Radiant's Freight Market Update

This week: U.S. Delays Tariff Hikes on Chinese Imports, Potential Canadian Rail Strike Could Disrupt Trade, & Air Cargo Demand Continues to Surge.

Current Critical Industry Trends

U.S. delays tariff hikes on Chinese imports. The U.S. Trade Representative has delayed the planned tariff increases on Chinese imports, including a 25% duty on ship-to-shore cranes, by two weeks. This decision comes as the USTR reviews over 1,100 public comments regarding the tariffs. The final determination is expected in mid-August, with the tariffs potentially taking effect two weeks later. Industry groups, particularly port authorities, have expressed concern over the proposed increases, highlighting potential cost implications and negative impacts on supply chains and port operations.

Ocean

Record growth in containership fleet capacity. The containership fleet's capacity has grown by 1.6 million TEU in the first half of 2024, an 11% year-over-year increase, marking the fastest growth in 15 years. This surge, driven by the addition of 264 new ships, has led to an overall fleet capacity of 29.5 million TEU. The growth has been particularly strong in the 12k-17k TEU segment. However, with limited recycling and new ship orders continuing, fleet capacity is expected to exceed 30 million TEU by the end of 2024.

Ports

Los Angeles Port faces power supply challenges. The Port of Los Angeles is facing significant power supply issues due to the increasing electrification of port operations, including the use of electric cranes and vehicles. The existing infrastructure is struggling to keep up, potentially affecting port operations and efficiency. Substantial investment in electrical grid capacity and infrastructure upgrades will be needed to support the port's growth and the transition to greener technologies.

Port of Long Beach expands rail capacity. The Port of Long Beach is expanding its rail infrastructure to enhance cargo handling efficiency and reduce truck traffic. The $1.5 billion project will add a new rail yard and enhance existing facilities, allowing for longer trains and increased capacity. This expansion is part of a broader effort to improve the port's environmental footprint by reducing emissions from trucks and promoting the use of cleaner rail transport. The project is expected to significantly boost the port's throughput and support sustainable growth.

Trucking

Congress debates trucking safety regulations. Congress recently debated proposed safety regulations for the trucking industry, including the contentious issue of mandating speed limiters on commercial vehicles. Proponents argue these measures could reduce accidents, while opponents, including the Owner-Operator Independent Drivers Association (OOIDA), contend they could increase dangers due to speed differentials. Additional concerns were raised about truck parking shortages, which pose significant safety risks, especially for female drivers. The Truck Parking Safety Improvement Act aims to address these issues by increasing parking infrastructure. Read more about the subcommittee debates here.

Rail

Potential Canadian rail strike could disrupt trade. Labor negotiations between Canadian Pacific Kansas City (CPKC) and the Teamsters Canada Rail Conference are at an impasse, with a potential strike expected in late August. The Canadian Industrial Relations Board will decide by August 9 which commodities must continue moving during a strike. The anticipated strike could disrupt freight and commuter services, impacting major Canadian cities and international trade routes, particularly with the recent diversion of traffic in anticipation of labor unrest.

U.S. Railroads see intermodal growth in early 2024. In the first half of 2024, U.S. railroads experienced significant intermodal growth, driven by geopolitical issues and domestic port labor negotiations. BNSF led with a 16% increase, while other major railroads also saw gains. This growth was partly due to importers shifting cargo to the U.S. West Coast to avoid disruptions in the Red Sea and potential labor strikes on the East Coast. Despite challenges, such as competition from low-priced trucking, railroads focused on improving service and efficiency to attract shippers.

Air

Air cargo demand continues to surge. The International Air Transport Association (IATA) reported strong global air cargo demand, with a 14.1% year-on-year increase in June 2024. The first half of 2024 saw exceptional growth, driven by e-commerce and limited maritime shipping options. Asia Pacific led the demand growth, followed by Europe and the Middle East. Despite economic challenges, the air cargo sector remains robust, though concerns about global trade and inflation persist.

International

Turkey to implement its own emissions trading scheme. Turkey plans to introduce its own carbon pricing scheme, similar to the EU Emissions Trading System (ETS), to prevent shipowners from avoiding EU carbon taxes by making transhipment stops in Turkish ports. This move aims to align Turkey's emissions regulations with EU standards and regulate approximately 10 million tonnes of annual CO2 emissions. The new policy reflects Turkey's commitment to addressing climate change and maintaining strong economic ties with the EU, one of its largest trading partners​.

Technology

FAA clears drone companies to operate in shared airspace. The FAA has authorized drone companies Wing and Zipline to operate drones beyond visual line of sight in the Dallas area. This new regulation allows drones to deliver packages by navigating shared airspace using technology that manages traffic and ensures safety. This move marks a significant advancement for U.S. drone operations, offering a more scalable and efficient method for deliveries. The system is expected to be operational in August.

Other

DOE's $33M investment in smart manufacturing. The U.S. Department of Energy is allocating $33 million to support smart manufacturing technologies that facilitate the transition to clean energy. The funding focuses on four areas: circular supply chains, sustainable transportation tooling, high-performance materials (like nickel and copper), and sustainable mining. Concept papers are due by August 22, and full applications by November 18. Awards will be announced in the spring of 2025. This initiative aims to enhance sustainability and efficiency in various industries, driving innovation and environmental stewardship.

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The Radiant Network's supply chain and logistics updates provide valuable insights on freight trends, customs regulations, global news, economics, tech, and more. The Radiant Network includes the brands Radiant World Trade Services, Radiant Global Logistics, Radiant Canada, Radiant Road & Rail, Adcom, Airgroup, SBA, and Distribution By Air.

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Radiant World Trade Services is a part of Radiant Logistics, Inc. (NYSE American: RLGT), a publicly traded third-party logistics company that provides technology-enabled global transportation and value-added logistics solutions to a diverse account base. They offer comprehensive services including freight forwarding, truck and rail brokerage, warehouse and distribution, customs brokerage, order fulfillment, inventory management, and technology services. Radiant has an extensive network of offices throughout North America and other key markets worldwide.