their
MQC’s (minimum quantity commitments) with multiple
companies, none more in the limelight than the
situation with Bed, Bath and Beyond. This focus from
the FMC only came about after the Ocean Shipping
Reform Act of 2022 which gave the FMC more oversight
and the tools necessary to target such endeavors.
Another bright spot saw Congress taking an active
approach into investigating the legitimacy of ocean
carrier alliances which for many support the notion that
such alliances create an unfavorable, uncompetitive
market strangle-hold on the ocean shipping market. As
of this writing, nothing has been decided but in January
we did see two of the world’s largest ocean carriers,
Maersk and MSC come to a decision to terminate their
alliance in 2025 - which for those that utilize the ocean
market, this is a blessing and it could spell doom for
the other two remaining alliances and bring an era of
more competitive services and rates to a much-needed
industry.
One industry that has been hammered over the
past 6 months is the trucking industry. This industry
has been rocked by multiple issues, from the massive
declines in volume, the changes in regulations for both
the drivers and equipment, to bankruptcies. This industry
(which moves roughly 90% of all goods nationwide) is in
a tailspin. Since the start of the year more than 60,000
drivers have either been terminated or furloughed due
to the market instability and even more are being asked
to transition away from key markets such as the West
Coast and move to either the Mid-West or East Coast
locations where cargo traffic still remains viable. Take
the West Coast as an example, with the passing of the
AB5 legislation and the diminished volumes coming into
those areas, we’re seeing a mass exodus of qualified
truckers leaving and going to Chicago, Dallas, Houston
and up and down the East Coast. What’s going to
happen when the volumes return to those West Coast
markets? Because it will return.
As far as what we see happening in the global
transportation realm for the remainder of 2023, it’s a
bit cloudy. We’ve certainly come a long way from where
we were a year ago, but we’re not out of the woods
yet. Here are just a few things that we see potentially
happening before the start of the new year.
First, the volatile ocean market. As I’ve previously
mentioned, ocean rates have seemed to settle into
pre-pandemic levels with subtle upward and downward
movements taking place today which should hold
steady for the next few months.
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