Top 3 Headlines in Tech-Logistics You Need to Know this Month
By Kelsea Mann
1. Assessing the Losses from the Shipping Vessel Stuck in the Suez Canal
Background: The Suez Canal, an artificially made waterway considered to be the shortest link between East and West due to its unique location across the isthmus of Egypt. This is especially important today, because maritime transport is the cheapest type of transport and more than 80% of the world trade volume is transported via waterways¹. The Suez Canal official website also highlights that the canal is the longest canal in the world without locks, accidents are almost nil compared to other waterways, navigation continues 24 hours a day, and the canal has an advanced deepening system as well as traffic management system.
Recent Updates: A large shipping vessel known as the Ever Given was stuck in the canal for 6 days, beginning on the 23rd of March and ending on March 29th. At nearly a quarter mile long, the gigantic ship blocked all transportation in and out of the canal, delaying shipments of all kinds. Somewhere between 5–10% of seaborne oil is transported through the Suez, meaning each day the ship was stuck, the shipment of 3 billion to 5 billion barrels of oil per day were delayed². It’s not just oil companies that were affected by the blockage- David Jinks, Head of Consumer Research at ParcelHero, says about 8.2 billion euros of goods have been held up every day. The delay will cost global trade over 5 billion euros. “It will particularly impact ecommerce orders from Amazon and other ecommerce sites”, he says³. Consumers can expect massive delays and higher shipping prices as a result of this delay.
2. The US Postmaster General Announced a 10-Year Plan, Which Includes Longer Mail Delivery Times and Shorter Post Office Hours
Background: The US Postal Service struggled to maintain its economic and professional reputation in early 2020, when it fell into the middle of a political firestorm during the 2020 elections. The USPS, despite having lost $26 billion from 2015–201⁹⁴, was in no position to ask for funding with past President Donald Trump remarking, “They [Democrats] want 25 billion dollars — billion — for the post office. Now, they need that money in order to have the post office work so it can take all of these millions and millions of ballots. But if they don’t get those two items, that means you can’t have universal mail-in voting because they’re not equipped to have it.” In the middle of this political battle, the post office was desperately failing and finding it difficult to recover. However, with the recent election of President Joe Biden, the US Postmaster General has announced a new strategy to get the USPS back on its feet. Postmaster General Louis DeJoy, however, is a known donor to President Trump, was accused of sabotaging President Joe Biden’s election by slowing the USPS, and many political figures are weary of his decisions.
Recent Updates: Postmaster General Louis DeJoy announced a ten year plan for the US Postal Service, detailed in a 58-page document titled “Delivering for America”. Short hours aren’t the only part of the plan; it also includes new uniforms, employee training, mobile devices for mail carriers and a new mail delivery vehicle which went viral in early February. Despite the more honorable efforts to move towards clean energy and modernize the service, DeJoy’s plan is being met with opposition. American Postal Workers Union President Mark Dimondstein noted that “any proposals that would either slow the mail, (or) reduce access to post offices… will need to be addressed” in response to the plan, and House Oversight Chairwoman Carolyn Maloney of New York criticizing what she called the “unacceptable decision to make permanent slower mail delivery”. The consequences of slower mail delivery are drastic, highlighted by Michigan Senator Gary Peters who expressed his concern for people, “who rely on the Postal Service for prescription drugs, financial documents, running their small businesses and more”⁴.
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3. New Railroad Merger Links US, Canada and Mexico
Background: Canadian Pacific Railway Ltd. has targeted two different US Railway companies since 2014 in an effort to create a transcontinental railway network. In 2014, Canadian Pacific’s talks with CSX Corporation ended in failure, and it also dropped a proposed $28.4 billion bid to obtain Norfolk Southern Corp in 201⁶⁵. A newly announced partnership may just be the reckoning of all the trial and error Canadian Pacific has gone through on their quest to interconnect North American trade via railways.
Recent Updates: On March 21st, the Wall Street Journal announced that Canadian Pacific Railway Ltd. would acquire Kansas City Southern in a $25 billion dollar deal. This transaction is set to create the first freight-rail network linking Canada, the United States and Mexico⁶. However, the deal has not been finalized and faces a lengthy review and represents a more connected American economy in the long term. The United States, Canada and Mexico are handling the re-opening of their states after the Covid-19 Pandemic very differently, which disrupted global supply chains on a massive scale. The boards of both companies are confident in the deal, and have reported their like-mindedness in bringing this type of railway system to America on multiple occasions. The deal must first be approved by the Surface Transportation Board (STB), and following the approval a Canadian headquarters will be established in Calgary, as well as a United States headquarters in Kansas City, Missouri.
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¹https://www.suezcanal.gov.eg/English/About/Pages/WhySuezCanal.aspx
⁴https://www.cnn.com/2021/03/23/politics/louis-dejoy-postal-service-changes-ten-year-plan/index.html
⁵https://www.cnbc.com/2021/03/21/canadian-pacific-railway-to-buy-kansas-city-southern-for-25-billion-.html
⁶https://www.progressiverailroading.com/class_is/news/Canadian-Pacific-to-acquire-Kansas-City-Southern--63009
Image of Suez Canal Boat provided by Getty Images
Image of US Postal Service Mail Delivery Truck provided by MotorBiscuit.com
