As we navigate this volatile global supply chain, Reilly International continues to strive to provide our clients with Reliability Without Surprises.  Within this letter, we have outlined key recent events expected to impact your supply chain and transportation costs. Our purpose is that is to help you plan and communicate with your client base promptly.

Increasing U.S. Diesel Fuel

US Carriers set their fuel surcharges based on the average price per gallon posted by the US Department of Energy, which is updated weekly.  The price per gallon at the pump rose 18.15% from 2/28/22 to 3/7/22.  This is causing US Carriers to drastically increase their fuel surcharges to us, and therefore we pass this cost along to you.  Due to the current environment, we are anticipating the diesel prices to continue to increase and carrier’s fuel surcharges to do the same.  Due to drastic inflationary costs of fuel, carriers who normally update their fuel surcharge weekly could very well begin to do so daily.   Please consider these almost certain increases in your analysis of costs.

BNSF Chicago – Major US Rail service from the US West Coast to Chicago

Last year we experienced significant delays with rail service from the US West Coast for Asian Imports.  Just as things have returned to a predictable normal, we have begun to see delays.  Upon investigation we found, the BNSF Chicago conducted a software upgrade, which caused drastic delays for truckers checking in and out of the BNSF Terminals.  These delays reduced the number of containers able to be picked up and return to the terminal.  The BNSF was able to correct the software issue after a week, however, this resulted in:

• back log of containers and railcars at Chicago location
• back log of containers at the port of Long Beach
• shortage of rail cars at the port of Long Beach as the turn around of the railcars was delayed because of the above two issues.

We are anticipating the BNSF Chicago to run as normal after the next week but will become overwhelmed again when the backlog of containers from Long Beach arrives.  This will once again, cause delays with containers becoming available at the BNSF Chicago.  We are monitoring this situation and your Reilly International team member will inform you of delays on your specific shipments.  Please reach out to us with any questions.

US Ocean Exports rising costs to Australia and Southeast Asia

Over the past year, carriers have diverted vessels to manage international volumes, prioritized empty containers back to heavy shipping markets, and skipped smaller ports and overloaded larger shipping ports.  Due to these events, the US Ocean Export market has begun to feel price increases like what we experienced with the Import rates back in the summer of 2020.  Currently, the export rate increases are only focused on Australia and Southeast Asia.  Looking at historical shipping trends, a drastic increase in volume in one part of the globe will eventually affect the rest of the global shipping costs as carriers reposition equipment to meet the overwhelming demand and backlog.   We are updating our pricing as these changes take effect, we recommend you anticipate these increases in your forward quotations to your clients in these markets.

Thank you

We are doing all that we can to keep you informed.   In this environment, that often seems like constant ‘bad news’.   We are sensitive to this and appreciate that so many of you have said to us – we would rather know the challenges than be faced with them without warning.   Please reach out to any Reilly International Team Member if you have questions or concerns.  Thank you for the opportunity to serve you – we appreciate it and you every day.

March 10, 2022