Global Fastener News

A potential July 1 labor strike at the Los Angeles shipping port “could cripple Los Angeles,” Chris Donnell of Scanwell Logistics told the Pacific-West Fastener Association.

A one-week strike by the International Longshore & Warehouse Union could take three months to catch up, Donnell warned. It would lead to a “stalemate.”

Donnell served on a panel at the 2022 Pac-West spring conference along with Jun Xu of Brighton-Best International and Tim Roberto of Star Stainless Screw. Web: Pac-West.org

Even without a longshoremen strike, the Los Angeles port “is not getting better” after congestion for months. Donnell said 100+ vessels with thousands of containers are waiting while there is a worker shortage.

Fastener distributors with warehouse space have “a luxury,” Donnell said.

“Transportation has been bad for several years.” Donnell predicted there will be a “slight dip” in container costs about mid-2022, but companies with expiring contracts will find rates jump.

“Talk with them on options” such as using alternative ports, Donnell advised.

It isn’t just the Los Angeles port having problems.  Covid-19 “is really hitting China, including the Shanghai port,” Donnell noted. More than 18 million containers go through the Shanghai port monthly.

Beyond offloading containers from ships, it can be a three-to-five day wait for a container to reach rail, Donnell pointed out.

It is estimated the U.S. is short 80,000 over-the-road truckers. But to get licensed, a trucker must be 21 years old and take eight weeks of training.

And the cost of diesel has skyrocketed 35% to 47%, Donnell added.

With shipping, rail and trucking backlogs, there has been a “tremendous volume increase the past two years in air freight. Cargo has been loaded on seats in otherwise passenger planes.”

Expect air freight to increase another 5% in the coming years, Donnell stated.

There are no quick fixes, Donnell noted. Florida is welcoming shipping, “but establishing freight ports is not that easy,” Donnell pointed out.

Xu of Brighton-Best finds prices are volatile and changing “literally every day,” creating “almost whiplash.”

“Don’t react to panic,” Xu advised. “Try not to oscillate with the daily news.”

Xu expects 2022 will be a “challenging year mentally and emotionally.”

“Just because the world has some crazies doesn’t mean we need to go crazy,” he observed.

Some factors, such as carbon steel prices, have remained “relatively stable,” Xu pointed out.

Xu attributed inflation to Section 301 tariffs, stimulus checks and the “supply chain bottleneck.”

The #1 factor in the supply chain is ocean freight, Xu said. “It is easier to give out money than build a ship.” However, he says ocean freight has “stabilized.”

“Inflation is not going away,” Xu declared. “The only cure for inflation is recession.”

Xu also said the “Russian invasion doesn’t affect us that much,” but the world’s reaction over Ukraine has given “China pause” about exerting control over Taiwan – the world’s third largest exporter of fasteners.

Xu expressed confidence in the fastener industry’s future: “Believe in the future. In every challenge there’s an opportunity.”

Roberto of Star Stainless Screw pointed to the 41.5% increase in the price of nickel leading up to Russia’s invasion of Ukraine, following a 17.9% drop after the lunar New Year.

Nickel is the key factor in the price of stainless steel and Russia is the third largest producer of nickel, Roberto noted. Within 24 hours of the invasion, nickel prices leaped 250%.

Roberto expects continued “short term price bursts with long term increases.”

And it will be difficult to quote stainless steel prices, he said.

“There will be continued tightening of supply until we we see new supply sources,” Roberto warned.

His advice: “Watch your inventory” and use “inventory hedging.”