MARKET BRIEF | November 2024
ILA-USMX Negotiations Stall over Automation
The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) have hit another impasse in their negotiations on a new master contract. As we get closer to the January 15 deadline, Aeronet is covering the latest on our Speaking Logistics blog.
Canadian Government Ends Port Strikes
On November 12, Canada’s labor minister Steven MacKinnon intervened in a labor dispute, mandating binding arbitration for unions and employers at British Columbia’s ports and the Port of Montreal. This decision, which led to operations resuming by November 14, was supported by the employers’ association, but strongly opposed by unions, which view it as a threat to their collective bargaining rights. The International Longshore and Warehouse Union (ILWU) announced plans to challenge the order legally, and a hearing is scheduled for November 18 to address issues regarding the directive. Workers, locked out since November 4, claim they only planned limited job actions and argue that employers forced federal intervention by overreacting. The employers’ final offer includes a 19% wage increase over four years, but the union remains concerned about job security amid increasing automation.
Trump’s Potential Effect on Logistics
President-elect Donald Trump’s anticipated policies can impact the logistics industry in several key areas:
Oil Production – Trump generally favors increasing domestic oil production, with fewer restrictions on fossil fuel industries. This approach could reduce fuel costs, benefiting logistics companies. However, it might raise concerns among companies prioritizing environmental sustainability, which may result in regulatory pushback.
Tariffs – Trump previously implemented tariffs, particularly on imports from China, aiming to boost U.S. manufacturing. Generally, tariffs can raise costs for companies that rely on imported goods, complicating supply chains. Logistics firms might see higher expenses and unpredictable supply chain disruptions, affecting warehousing, transportation, and overall planning. However, this may ease over time, as American-based companies adjust.
Automotive – Trump’s trade policies encourage domestic auto manufacturing by renegotiating trade agreements, such as the USMCA. Supporting domestic automotive production could increase demand for U.S. vehicle logistics. However, any disruptions in international supply chains due to trade policies may reduce cross-border transport volume.
Corporate Taxes – Trump previously enacted significant corporate tax cuts, lowering the tax rate from 35% to 21%. Lower corporate taxes can free up capital for logistics companies, allowing them to invest in technology and infrastructure, and possibly lowering transportation costs.
Trucking – Trump’s previous administration often reduced emissions regulations, which could lessen compliance costs for trucking companies. However, this approach will be unfavorable to companies focused on eco-friendly supply chains. With little federal regulation on autonomous vehicles, Trump’s policies may slow industry-wide adoption unless individual states champion this technology. Limited federal support may delay widespread adoption. Regarding independent contractors, Trump has supported policies that allow industries (such as trucking) to rely on independent contractors rather than employees. This allows for greater labor flexibility and reduced labor costs, but may face challenges as independent contractor classifications come under scrutiny. Although Trump previously proposed large infrastructure plans, Congressional delays limited implementation. Investment in roads and bridges would greatly benefit logistics companies, enhancing efficiency and reducing transportation costs.
Biden Administration Likely to Overhaul De Minimis
The Biden administration is preparing to overhaul the de minimis exemption, which currently allows imports valued under $800 to enter the U.S. without duties or taxes. Tim Manning, a former White House supply chain official, stated he is confident that a Notice of Proposed Rulemaking (NPRM) will be issued in late November or early December. This NPRM is an initial step in the regulatory process, allowing the public to review and comment on the proposed changes before they are finalized. The administration’s proposed changes to de minimis aim to restrict certain products from qualifying, particularly those covered by Section 201, 232, and 301 tariffs, which include goods imported from China. These restrictions are intended to address concerns about the impact of tariff-free imports on U.S. businesses, potentially raising costs for companies that rely on inexpensive imports. Following the NPRM’s release, a 30- to 60-day public comment period will be provided. If finalized, the rule may be implemented during the next Trump presidential term.
Amazon Implements Drone Delivery in Arizona
Amazon’s drone launch in Tolleson, Arizona, marks a shift to integrate drones within its existing fulfillment network, rather than using separate Prime Air sites. The company’s same-day delivery locations in metropolitan areas are strategically positioned for rapid service, near both customers and larger fulfillment centers. A significant milestone was reached when the FAA approved Amazon’s MK30 drones to fly beyond an operator’s line of sight, allowing this Arizona debut. Amazon celebrated this as an unprecedented approval, highlighting the FAA’s rigorous safety assessment. Drone delivery faces challenges, including airspace regulations, high costs, and customer uncertainty. Current models are limited to single-item deliveries and cannot operate in poor weather or at night. Despite these limits, Amazon reports thousands of under-an-hour deliveries since 2022. Besides Tolleson, it offers drone deliveries in College Station, Texas, aiming to expand the service while refining technology and delivery protocols.
