Radiant's Freight Market Update

This week: Canadian National and CPKC prepare for potential Teamsters strike, Trans-Atlantic ocean carriers announce September rate hikes amid uncertainty, Chinese port explosion causes major disruptions in Trans-Pacific container trade.

Current Critical Industry Trends

Looming U.S. port strike continues to pose significant threat to global shipping. The U.S.is still facing the potential of a major port strike, which could become the next critical chokepoint for global shipping. With labor disputes intensifying, there are growing concerns about widespread disruptions to supply chains, particularly as U.S. ports handle a substantial portion of the world’s trade. A strike could lead to severe congestion, delays, and increased costs, affecting industries and consumers worldwide. The situation is being closely monitored as negotiations continue, with the outcome likely to have significant ramifications for global logistics.

Ocean

U.S. container imports could hit record levels. U.S. container imports are approaching record monthly levels as the peak shipping season intensifies. According to recent reports, the surge is driven by strong consumer demand and preemptive stockpiling by retailers ahead of potential disruptions. This increase in import activity is putting pressure on ports and supply chains, raising concerns about congestion and delays.

Trans-Atlantic ocean carriers announce September rate hikes amid uncertainty. Starting September 1, 2024, trans-Atlantic ocean carriers will introduce peak season surcharges (PSSs) to counter declining westbound rates, despite a 7% increase in U.S. imports from North Europe. Mediterranean Shipping Co. will impose a $1,000 per FEU surcharge, and Hapag-Lloyd $800 per FEU, among others. However, market response has been mixed, with some carriers still offering long-term deals. Adding to the uncertainty, stalled labor negotiations between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) could lead to a strike when the ILA’s contract expires on September 30. This potential disruption may challenge carriers' ability to enforce the proposed rate hikes, leaving shippers uncertain as the deadline approaches.

Ports

Georgia Ports moves forward with inland rail hub development. The Georgia Ports Authority is making significant strides in developing an inland rail hub that will enhance connectivity between the Port of Savannah and major markets in the Southeast. This project aims to streamline cargo movement, reduce congestion, and improve supply chain efficiency by providing a direct rail link to inland destinations. The rail hub is expected to play a crucial role in supporting the port's growth and meeting increasing demand for efficient cargo handling.

Trucking

FMCSA to update trucking guidance, consider dropping outdated rules. The Federal Motor Carrier Safety Administration (FMCSA) is reviewing its current guidance documents for trucking regulations, with plans to update relevant guidelines and eliminate outdated ones. This initiative is part of FMCSA's broader effort to ensure that trucking regulations remain clear, relevant, and effective in promoting safety and efficiency in the industry. Stakeholders are encouraged to participate in the review process.

Rail

Canadian National and CPKC prepare for potential Teamsters strike. Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) are bracing for a potential strike by the Teamsters Canada Rail Conference (TCRC) on August 22. The looming strike has already led to significant disruptions in rail operations, with both companies beginning to implement contingency plans including shipping embargoes on certain goods. CN and CPKC have emphasized their commitment to reaching a fair agreement with the union but are also preparing for the possibility of an extended labor action that could impact rail service across Canada.

Air

Air Cargo industry calls for consistent emissions reporting standards. Air cargo stakeholders are advocating for standardized and cohesive methods of reporting aviation emissions. The industry is pushing for uniform guidelines to ensure accurate and comparable data across regions, which would help airlines, shippers, and regulators better track and reduce carbon footprints. As environmental concerns gain prominence, the need for clear, consistent reporting is seen as essential for the sector’s sustainability efforts.

Automotive industry drives growth in air cargo sector. The automotive industry is increasingly driving demand in the air cargo sector, with auto manufacturers relying on air freight for quick and efficient delivery of parts and vehicles. This trend is particularly evident as global supply chains continue to recover from disruptions. The urgency to meet production timelines and the growing demand for electric vehicles are contributing to the rise in air cargo volumes tied to the automotive sector.

International

Chinese port explosion causes major disruptions in Trans-Pacific container trade. A significant explosion at a Chinese port has caused widespread disruption in the Trans-Pacific container trade, leading to delays and congestion at key shipping hubs. The explosion has exacerbated existing supply chain challenges, with many ships rerouted or delayed, impacting the flow of goods between China and the U.S.

Overbookings and service adjustments disrupt India-U.S. East Coast shipments. Indian freight forwarders are frustrated as carriers increasingly deny gate access for containers despite confirmed bookings. Overbooked vessels and service adjustments have left many shipments stranded, like those at Nhava Sheva Port, where hundreds of containers were not loaded. Carriers are reportedly overbooking by up to 30% to maximize export capacity, leading to frequent cargo rollovers. While carriers argue that overbooking helps meet high demand and navigate disruptions like the Red Sea crisis, forwarders worry about losing customers due to these ongoing issues. Carriers acknowledge the problem but say some rollovers are unavoidable.

Other

Leading terminal operators now handle 40% of global container throughput. The seven largest container terminal operators in the world now control 40% of global container throughput, according to recent data. This consolidation of power among a few key players is reshaping the global shipping landscape, with implications for competition, pricing, and service levels. The dominance of these operators highlights the increasing centralization in the port industry, raising questions about the long-term effects on global trade efficiency.

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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.