5-26-23 Update

Tonnage in April Drops 3.4% Year-Over-Year

Truck tonnage in April fell on both an annual and month-to-month basis as freight activity remains slow, American Trucking Associations said May 23.

Tonnage slumped 3.4% last month to 112.7 when measured against the same period a year ago, and dipped 1.7% compared with March results, according to ATA’s seasonally adjusted For-Hire Truck Tonnage Index. The index was 115.8 in April 2022.

ATA Chief Economist Bob Costello said the year-over-year decline is the largest decrease since February 2021. The April annual decline follows a 2.4% year-over-year drop in March.

AI opens new frontier in supply chain planning

Last year broke the crystal balls. Some of the largest, most sophisticated companies in the world overbought or overproduced inventory by many millions of dollars last year. The reason, at its simplest, is that consumers did not behave as predicted.

Planners don’t have the luxury of blaming consumers for not acting according to their forecasts — especially when many of those customers were reacting to historic inflation in food, fuel and housing.

“Demand planning went out the door for three years,” said Rick Jordon, senior managing director with FTI Consulting. “Now they’re picking it back up, because they have all this excess inventory everywhere. And they’ve forgotten how to do it, or they didn’t do it well before.”

Retailers Near Restocking as Inventory Paring Winds Down

Big retailers are signaling they are nearly done paring back their excess inventories and are preparing to fill their shelves with new merchandise this fall, potentially brightening prospects for freight carriers looking for revived restocking to drive a shipping rebound.

Target’s inventories at the end of the last quarter were 16% lower than the same period a year ago and Walmart cut inventories in its U.S. store operations by 9% over the past year, slashing hundreds of millions of dollars of goods from their balance sheets and suggesting space is opening up in their jammed supply chains.

5-19-23 Update

South Korea expands container shipping links to Russia

South Korea has again widened container shipping links with Russia, the port of Donghae starting a container liner service linking it with far-eastern ports.

Feeder operator Dong Young Shipping will extend its shuttle service between Busan and Vladivostok to include a call at Donghae, on the eastern part of the Korean peninsula.

The revamped service will start at the end of June, and officials at Donghae say they hope it will revitalise the port and regional development through the growing trade in the northern economic bloc.

US supply chain woes shift and persist in 2023

CHICAGO, May 17 (Reuters) – The U.S. supply chain is healing from early pandemic shocks that sent shipping costs skyrocketing and squeezed supplies of everything from toilet paper to pasta, but more than three years later, material shortages and hiring woes linger.

Rates for trucking, ocean shipping and other transportation tumbled after U.S. consumers shifted spending from big-ticket items like furniture, BBQ grills and big-screen TVs to travel and other entertainment, offering a reprieve to beleaguered shippers.

However, “there’s still a pretty big mess out there,” said Ryan Patel, senior fellow at Claremont Graduate University’s Drucker School of Management.

Union group pushes for passage of rail safety bill

Rail union representatives are poised to adopt a policy statement that urges Congress to pass a rail safety bill — one that mandates a minimum of two-person crew sizes on all passenger and freight trains, regulates train lengths exceeding 7,500 feet and ensures adequate inspections of rail cars, locomotives and brakes.

The latest policy statement of the Transportation Trades Department (TTD) of the AFL-CIO cites at least 18 areas where regulations and guidance via the Federal Railroad Administration can bolster existing rail safety practices. TTD expects to formally adopt the statement at its spring summit on Wednesday, when 37 unions, including all U.S. rail labor unions, are convening at AFL-CIO headquarters in Washington.

Weekly Update 5-12-23

Weak demand and rising capacity drive air freight prices lower

After a modest bounce during March, global air freight prices resumed their downward trend in April.

According to TAC Index, a leading price reporting agency for the sector, the overall Baltic Air Freight Index (BAI00) dipped a further 0.8% during the week to 1 May, to leave it lower by 42.5% over 12 months.

There were, as usual, regional variations, with Hong Kong (BAI30) up 1.1%, week on week, to leave it down 42.2% year on year, but Shanghai (BAI80) down 2.3% WoW, to leave it down 48.5% YoY – but with upper quintiles in the range of prices paid falling again after an uptick in March.

US imports up again in April as market mirrors pre-COVID ‘normal’

Amid all the doom and gloom on container shipping and the talk of an impending recession, U.S. imports are rising off their lows. Inventory-to-sales ratios are still much higher than pre-COVID, yet monthly imports are now either at or above 2019 levels, depending on which data source you use.

U.S. ports imported 2,020,197 twenty-foot equivalent units of containerized cargo in April, Descartes said on Monday.

That’s down 18% from a year ago, when American importers were frantically shipping in cargo. But it’s up 9% from March and 5% from April 2019, pre-COVID.

Labor Deal at West Coast Ports Comes Into View

Contract talks between unionized longshore workers and employers at West Coast ports appear to be headed into their final stretch following agreements on several major issues, potentially clearing the uncertainty that has been hanging over U.S. importers heading into their crucial fall selling season.

Some shipping officials familiar with the talks hope a tentative agreement could be reached by June, ending a contentious period in port labor relations that prompted some of the country’s biggest retailers and manufacturers to shift goods away from the region to avoid possible disruptions.

Weekly News Update – 5/5/23

Manufacturing industry performance holds largely stable in April

While the manufacturing industry saw only modest gains in production levels and customer demand compared to March, the industry may be on its slow way back to economic growth, according to two national economic indices.

The Institute for Supply Management’s Report on Business posted a Purchasing Managers’ Index at 47.1%, a 0.8 percentage point increase from March, marking a fifth month of consecutive economic contraction.

S&P Global’s US Manufacturing PMI edged into growth mode this past month, with a reading of 50.2, the first time the index has reached above 50.0 since October 2022. A reading over 50.0 indicates economic expansion in the industry.

Study: Heavier Fog Will Affect Shipping Safety in a Warming Arctic

The Arctic is going to become easier to navigate as ice recedes, but it is also going to have more of a marine weather condition that mariners tend not to like: heavy fog.

According to a new study published in Geophysical Research Letters, rapidly retreating sea ice in the Arctic will open up new shipping lanes – as already seen on Russia’s Northern Sea Route – but vessel operators will have to take into account a higher incidence of fog. According to the study, safety slowdowns due to fog will add up to 1-4 days to a voyage’s transit time, and may force weather routing choices to optimize for less transit time through foggy areas.

2nd-half freight rebound increasingly unlikely

Across the physical economy, executives and analysts are projecting that the second half of 2023 will bring a rebound. That includes containerized U.S. import volumes, which sees its peak season in late summer to autumn. Some believe U.S. import demand has hit the bottom.

However, further downside risks have emerged for the U.S. economy. It’s wrecking the odds of a second-half rebound in import volumes.

Last June, SONAR’s ocean container bookings data revealed that U.S. import demand for containerized goods was dropping off a cliff, just a few months after FreightWaves’ U.S. truckload data first signaled that a freight recession was imminent. Now, the freight recession of 2023 has officially arrived.

News Update – 4/28/23

Influx of capacity brings a ‘new era’ for air cargo markets

New capacity in the passenger and freighter market is changing the parameters of air cargo this year.

Different aircraft entering the market will alter the balance, according to Frank Ziesemer, CEO of Strike Aviation. But he said these changes had not been thought through, particularly in the freighter market.

“During the pandemic, everybody was looking for freighters, because passenger aircraft were grounded. So the airlines shifted towards cargo aircraft without any clear strategy, just to satisfy the market’s needs.

“Currently, air cargo carriers are increasing frequencies and capacities to gain market share. Some of them do it without calculating the costs or profit and loss, and without receiving any state aid, which could lead to unforeseen difficulties,” he explained.

Here’s How Supply Chains Are Being Reshaped for a New Era of Global Trade

When a measure of strains on global supply chains fell earlier this year to levels last seen before the Covid-19 pandemic, it signaled to some that the product shortages, port bottlenecks and shipping disruptions of the past three years were over and that a new era of stability was on the horizon.

But industry experts say a “return to normal,” as the Federal Reserve Bank of New York described its Global Supply Chain Pressure Index in February, hardly means that companies are going back to conventional, some would say complacent, supply chains.

Instead, say academics and consultants, the experiences during the pandemic, along with changes in geopolitics, are leading to broader, potentially long-lasting changes in how companies manage the flow of goods, from the sourcing of raw materials to manufacturing and distribution.

The economy is in a ‘freight recession,’ with China trade decline continuing

As the big East and West coast ports jockey for supremacy in total trade volume coming into the country, the pie is getting smaller as the economy softens.

The latest trade data from the Port of New York and New Jersey, the nation’s largest container port on the East Coast, points to a slight uptick in container processing but future ocean freight orders continuing to pull back.

In the month of March, the Port of New York and New Jersey handled 574,452 TEUs (20-foot equivalent units) making it the nation’s third-busiest port. But the difference between the Port of Los Angeles, which processed the most containers in March, and the Port of New York/New Jersey, was 48,781 TEUs.

Weekly Update – 4/14/23

‘Subpar’ trade growth in store for 2023: WTO

The pace of trade will likely remain sluggish in 2023 as volumes are weighed down by inflationary pressures and the war in Ukraine, according to the World Trade Organization.

Global trade volume in 2022 came in below estimates at 2.7% growth, well below 2021’s figure of 9.4%. Growth in trade fell from an average of 4.2% in the first three quarters of 2022 before falling to 2.4% in the fourth quarter, according to the WTO’s latest outlook report.

The value of merchandise traded, however, rose by 12% to $25.3 trillion, driven by higher commodity prices.


Search Continues for Hijacked Tanker Missing in Gulf of Guinea

Calls are going out for international assistance as the search continues for a missing product tanker believed hijacked on April 10 in the Gulf of Guinea. Searches of the region have so far been unsuccessful in locating the vessel which stopped transmitting an AIS signal on Monday in a position last reported 300 nautical miles south of Abidjan in Cote d’Ivoire. At the same time, the International Maritime Organization is speaking out on what it sees as a troubling increase in piracy in the region after the success of reducing incidents since 2021.

The Maritime and Port Authority of Singapore representing the vessel’s flag issued a statement confirming that it had received a report that the Success 9, a 4,374 dwt product tanker flagged and managed from Singapore, had been boarded by an unknown number of pirates.


Container lines still up vs. pre-COVID despite fall from peak

Early numbers on the first quarter are starting to trickle in from container shipping lines. They show a big step down from the fourth quarter, but they also confirm that earnings are still well above the pre-COVID “normal.”

Spot rates in the trans-Pacific eastbound market have collapsed, yet carriers continue to be shielded by annual contracts signed in 2022. Meanwhile, spot rates in the trans-Atlantic westbound market remain much higher than they were prior to the pandemic.

Average revenue per forty-foot equivalent unit — the big driver of container shipping net income — remains higher than it was before 2020.

Weekly Update 3/31/23

FDA expects COVID-related shortages to normalize this year

The FDA’s medical device shortage page as of December 2022 listed 16 supply disruptions that were forecast to last for the duration of the COVID-19 public health emergency. With the U.S. government set to end the public health emergency in May, the regulator has revised its forecasts for most of the products.

The FDA now predicts the supply of multitarget respiratory specimen nucleic acid tests, micropipettes, microbiological specimen collection devices and other products used in response to the pandemic will return to normal in the first half of the year. Many of the shortages date back to the creation of the list of supply disruptions in August 2020.


Trans-Atlantic container rates still double pre-COVID levels

Container shipping rates are not back to normal quite yet. Trans-Pacific rates have returned to pre-COVID levels, but pricing in trans-Atlantic markets has not.

Spot container rates from Europe to the U.S. — while falling — are still more than twice pre-pandemic rates. U.S. imports from Europe remain strong, with building materials supporting volumes.

Drewry and FBX spot assessments

The Drewry World Container Index (WCI) spot-rate assessment for Rotterdam, Netherlands, to New York was $5,061 per forty-foot equivalent unit in the week ending Thursday. That’s down 32% from last year’s peak but still 2.5 times rates in March 2019.


Nationwide German transport strike causes major disruptions

Almost all planes, trains and buses in Germany were at a standstill on Monday after a nationwide 24-hour strike began at midnight.

Preparations for the strike had already caused major weekend travel disruptions.

Two major unions are deadlocked in negotiations with public sector employers in several transport sectors — including rail, local public transport, and airport ground staff — and organized the strike to coincide with the start of a third round of talks.

Frank Werneke, head of the Verdi union that represents around 2.5 million public sector employees, spoke of the biggest strike in decades.

Long-distance and regional trains and local public transport all affected

The German rail network was similarly paralyzed. The EVG union said more than 30,000 railway workers have joined the strike.

PGL Weekly Update 3-24-23

Container Volumes Fall at Most US Ports

A combination of the Lunar New Year, ongoing labor negotiations and concern about a slowing global economy resulted in the Port of Los Angeles seeing a 43% year-over-year drop in container cargo in February.

The port processed 487,846 20-foot-equivalent containers, down from last year’s 857,764.

“February declines were exacerbated by an overall slowdown in global trade, extended Lunar New Year holiday closures in Asia, overstocked warehouses and a shift away from West Coast ports,” Port of Los Angeles Executive Director Gene Seroka said. “While we expect more cargo moving across our docks in March, volume will likely remain lighter than average in the first half of 2023.

Labor Tensions Rise in Stalled West Coast Port Contract Talks 

Tensions in long-running contract talks at West Coast ports are worsening, with employers accusing unionized dockworkers of slowing cargo handling at the ports of Los Angeles and Long Beach, the nation’s busiest gateway for imported consumer goods.

The sharp rhetoric marks a shift from a longstanding agreement to maintain public silence on issues around the negotiations, which began last spring. The two sides appear to be no closer to bridging the gap on their disagreements, pointing to the possibility of deeper disruptions to U.S. trade flows.

The Pacific Maritime Association, which represents ocean carriers and port employers, said Monday that dockworkers at the ports of Los Angeles and Long Beach had stopped staggering work shifts during mealtimes starting last Wednesday.

National diesel average falls 6.2 cents, to $4.185, reports EIA

The national average price per gallon of diesel gasoline saw another decline, for the week of March 20, according to data issued this week by the Department of Energy’s Energy Information Administration (EIA).

The national average decreased 6.2 cents, to $4.185, following a 3.5-cent decline, to $4.247, for the week of March 13. This was preceded by a 1.2-cent decrease, to $4.282, for the week of March 6, an 8.2-cent decline, to $4.294, for the week of February 27 and another 8.2-cent decrease, to $4.376, for the week of February 20, and a 9.5-cent decrease to, $4.444 per gallon, for the week of February 13. Those declines were preceded by a 1.8-cent increase, to $4.622 per gallon, for the week of January 30 and an 8.0-cent increase, to $4.604, for the week of January 23, with a 2.5-cent decline, to $4.524, for the week of January 16.

PGL Weekly Update 3-17-23

February still busy for Georgia Ports despite year-over-year, sequential dips

Despite the headwinds of inflation, rising interest rates and high warehouse inventories, the Georgia Ports Authority said it had its second-busiest February ever.

February container volumes totaled nearly 395,000 twenty-foot equivalent units, down from 460,400 TEUs in February 2022 but still 30,400 TEUs higher than pre-pandemic February 2020, GPA said Tuesday.

However, February’s volumes of 394,793 TEUs were also 6% lower than January’s volumes of 421,714 TEUs. January’s volumes also marked a year-over-year decline, with weather and reduced orders in retail and manufacturing contributing to less cargo.

Retail Sales Slip 0.4% in February After January’s Burst

NEW YORK — America’s consumers trimmed their spending in February after a buying burst in January, underscoring the volatility of the economic environment.

The government said March 15 that retail sales slipped 0.4% after jumping a revised 3.2% in January, helped by an increase in auto sales. Retail sales were down in November and December, the critical holiday period.

The February retail sales figure was weighed down by a 1.8% drop in auto sales as well as declines at restaurants and stores selling furniture and clothing. Excluding autos, sales slipped 0.1% from January, according to the Commerce Department.

Sales at furniture stores fell 2.5%, while business at restaurants declined 2.2% in February from January. Sales at department stores slid 4%. But shoppers spent more online and at electronics stores, health and beauty stores and food retailers, according to the report.

Trade slows at Port of Long Beach

Cargo moving through the Port of Long Beach slowed in February due to full warehouses, reduced consumer spending, and the closure of east Asian factories during the Lunar New Year holiday.

Dockworkers and terminal operators moved 543,675 twenty-foot equivalent units (TEUs) last month, down 31.7% from February 2022, which was the Port’s busiest February on record. Imports declined 34.7% to 254,970 TEUs and exports decreased 5.9% to 110,919 TEUs. Empty containers moving through the Port were down 38.3% to 177,787 TEUs.

“Trade continues to normalize following the record-breaking cargo numbers we saw at the start of last year,” said Port of Long Beach Executive Director Mario Cordero. “We are investing in infrastructure projects that will keep us competitive as we collaborate with industry stakeholders to focus on trade volume.”

Point Global Logistics Weekly Update 3-3-23

Despite big gains in New York, Los Angeles remained top port in 2022

For a brief moment last year, the Port of New York and New Jersey made waves with a single stat: It had become the largest port in the United States, dethroning the long-standing volume leader, the Port of Los Angeles.

Though the East Coast port only kept the top spot for a few months — falling back to the #2 spot by December — its gains over the years made it the second-largest port in the nation, outpacing the Port of Long Beach in 2022. The Port of New York and New Jersey has been gaining market share since the pandemic, growing its volumes by more than 2 million TEUs in the past five years.

Gains at the top of the ranking reflect a broader trend of rising volumes for U.S. ports. See a full ranking of U.S. containerports that handled more than a million TEUs in 2022 below.

For February, Carloads, Intermodal Volume Decline

U.S rail traffic in February 2023 lagged the same month last year—down 5.2% or 101,452 carloads and intermodal units, the Association of American Railroads (AAR) reported March 1. This follows January’s 3.2% drop from the prior-year period; while carloads rose slightly during the first month of the year, intermodal experienced its worst January since 2013.

According to AAR, U.S. Class I railroads in February 2023 hauled 1,849,723 carloads and intermodal units, comprising 905,744 carloads (down 1.6%) and 943,979 containers and trailers (down 8.4%). In contrast, February 2022 U.S. rail traffic experienced big year-over-year gains largely due to severe winter storms holding back volumes in 2021; February 2019 U.S. rail traffic was behind February 2018, reflecting weather and/or economic and trade-related uncertainty.

DAT’s January Truckload Volume Index is solid to start 2023

The January edition of the DAT Truckload Volume Index (TVI), which was recently issued by DAT Freight & Analytics kicked off 2023 in strong fashion.

The DAT Truckload Volume Index reflects the change in the number of loads with a pickup date during that month, with the actual index number normalized each month to accommodate any new data sources without distortion, with a baseline of 100 equal to the number of loads moved in January 2015. It measures dry van, refrigerated (reefer), and flatbed trucks moved by truckload carriers.

January’s van freight TVI—at 223—was up 2.8% compared to December and also up 2.8% annually. The refrigerated TVI—at 174—was up 3.0% compared to December and up 3.6% annually. And the flatbed TVI—at 218—was up 10.7% compared to December and was up 12.4% annually.