Sources: “The Geography of Transport Systems,” by Jean-Paul Rodrigue; VesselFinder; the Empire State Building; the Eiffel Tower; ShipHub; Maryland Port Administration Note: Widths shown are for the widest point for each ship. The container ship that hit the Francis Scott Key Bridge early Tuesday while leaving Baltimore Harbor is enormous. When fully loaded, the vessel, […] More
The destruction of a Baltimore bridge is hampering a busy port, adding to the strains confronting the global supply chain.Even before an enormous container ship rammed a bridge in Baltimore in the early hours of Tuesday, sending the span hurtling into the Patapsco River, and halting cargo traffic at a major American port, there was ample reason to worry about the troubles dogging the global supply chain.Between swirling geopolitical winds, the variables of climate change and continued disruptions resulting from the pandemic, the risks of depending on ships to carry goods around the planet were already conspicuous. The pitfalls of relying on factories across oceans to supply everyday items like clothing and critical wares like medical devices were at once vivid and unrelenting.Off Yemen, Houthi rebels have been firing missiles at container ships in what they say is a show of solidarity with Palestinians in the Gaza Strip. That has forced ocean carriers to largely bypass the Suez Canal, the vital waterway linking Asia to Europe, and instead circumnavigate Africa — adding days and weeks to journeys, while forcing vessels to burn additional fuel.In Central America, a dearth of rainfall, linked to climate change, has limited passage through the Panama Canal. That has impeded a crucial link between the Atlantic and the Pacific, delaying shipments to the East Coast of the United States from Asia.These episodes have played out amid memories of another recent blow to commerce: the closing of the Suez Canal three years ago, when the container ship Ever Given hit the side of the waterway and got stuck. While the vessel sat, and social media filled with memes of modern life stopped, traffic halted for six days, freezing trade estimated at $10 billion a day.Now the world has gained another visual encapsulation of globalization’s fragility through the abrupt and stunning elimination of a major bridge in an industrial city distinguished by its busy docks.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More
The Baltimore bridge disaster on Tuesday upended operations at one of the nation’s busiest ports, with disruptions likely to be felt for weeks by companies shipping goods in and out of the country — and possibly by consumers as well.The upheaval will be especially notable for auto makers and coal producers for whom Baltimore has become one of the most vital shipping destinations in the United States.As officials began to investigate why a nearly 1,000-foot cargo ship ran into the Francis Scott Key Bridge in the middle of the night, companies that transport goods to suppliers and stores scrambled to get trucks to the other East Coast ports receiving goods diverted from Baltimore. Ships sat idle elsewhere, unsure where and when to dock.“It’s going to cause a lot of chaos,” said Paul Brashier, vice president for drayage and intermodal at ITS Logistics.The closure of the Port of Baltimore is the latest hit to global supply chains, which have been strained by monthslong crises at the Panama Canal, which has had to slash traffic because of low water levels; and the Suez Canal, which shipping companies are avoiding because of attacks by the Houthis on vessels in the Red Sea.The auto industry now faces new supply headaches.Last year, 570,000 vehicles were imported through Baltimore, according to Sina Golara, an assistant professor of supply chain management at Georgia State University. “That’s a huge amount,” he said, equivalent to nearly a quarter of the current inventory of new cars in the United States.Baltimore Ranks in the Top 20 U.S. PortsTotal trade in 2021 in millions of tons
Source: Bureau of Transportation StatisticsElla KoezeWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More
A water shortage forced officials to reduce traffic, but higher fees increased revenue.Low water levels have forced officials to slash the number of ships that are allowed through the Panama Canal, disrupting global supply chains and pushing up transportation costs.But, remarkably, the big drop in ship traffic has not — at least so far — led to a financial crunch for the canal, which passes on much of its toll revenue to Panama’s government.That’s because the canal authority introduced hefty increases in tolls before the water crisis started. In addition, shipping companies have been willing to pay large sums in special auctions to secure one of the reduced number of crossings.In the 12 months through September, the canal’s revenue rose 15 percent, to nearly $5 billion, even though the tonnage shipped through the canal fell 1.5 percent.The Panama Canal Authority declined to say how much money it earned from auctions. At a maritime conference last week in Stamford, Conn., Ilya Espino de Marotta, the canal’s deputy administrator, said the auction fees, which reached as much as $4 million per passage last year, “helped a little bit.”But even now, during a quieter season for global shipping, auction fees can double the cost of using the canal. This month, Avance Gas, which ships liquefied petroleum gas, paid a $401,000 auction fee and $400,000 for the regular toll, said Oystein Kalleklev, the company’s chief executive. Auction fees are ultimately borne by the company whose goods are being shipped.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More
Analysts and shipping executives say they expect costs to fall later this year as companies receive vessels they ordered two to three years ago.After the Houthi militia started attacking container ships in the Red Sea last year, the cost of shipping goods from Asia soared by over 300 percent, prompting fears that supply chain disruptions might once again roil the global economy.The Houthis, who are backed by Iran and control northern Yemen, continue to threaten ships, forcing many to take a much longer route around Africa’s southern tip. But there are signs that the world will probably avoid a drawn-out shipping crisis.One reason for the optimism is that a huge number of container ships, ordered two to three years ago, are entering service. Those extra vessels are expected to help shipping companies maintain regular service as their ships travel longer distances. The companies ordered the ships when the extraordinary surge in world trade that occurred during the pandemic created enormous demand for their services.“There’s a lot of available capacity out there, in ports and ships and containers,” said Brian Whitlock, a senior director and analyst at Gartner, a research firm that specializes in logistics.Shipping costs remain elevated, but some analysts expect the robust supply of new ships to push down rates later this year.Before the attacks, ships from Asia would traverse the Red Sea and the Suez Canal, which typically handles an estimated 30 percent of global container traffic, to reach European ports. Now, most go around the Cape of Good Hope, making those trips 20 to 30 percent longer, increasing fuel use and crew costs.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More
For over a century, the Panama Canal has provided a convenient way for ships to move between the Pacific and Atlantic Oceans, helping to speed up international trade.But a drought has left the canal without enough water, which is used to raise and lower ships, forcing officials to slash the number of vessels they allow through. That has created expensive headaches for shipping companies and raised difficult questions about water use in Panama. The passage of one ship is estimated to consume as much water as half a million Panamanians use in one day.“This is the worst we have seen in terms of disruption,” said Oystein Kalleklev, the chief executive of Avance Gas, which transports propane from the United States to Asia.The problems at the Panama Canal, an engineering marvel that opened in 1914 and handles an estimated 5 percent of seaborne trade, is the latest example of how crucial parts of global supply chains can suddenly seize up. In 2021, one of the largest container ships ever built got stuck for days in the Suez Canal, choking off trade. And the huge demand for goods like surgical masks, home appliances and garden equipment during the pandemic strained supply chains to their breaking point.Before the water problems, the canal handled some 38 ships a day. In July the authorities cut that to 32 vessels.Fewer passages could deprive Panama of tens of millions of dollars in revenue, push up the cost of shipping and increase greenhouse gas emissions when ships travel longer routes.In Panama, a lack of water has hampered canal operations in recent years, and some shipping experts say vessels may soon have to avoid the canal altogether if the problem gets worse. Fewer passages could deprive Panama’s government of tens of millions of dollars in annual revenue, push up the cost of shipping and increase greenhouse gas emissions when ships travel longer routes.Though Panama has an equatorial climate that makes it one of the wettest countries, rainfall there has been 30 percent below average this year, causing water levels to plunge in the lakes that feed the canal and its mighty locks. The immediate cause is the El Niño climate phenomenon, which initially causes hotter and drier weather in Panama, but scientists believe that climate change may be prolonging dry spells and raising temperatures in the region.Before the water problems, as many as 38 ships a day moved through the canal, which was built by the United States and remained under its control until 2000. The canal authority in July cut the average to 32 vessels, and later announced that the number would drop to 31 on Nov. 1. Further reductions could come if water levels remain low. The canal authority is also limiting how far a ship’s hull can go below the water, known as its draft, which significantly reduces the weight it can carry.Container ships, which transport finished consumer goods, typically reserve passage well in advance, and have not faced long delays. But ships carrying bulk commodities generally don’t book passage.Tree trunks are visible due to low levels of water. The drought also presents tough choices for Panama’s leaders, who must balance the water needs of the canal with those of residents.Vessels waiting to cross the Panama Canal. The passage of one ship is estimated to consume as much water as half a million Panamanians use in one day.This presents bulk shipping companies with an expensive calculus: They can risk waiting for days, pay a big fee to jump the line or avoid the canal entirely by taking a longer route.Mr. Kalleklev, the shipping executive, said his company decided in August to pay $400,000 in a special auction to move a ship ahead in the queue, roughly doubling the total cost of using the canal. Other companies have paid over $2 million, a cost they will sometimes bear to ensure ships don’t miss their next assignment. A portion of these extra costs will be passed on to consumers, already pummeled by inflation.The pain, however, has been limited because the U.S. economy is not running very hot and demand for imported goods is relatively muted.“If this was a year ago, when we still had record high freight rates and consumers still spending a lot on containerized goods from the Far East, then you would see more drama than you have now,” said Peter Sand, chief analyst at Xeneta, a shipping market analytics company.But traffic through the canal is likely to remain at lower levels in the coming months. Reducing passages helps conserve water, because huge amounts are used up every time a ship goes through the locks as it travels the 40 miles across Panama.The drought also presents tough choices for Panama’s leaders, who must balance the water needs of the canal with those of residents, over half of whom rely on the same sources of water that feed the canal.The canal’s board recently proposed building a new reservoir in the Indio River to bolster the water supply and increase traffic through the canal, which generates over 6 percent of Panama’s gross domestic product. Under the plan, the new water supply could allow for an additional 12 to 15 passages daily.For over a century, the Panama Canal has provided a convenient way for ships to move between the Pacific and Atlantic Oceans.The canal’s board recently proposed building a new reservoir in the Indio River to bolster the water supply and increase traffic through the canal.“In optimal terms, the canal can handle 38 transits per day, so 12 to 15 is a lot,” said Rodrigo Noriega, a lawyer and a columnist for Panama’s La Prensa newspaper.Building the reservoir is expected to cost nearly $900 million, and the canal authority could start accepting bids from contractors toward the middle of next year with construction starting early in 2025. But that timeline could well be delayed; the construction of larger locks was completed two years late, in 2016, and that project was marred by cost disputes.The new reservoir would also involve acquiring land that is protected by a 2006 law, and displace at least some of its inhabitants. Mr. Noriega said he expected Panama’s legislature to pass a law that would lift the ban on acquiring land. But he and others note that new water sources could also be built in other places.Without a new water source, the canal could lose significant amounts of business. Other ocean routes are, of course, longer and more expensive, but they are less likely to have unpredictable delays. One alternative is to transport goods between Asia and United States through the Suez Canal to the East Coast and Gulf Coast. Another is to ship goods from Asia to the West Coast ports — and then transport them overland by train or truck.“In theory, something that offers a cheaper, shorter route should always be in favor, but it’s the uncertainty that can be a killer,” said Chris Rogers, head of supply chain research at S&P Global Market Intelligence.Protracted disruptions at the canal could stoke interest in building land routes in Mexico, Colombia and other countries that have coastlines on both oceans, said Richard Morales, a political economist who is running as an independent candidate for vice president in an election next year.The efforts to secure new water supplies could be a race against climate change.Because interest in building a canal dates to the 19th century, Panama has rainfall records going back some 140 years. That gives scientists more confidence when concluding that a weather change is a permanent shift and not merely random, said Steven Paton, a director of the Smithsonian Tropical Research Institute’s Physical Monitoring Program on an island in Lake Gatun, which makes up a large part of the canal and supplies most of its water.He said that while scientists were unsure about climate change’s impact on El Niño, two of the driest El Niño periods of the last 140 years had occurred in the last quarter-century, and that the current one could be the third.“It doesn’t say that this is climate change,” Mr. Paton said, “but it does say that this is wholly consistent with almost all of the climate change models.”Sol Lauría More
On a bright September day on the harbor in Copenhagen, several hundred people gathered to welcome the official arrival of Laura Maersk.Laura was not a visiting European dignitary like many of those in attendance. She was a hulking containership, towering a hundred feet above the crowd, and the most visible evidence to date of an effort by the global shipping industry to mitigate its role in the planet’s warming.The ship, commissioned by the Danish shipping giant Maersk, was designed with a special engine that can burn two types of fuel — either the black, sticky oil that has powered ships for more than a century, or a greener type made from methanol. By switching to green methanol, this single ship will produce 100 fewer tons of greenhouse gas per day, an amount equivalent to the emissions of 8,000 cars.The effect of global shipping on the climate is hard to overstate. Cargo shipping is responsible for nearly 3 percent of global greenhouse gas emissions — producing roughly as much carbon each year as the aviation industry does.Figuring out how to limit those emissions has been tricky. Some ships are turning to an age-old strategy: harnessing the wind to move them. But ships still need a more constant source of energy that is powerful enough to propel them halfway around the world in a single go.Unlike cars and trucks, ships can’t plug in frequently enough to be powered by batteries and the electrical grid: They need a clean fuel that is portable.Ursula von der Leyen, center, the president of the E.U. Commission, stands with the captains of the Laura Maersk as well as company and government officials in Copenhagen in September.Betina Garcia for The New York TimesThe Laura Maersk is the first of its kind to set sail with a green methanol engine and represents a significant step in the industry’s efforts to address its contribution to climate change. The vessel is also a vivid illustration of just how far the global shipping sector has to go. While roughly 125 methanol-burning ships are now on order at global shipyards from Maersk and other companies, that is just a tiny portion of the more than 50,000 cargo ships that ply the oceans today, which deliver 90 percent of the world’s traded goods.The market for green methanol is also in its infancy, and there is no guarantee that the new fuel will be made in sufficient quantities — or at the right price — to power the vast fleet of cargo ships operating worldwide.Shipping is surprisingly efficient: Transporting a good by container ship halfway around the world produces far less climate-warming gas than trucking it across the United States.That’s true in part because of the scale of modern cargo vessels. The biggest container ships today are larger than aircraft carriers. Each one is able to carry more than 20,000 metal containers, which would stretch for 75 miles if placed in a row.That incredible efficiency has lowered the cost of transport and enabled the modern consumer lifestyle, allowing retailers like Amazon, Walmart, Ikea and Home Depot to offer a vast suite of products at a fraction of their historical cost.Yet that easy consumption has come at the price of a warmer and dirtier planet. In addition to affecting the atmosphere, ships burning fossil fuel also spew out pollutants that reduce the life expectancy of the large percentage of the world’s people who live near ports, said Teresa Bui, policy director for climate at Pacific Environment, an environmental organization.Cargo ships at the Port of Los Angeles in 2021 sometimes had to wait days to dock because of congestion, producing huge amounts of pollution.Coley Brown for The New York TimesThat pollution was particularly bad during the Covid-19 pandemic, when supply chain bottlenecks caused ships to pile up outside of the Port of Los Angeles, producing pollution equivalent to nearly 100,000 big rigs per day, she said.“They have been under regulated for decades,” Ms. Bui said of the shipping industry.Some shipping companies have tried to cut emissions in recent years and comply with new global pollution standards by fueling their vessels with liquefied natural gas. Yet environmental groups, and some shipping executives, say that adopting another fossil fuel that contributes to climate change has been a move in the wrong direction.Maersk and other shipping companies now see greener fuels such as methanol, ammonia and hydrogen as the most promising path for the industry. Maersk is trying to cut its carbon emissions to zero by 2040, and is pouring billion of dollars into cleaner fuels, along with other investors. But making the switch — even to methanol, the most commercially viable of those fuels today — is no easy feat.Switching to methanol requires building new ships, or retrofitting old ones, with different engines and fuel storage systems. Global ports must install new infrastructure to fuel the vessels when they dock.Perhaps most crucially, an entire industry still needs to spring up to produce green methanol, which is in demand from airlines and factory owners as well as from shipping carriers.Methanol, which is used to make chemicals and plastics as well as fuel, is typically produced using coal, oil or natural gas. Green methanol can be made in far more environmentally friendly ways by using renewable energy and carbon captured from the atmosphere or siphoned from landfills, cow and pig manure, or other bio waste.By using green methanol, the Laura Maersk could produce 100 fewer tons of greenhouse gas per day, equivalent to the emissions of 8,000 cars.Betina Garcia for The New York TimesCargo ships require fuel sources that are powerful enough to propel them halfway around the world in a single go.Betina Garcia for The New York TimesFlemming Sogaard Christensen, the chief engineer of the Laura Maersk, inside the engineering room. The ship’s engine can burn oil or a greener type of fuel made from methanol.Betina Garcia for The New York TimesBut the world today does not yet produce much green methanol. Maersk has committed to using only sustainably produced methanol, but if other shipping companies end up using methanol fuel made with coal or oil, that will be no better for the environment.Ahmed El-Hoshy, the chief executive of OCI Global, which makes methane from natural gas and greener sources like landfill gas, said companies today were producing “infinitesimally small volumes” of green methanol using renewable energy.“Companies haven’t done much in our industry yet quite frankly,” he said. “It’s all hype.”Fuel producers still need to master the technology to build these projects, he said. And in order to finance them they need buyers who are willing to commit to long-term contracts for green fuel, which can be three to five times as expensive as conventional fuel.Maersk has signed contracts with fuel providers including OCI and European Energy, which is building in Denmark what will be the world’s largest plant producing methanol with renewable electricity. The shipping company already has clients like Amazon and Volvo that are willing to pay more to have their goods transported with green fuels, in order to reduce their own carbon footprints.But many other companies are not yet willing to pay the necessary cost for greener technologies, Mr. El-Hoshy said.The missing piece, said Mr. El-Hoshy and others in the shipping and methanol industries, is regulation that would help level the playing field between companies trying to clean up their emissions and those still burning dirtier fuels.The European Union is ushering in rules that encourage ships to decarbonize, including new subsidies for green fuels and penalties for fossil fuel use. The United States is also spurring new investments in green fuel production and more modern ports through generous domestic spending programs.Maersk has clients like Amazon and Volvo that are willing to pay more to have their goods transported with green fuels, in order to reduce their own carbon footprints.Betina Garcia for The New York TimesBut proponents say the key to a green transition in the shipping sector are global rules that are pending through the International Maritime Organization, the United Nations body that regulates global shipping.The organization has long received heavy criticism for its lagging efforts on climate. This summer, it adopted a more ambitious target: eliminating the global shipping industry’s greenhouse gas emissions “by or around” 2050.To get there, nations have promised to agree on a legally binding way to regulate emissions by the end of 2025, which they would put into effect in 2027.Yet countries have yet to agree on what kind of regulation to use. They are debating whether to adopt a new standard for cleaner fuels, new taxes per ton of greenhouse gas emitted or some kind of mix of tools.Some developing countries, and nations that export low-value goods like farm products, say that strict regulation would raise shipping costs and be economically harmful.Proponents of the regulation — including Maersk — say it’s necessary to avoid penalizing those who are trying to clean up the business, and provide certainty about the industry’s direction.“There has to be an economic mechanism by which you level the playing field so that people are incentivized and not punished for using low-carbon fuels,” said John Butler, the chief executive of the World Shipping Council, which represents container carriers including Maersk.“Then you can invest with some confidence,” he added.A container ship traveling halfway around the world produce less climate-warming gas than a truck traveling across the United States.Betina Garcia for The New York TimesVincent Clerc, the chief executive of Maersk, said the company would continue to adopt new green technologies as they became available.Betina Garcia for The New York TimesStill, Maersk acknowledges that green methanol is unlikely to be the final solution. Experts say that the fuel’s reliance on finite sources of waste, like corn husks and cow manure, mean there will not be enough to power the entire global shipping fleet.In an interview, Vincent Clerc, the chief executive of Maersk, said that the entire maritime sector was unlikely to ever be powered predominantly by methanol. But Maersk had no regrets about moving some of its fleet from fossil fuels to methanol now, then adopting new technologies as they become available, he said.“This marks a real systemic change for this sector,” Mr. Clerc said, gesturing toward the vessel piled high with 20-foot containers in front of him.Eric Leveridge, the climate campaign manager for Pacific Environment, said his group was glad that Maersk and other shipping companies were moving toward more sustainable fuels. But the organization is still concerned that “it is more for optics and that the impact is potentially being exaggerated,” he said.“When it comes down to it, even if there is this investment, there’s still a lot of heavy fuel oil ships on the water,” he said. More
As Black Sea-bound vessels clustered in the waters near Istanbul, wheat prices remained elevated on Thursday, up 13 percent since Monday, when Russia pulled out of a wartime agreement that had been considered critical to stabilizing global food prices.The termination of the deal, which had permitted Ukraine to safely export its grain through the Black Sea, could have significant long-term consequences for grain supplies, said Alexis Ellender, a global analyst at Kpler, a commodities analytics firm. Despite robust grain harvests from exporters including Brazil and Australia, prices could become volatile.“By not having Ukraine there as a supplier, we’re increasing the vulnerability of the global grain market to these shocks,” Mr. Ellender said. “In the short term, supplies are good, but longer term, if we get any more supply shocks, we’re more vulnerable in terms of the global market.”Another drought in Brazil, like in 2021, or a disruption to Australia’s barley and wheat crop caused by El Niño, could cause prices to soar, he said.Russian threats to attack commercial vessels heading to Ukrainian ports have stalled traffic in the area. Marine tracking data shows that ships that had been en route to the Black Sea are sitting in ports in Istanbul as they wait to see if an agreement could be hammered out.“They’re still deciding what they’re going to do,” he said. Some vessels could look to pick up shipments of grain from other parts of Europe.At the moment, a quick resolution looks unlikely. Russia bombarded the port city of Odesa with missiles and drones on Tuesday and Wednesday, after an apparent Ukrainian drone strike on a Russian bridge linking the occupied Crimean Peninsula to mainland Russia.The suspension of the deal between Russia and Ukraine also has implications for maritime insurers and shipowners, who will no longer have insurance coverage to travel to Ukrainian ports, said James Whitlam, a product director at Concirrus, a marine data and analytics platform. While the deal between Russia and Ukraine was in effect, ships were able to secure insurance coverage under a temporary agreement.“Insurance markets are now scrambling around trying to understand what exposure they have,” Mr. Whitlam said.Despite recent increases, grain prices are still lower than they were on the eve of Russia’s invasion of Ukraine in February 2022, partly because the end of the deal was expected, Mr. Ellender said. In addition, Ukrainian grain exports have recently been at reduced levels because of limited labor, with workers fighting the war, and limited fuel supplies and lost territory to Russia.Ukraine has also increased exports by truck, train and river barge.Ukraine is still likely to be able to export most of its wheat, corn, barley and sunflower seeds via alternative routes, said Rabobank, a Dutch bank, on Thursday. But this will put additional pressure on ports on the Danube River, which flows from the Black Forest in Germany to the Black Sea, and the cost of transport will become more expensive, and rail infrastructure will be at a higher risk of Russian attack, the note said.“The higher transport cost means that Ukrainian farmers may, quite possibly, reduce planted area in the future,” the note said.Ukraine is one of the leading exporters of grain and the leading global exporter of sunflower oil, and the deal had allowed Ukraine to restart the export of millions of tons of grain that dropped after the invasion.Ukraine has exported 32.9 million metric tons of grain and other agricultural products to 45 countries since the initiative began, according to United Nations data. Under the agreement, ships had been permitted to pass by Russian naval vessels that had blockaded Ukraine’s ports in the aftermath of Russia’s full-scale invasion.Soaring prices are expected to hit the poorest people in the world the hardest. Ukraine last year had supplied more than half of the World Food Program’s wheat grain sent to people in Afghanistan, Ethiopia, Kenya, Somalia, Sudan, and Yemen, according to the U.N. More
Businesses around the country are facing what could be the latest disruption to how they get their goods to their customers in a timely and affordable fashion.Kathryn Keeler and her husband, Stuart de Haaff, own an olive oil company in the hills of central California. The couple spend their days harvesting olives, bottling the oil, labeling the glass bottles and shipping them out, relying primarily on UPS to get their product to kitchens throughout the United States. They are far from alone. UPS handles about a fourth of packages shipped each day in the United States, according to the Pitney Bowes Parcel Shipping Index, many of them for small businesses like Ms. Keeler’s company, Rancho Azul y Oro.But with the labor contract between UPS and 325,000 of its workers expiring at the end of the month and a potential strike looming, business owners around the country are facing what could be the latest in a series of supply chain disruptions they have confronted since the start of the pandemic.Some are pre-emptively turning to FedEx, the next largest private carrier in the United States, or the Postal Service. Others are calling their third-party shippers — firms that work with the likes of UPS, FedEx and DHL to handle their clients’ shipping needs — to ensure that their packages can still get to their final destinations even if there is a strike.The logistical challenge is just one more burden on businesses that have been stretched thin over the past few years.“Maybe a larger business can withstand those types of situations,” Ms. Keeler said. But as small-business owners, she and her husband “don’t have a lot of extra time in our day to be on the phone with the post office or FedEx.”Since 2020, the pandemic has strained the global supply chain in a number of ways. E-commerce reached record levels as stuck-at-home Americans bought clothes, furniture, workout equipment and groceries online. Companies had to navigate Covid-related shutdowns at factories in China and Vietnam. There were worldwide delays when a large container ship got stuck in the Suez Canal, leading to containers piling up at the Port of Los Angeles. Those situations affected the way goods came into the United States.A UPS strike could hobble the way brands move their wares domestically.“This is something that affects us on our home turf, and how do we solve for that?” said Ron Robinson, the chief executive of BeautyStat Cosmetics, which uses UPS to ship its skin care products to retailers like Ulta and Macy’s.One strategy that his team will lean on is trying to bundle packages, sending as many as it can out at once, he said.Switching to another carrier is going to cost some companies.Ryan Culver, the chief executive of Platterful, a monthly charcuterie board subscription service, also uses UPS. Switching over to FedEx Express — necessary to ensure that the meats in his packages reach consumers in time — would cost about $5 to $10 more per delivery.Using FedEx to ship goods can sometimes be more costly for small businesses.Hunter Kerhart for The New York TimesTeri Johnson, the founder of Harlem Candle Company, received an email on June 26 from her third-party shipper about a potential UPS strike. It suggested she switch to FedEx. That will cost her about $2 extra for each candle shipped in the greater New York area. Sending her candles to California will cost even more.“We don’t really have a choice right now,” Ms. Johnson said.FedEx said it was accepting additional volume for a limited time and would assess how much capacity its network could accommodate. “Shippers who are considering shifting volume to FedEx, or are currently in discussions with the company to open a new account, are encouraged to begin shipping with FedEx now,” the company said in a post on its website on Thursday.The Postal Service said in an emailed statement that it “has a strong network, and we have the capacity to deliver what is tendered to us.”Larger companies are relying on sophisticated backup plans that have been tested over the past few years. The pandemic and previous tariff trade wars pushed many major retailers with global supply chains to diversify the countries where their vendors are and the parcel carriers they use.“We’ve been focused on investing in a lot of transportation solutions that allow us to more nimbly move freight between carriers,” said Alexis DePree, the chief supply chain officer at Nordstrom. “We can do that with a lot more flexibility and speed than we were able to in the past.”Some third-party carriers are seeing a boost in their businesses as the possibility of a UPS strike comes into focus for their clients. Stord, a third-party logistics and technology provider based in Atlanta whose clients include apparel makers and consumer-package companies, has been sending emails out telling its clients not to worry. Stord uses a cloud-based platform to offer services like warehousing and fulfillment and handles tens of thousands of their packages a day.By combining the volume of its broad portfolio of client brands and using software to make decisions, Stord has the leverage to better negotiate prices with the large parcel carriers, said Sean Henry, the company’s chief executive.“We’ve been negotiating with FedEx and U.S.P.S. about rates around UPS so our customers don’t have to do that,” he said.Stord said more of its clients had asked it to negotiate with carriers on their behalf. He said that equated to “tens of millions of dollars of annual revenue” for his business.Still, some business owners are not letting the possibility of a UPS strike stress them out just yet.Bill McHenry, president of Widgeteer, which sells cookware to large retailers, said he felt “kind of numb” after navigating the pandemic-related challenges. “I’ve seen a lot of stuff and the stories that I’ve heard and things we’ve had to go through and survive — not just the pricing but the upheaval of thinking you have a container but don’t,” he said.He said the potential rail strike last December had been a bigger concern for him.In the meantime, the possibility that a deal could be reached between UPS and the union that represents its workers, the International Brotherhood of Teamsters, remains. The union announced on Wednesday that negotiations had broken down, after previously saying the sides had reached a tentative agreement. If an agreement is not reached, a strike could happen as early as Aug. 1.If that occurs, “we would be collateral damage,” Ms. Keeler said. More
