Supply Chain Update

Global markets are in flux as East and Gulf Coast ports secure a new deal, commodity prices fluctuate and the labor market stabilizes.

Supply Chain Update
Get the latest news from Border States that helps you navigate factors affecting global supply chains. Sign up to get an email update once a month.

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Lead Time Trends

Lead time changes over the last 12 months:

Market Difference
Natural gas/PVF
-37%
Utility
-49%
Industrial
-43%
Construction
-22%

Ports and dockworkers reach a new six-year contract deal

The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) reached a tentative deal on a new six-year contract, avoiding another strike.

Zoom in: The agreement covers approximately 25,000 union dockworkers at 14 East Coast and Gulf Coast ports and maritime cargo centers. Terminal operators and ocean carriers will receive broader rights to introduce semi-automated cranes and other technology needed to improve efficiency in container-handling, while the union will receive some protections of existing positions and guarantees of new jobs related to the addition of new automation equipment.

Review of the ILA and USMX negotiations

 

By the numbers: As shippers and carriers anticipated the labor dispute, container rates spiked nearly 13% in December 2024 in preparation for a potential work stoppage. December 2024 saw continued strong import volumes in the U.S. with 2.37 million TEU (20-foot container equivalent). Rates remain elevated nearly 50% over the prior year, driven by ongoing Red Sea and Suez Canal shipping disruptions. Diesel fuel prices remain stable, even as ongoing conflicts in the Middle East and Ukraine persist.

Commodity prices are seesawing on the global market

The metals market experienced fluctuations in prices, global supply and demand brought on by the Federal Reserve’s (Fed) decision to cut interest rates in December 2024, President Biden’s decision to block the purchase of U.S. Steel to Nippon Steel, anticipation over China’s economic recovery plan and the upcoming transition of U.S. presidential administrations.

More commodity news:

  • PVC suppliers expect to recover from a one-week delay in lead times due to maintenance and begin preparing for a strong construction season.
  • While U.S. pending home sales rose 2.2% month over month in November 2024, the demand rebound has yet to boost lumber prices.
  • Crude oil prices have increased by over 5% month over month, driven by cold weather, a tightening global market and potential sanctions and trade conflicts surrounding President-elect Trump’s return to office.

U.S. labor market is stable exiting 2024

The Fed lowered interest rates by another one-quarter point in December 2024, marking its third straight rate cut. The Open Market Committee will meet again Tuesday–Wednesday, January 28–29.

  • The U.S. labor market added 256,000 jobs in December 2024, up from the 160,000 economists had predicted.
  • Unemployment remains relatively stable with a slight decline from 4.2% to 4.1%.

 

Why this matters: December 2024’s strong employment market figures suggest the labor market is stabilizing, which could influence a slowing of rate cuts into 2025.

By the numbers: The Consumer Price Index, which measures price changes across commonly purchased goods and services, increased more than predicted in December 2024, rising 2.9% on an annual basis. The Producer Price Index, which tracks average price changes experienced by producers and manufacturers, rose 3.3% over prior year, with a one-month increase of 0.2%.

News roundup

In California, wildfires have swept through more than 40,000 acres in the Greater Los Angeles area, destroying more than 13,600 structures and killing at least 27 people. Our thoughts are with all of those impacted by these devastating events.

We continue to work with our suppliers to understand potential risks and impacts across our supply chain. All suppliers with operations in the impacted areas have reported their employees are safe and there are no known impacts to production at this time.

Supply Chain Update
A monthly newsletter from Border States that helps you navigate factors affecting global supply chains. Sign up to get an email update once a month.

Disclaimer: Our information is compiled from several sources that, to the best of our knowledge and belief, are accurate and correct. Border States accepts no liability or responsibility for the information published herein. These materials are provided for informational use only and do not, nor are they intended to, constitute legal advice.

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