Radiant's Freight Market Update

This week: Mexico's interoceanic corridor aims to compete with Panama Canal, FMCSA delays truck speed limiter rule to May, & Boeing withdraws safety exemption request for 737 Max 7.

Ocean

Surge in container shipping rates caused by Red Sea slows. Recent container ship diversions around Africa’s Cape of Good Hope caused a surge in spot rates, particularly in European lanes. However, the momentum is slowing, with rates leveling off in most lanes. The Shanghai Containerized Freight Index (SCFI) dropped 2.7% in the latest week, marking the first weekly decline since late November. Analysts anticipate the current rate surge, driven by supply chain disruptions, may ease after the Chinese New Year as liners adjust schedules and new ship deliveries increase vessel supply for longer routes.

Ports

South Carolina Ports Authority focuses on rail amid cargo volume dip. The South Carolina Ports Authority experienced a 4% YoY decline in cargo volumes in December. Despite lower volumes, the port is strategically emphasizing rail, with 23% of total marine containers moving inland by rail during the calendar year. The port's investments in rail infrastructure aim to maintain and improve connectivity, especially at its two rail-served inland ports.

Trucking

FMCSA delays truck speed limiter rule to May. The Federal Motor Carrier Safety Administration has postponed the truck speed limiter rule's publication to May. Originally slated for mid-2023, the rule mandates electronic speed governors for trucks over 26,000 pounds. While owner-operators oppose it, safety groups and large carriers support the federal mandate, citing economic and safety reasons for setting truck speed limits.

Rail

Norfolk Southern joins C3RS reporting system for railroad safety. Norfolk Southern has become the first Class I carrier to participate in the Federal Railroad Administration's Confidential Close Call Reporting System (C3RS). This joint initiative with labor unions aims to enhance railroad safety by allowing covered employees to report concerns without fear of discipline. A joint committee will review the data to implement corrective actions and improve safety.

Mexico's interoceanic corridor aims to compete with Panama Canal. Mexico's Isthmus of Tehuantepec's Interoceanic Corridor (CIIT) project is positioned as a competitive alternative to the Panama Canal. With global shipping disruptions, the initiative aims to transform the isthmus into a 188-mile rail corridor, potentially handling up to 1.4 million twenty-foot equivalent units annually by 2033.

Air

Boeing withdraws safety exemption request for 737 Max 7. Boeing has officially withdrawn its request to the Federal Aviation Administration (FAA) for a safety exemption related to its 737 Max 7 awaiting certification. The request involved an anti-ice system, with concerns about potential overheating issues leading to engine nacelle breakage. Boeing, confident in the proposed exemption's safety, will instead implement an engineering solution during the certification process. Read more from CNBC here.

Volume surge fails to boost air cargo rates in January. Despite a 10% year-on-year increase in air cargo volumes in January, rates have yet to see a corresponding rise due to abundant capacity. Shippers' concerns over Red Sea – Suez Canal delays and an early Lunar New Year contributed to increased air cargo volumes, but spot rates declined by -12% month-on-month to an average of $2.27 per kg. General air cargo spot rates globally showed a double-digit year-over-year decline of -21% in January, indicating a slower pace compared to the -38% decline seen in January 2023, according to market analysis by Xeneta.

International

Asia Pacific airlines saw decline in air cargo demand in 2023. The Association of Asia Pacific Airlines (AAPA) released preliminary traffic figures for 2023, revealing a 2.8% year-on-year decline in international air cargo demand. Throughout the year, Asia Pacific airlines faced multiple challenges, including inflation, a strong US Dollar, and government policies affecting trade. E-commerce provided a boost in the final months of 2023, with December recording a 13.2% year-on-year growth in international air cargo demand, partially mitigating the overall decline for the year to 2.8%. The AAPA notes a shift in demand dynamics in the last quarter after continued weakness in earlier periods. Read more from Air Cargo News here.

Other

UPS reports revenue drop, announces layoffs. UPS fell below Wall Street revenue expectations, reporting international and domestic shipping volume declines. As part of a resource alignment effort in 2024, UPS announced 12,000 layoffs.

FBI alleges Mexican cartel and Canadian truckers collaborated in drug trafficking ring. The FBI has indicted 19 men in a drug-smuggling operation involving large narcotics shipments moved from Mexico across the U.S. and Canada by long-haul truckers. Dubbed "Operation Dead Hand," the cross-border investigation spanned three countries involving drug suppliers, distributors, Canadian truck drivers, and associates of the Italian Mafia. The organized crime group utilized Canadian handlers and dispatchers who coordinated shipments, leading to numerous border crossings and seizures of large quantities of cocaine, methamphetamine, and fentanyl. The transportation network involved drivers collaborating with multiple trucking companies, making border crossings via the Detroit Windsor Tunnel, the Buffalo Peace Bridge, and the Blue Water Bridge.

⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯

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.

⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯

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.