January 22, 2021
The oceans were a dangerous place last year. The Gulf of Guinea—a major shipping corridor off the west coast of Africa—was especially dangerous. According to the annual piracy report released last week by the International Maritime Bureau (IMB), the IMB Piracy Reporting Centre (PRC) saw a 20 percent increase in incidents of piracy and armed robbery against ships last year.  The number of incidents where ships were boarded last year equalled the total number of incidents (of all outcomes) the year prior. A record number of kidnappings were recorded last year as well with over 95 percent of kidnappings occurring in the Gulf of Guinea.
Over 20,000 vessels transit the Gulf of Guinea between Senegal and Angola each year. This year there were 130 seafarers kidnapped in 22 separate incidents in the region. Three vessels were hijacked as well. With attacks occurring farther and farther from the coast, the IMB is advising vessels to remain at least 250 nautical miles (NM) offshore when possible. Most kidnapping incidents last year happened 60 NM from land. The furthest out took place in mid-July almost 200 NM offshore. Eight machine-gun wielding pirates boarded a chemical tanker and seized 13 crew members, leaving the vessel adrift. The crew was freed a month later 
Nigeria has taken the lead in addressing piracy in the region. Its navy has arrested 100 suspects under a new anti-piracy law. Some shipping lines are calling for a more coordinated international response by E.U., U.S. and NATO forces which protect vessels transiting the Suez Canal.  The Somali coast south of the Suez Canal was an epicenter of piracy a decade ago. In 2008 the UN Security Council authorized international naval forces to enter Somali territorial waters and attacks all but stopped within a few years.  According to the IMB there were no reports of piracy off the Somali coast last year.
Piracy is not the only danger ships encounter. On Saturday, some 750 containers were lost to the Pacific when the Maersk Essen encountered heavy seas en route to Los Angeles from China.  The incident comes less than two months since the ONE Apus encountered a severe storm in the Pacific and lost more than 1,800 containers with thousands more damaged.  The incidents mark an upward trend in container losses from recent years. According to the World Shipping Council (WSC), less than 1,500 containers were lost each year by its members—over 90 percent of global container capacity—every year since it started the survey in 2008 with the exception of the MOL Comfort incident in 2013.  Fortunately no crew were injured in the two recent incidents.
Also in container shipping, the ports of L.A. and L.B. have been a significant choke point in the first weeks of the new year. The surge of imports from Asia in the second half of last year has rippled through Southern California supply chains, leaving a record 37 container ships at anchor on January 8th. The backlog outpaced the 2014-15 West Coast labor crisis which saw a peak of 28 ships waiting at anchor. The last time the harbor was so congested was in 2004 when 65 ships were stuck at anchor due to labor shortages at the Union Pacific Railroad.  With a new spike in coronavirus cases among dockworkers at both ports, the risk of further slowdowns has union leaders, port officials and congressional representatives urging that dockworkers be prioritized for vaccines. 
Vaccines. Among the major events of the last few weeks, one of the most closely watched is the distribution of the coronavirus vaccines. And with the global scale of the pandemic, that rollout was bound to be bumpy. According to a new report by ProPublica, one of the challenges clinics and hospitals have faced stems from states only knowing how many doses they will receive one week at time.  The amount they receive has fluctuated week-to-week as well. Operation Warp Speed narrowed distribution planning for the coronavirus vaccine to weekly availability based on lessons learned from the 2009 H1N1 pandemic when vaccine availability fell short of projections by federal officials leading to widespread criticism.  With the coronavirus vaccines, the short planning horizon and delivery variability has made it difficult for states and local officials to set up clinics and registration systems leading to canceled appointments, confusion around second doses and understandable frustration. Despite the challenges, however, over 18 million doses have been administered in the U.S. since December 14th—that’s a massive product launch in little more than a month. Worldwide almost 57 million doses have been administered in 52 countries.  And with two more vaccines—one from Johnson & Johnson and one from AstraZeneca—entering the final stages of testing, that light at the end of the tunnel is getting brighter.
Finally, the U.S. Court of Appeals for the Ninth Circuit upheld last Friday the Federal Motor Carrier Safety Administration’s (FMCSA) determination that interstate meal and rest break (MRB) rules for truck drivers preempt California’s MRB rules.  There is a patchwork of federal and state laws requiring trucking companies to provide meal and rest breaks for drivers. Federal laws enforced by the FMCSA require property-carrying commercial carriers—subject to FMCSA Hours of Service (HOS) regulations—to allow drivers to take one 30-minute break in the first eight hours of work.  California’s MRB rules are more stringent, requiring employers to provide a 30-minute break to employees working five hours a day, a second 30-minute break for employees working more than 10 hours a day, and an additional 10-minute break every four hours. Nineteen other states have their own MRB rules. Washington State’s are similar to California’s.
To reduce the burden of compliance for carriers driving across state lines, the FMCSA determined that its MRP rules preempt California’s and Washington’s rules.  The International Brotherhood of Teamsters and California Labor Commissioner challenged the decision in California. They argued the state had an interest in promoting driver and public safety, and the FMCSA’s preemption of California’s rules was arbitrary and capricious. The court ultimately rejected this argument and agreed with the FMCSA that enforcement of California’s MRB rules “would cause an unreasonable burden on interstate commerce.” 
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 https://www.fmcsa.dot.gov/regulations/californias-meal-and-rest-break-rules-preemption-determination; https://www.fmcsa.dot.gov/regulations/notices/2020-25155
Supply chains are complex and dynamic. This past year delivered that message in container-ship-sized portions.To accelerate out of the pandemic and excel in the coming decade, we need better tools and processes than MRP systems developed in the 1960's.
With the climate crisis, coronavirus pandemic, trade tensions and the rising power of China... uncertainty may be the one certainty. Join us at #reConnect2021 for a fireside chat with Sam Kaplan, author of the new book "Challenging China: Smart Strategies for Dealing with China in the Xi Jinping Era," and moderator Kellen Betts. They will discuss challenges and opportunities in the international business environment, and what this shifting landscape means for global supply chains, trade and world economies.