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Radiant's Freight Market Update

Feb 8, 2024

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This week: Transportation prices surge amid inventory increases, Mexican truckers halt nationwide strike over cargo theft, & rising cocoa prices could mean Valentine’s Day sticker shock.


Red Sea disruptions pose risk to U.S. economy. Stakeholders cautioned regulators about the risk posed to the U.S. economy by disruptions in the Red Sea during a recent House of Representatives Coast Guard and Maritime Transportation subcommittee hearing. Experts highlighted potential congestion and inflationary pressures resulting from ongoing attacks on commercial shipping in the region. The ripple effect of these attacks has already led to rerouted vessel services, causing increased transit times and ocean shipping rates. Shippers have experienced delays and constraints on certain products, prompting some to redirect cargo through the West Coast, potentially exacerbating congestion issues.


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.


Port Houston records impressive growth in cargo volumes. Port Houston witnessed a significant uptick in cargo volumes in December, with a year-over-year increase of 11% to 325,020 total TEUs. The port set a new record for loaded exports during the month, driven largely by demand for resin. Despite challenges elsewhere, Houston's strong export performance helped maintain overall volume stability, with loaded imports, export loads, and empties all experiencing double-digit percentage growth compared to the previous year.


Transportation prices surge amid inventory increases. A recent supply chain report revealed a noteworthy shift in transportation prices, marking the first expansion in 19 months. The Logistics Managers’ Index (LMI) for January surged by 5 percentage points to 55.6, with all eight components indicating growth. The upturn was driven by increased inventory restocking, particularly in the retail sector following a busy holiday season. While transportation capacity continued to grow at a slow pace, transportation prices saw a significant jump, firmly entering growth territory after a prolonged period of contraction.

Yellow Corp. repays $700 million treasury loan. Yellow Corp. announced the repayment of a $700 million loan received from the U.S. Department of the Treasury under the Coronavirus Aid, Relief, and Economic Security Act. The repayment, including accrued interest, was made to the federal government following the completion of an auction of Yellow’s terminals and rolling stock, making the government one of the first creditors to receive repayment in Yellow’s bankruptcy proceedings.


Lufthansa Cargo recovering post-strike. Following a strike by ground staff lasting over 24 hours at Frankfurt and Munich airports, Lufthansa Cargo initiated recovery efforts. The strike, organized by trade union Ver.di, disrupted operations from 4 am CET on Wednesday, February 7, until 7:10 am on Thursday, February 8. While the majority of flights from both airports were canceled during the strike, Lufthansa Cargo’s hubs remained partially operational. Despite ongoing delays and cancellations, the airline aims to gradually resume flight operations, anticipating potential disruptions throughout Thursday due to the strike's significant impact.

ATI pilots seek resolution amid contract negotiation delays. The Air Line Pilots Association (ALPA) representing pilots at Air Transport International (ATI), a major air carrier in Amazon's delivery network, expressed frustration over stalled contract negotiations. The pilots' union accused ATI management of delaying contract talks until the existing transportation services agreement with Amazon is renewed in two years. Amid negotiations ongoing for over three and a half years, issues such as pay, retirement benefits, and work rules remain unresolved. Pilots have requested the National Mediation Board to declare an impasse, potentially paving the way for binding arbitration or even a strike, according to Freight Waves.


Mexican truckers halt nationwide strike over cargo theft. Truckers across Mexico, representing various organizations, initially threatened a nationwide strike and protests to denounce escalating cargo theft and violence against freight transporters. However, following negotiations between the government and unions, the strike planned for February 5 was called off. Approximately 150,000 truckers were expected to participate in the protest actions, but the agreement averted the strike and associated disruptions.

Indo-Pacific supply chain agreement looks to boost collaboration and resiliency. The Indo-Pacific Economic Framework for Prosperity (IPEF) supply chain agreement, aimed at enhancing supply chain resilience among countries heavily engaged in Pacific Ocean trade routes, is scheduled to come into effect on February 24. Member countries will initiate key committees and take the initial steps outlined in the agreement. The pact emphasizes enhancing data sharing, establishing warehousing near ports, identifying and mitigating logistical bottlenecks and disruptions, and fostering policy collaboration among member nations.


Rising cocoa prices could mean Valentine’s Day sticker shock. Chocolate manufacturers may face sales challenges ahead of Valentine's Day due to soaring cocoa prices, which are nearly 65% higher than a year ago, reaching a 46-year high in futures trading. According to a CoBank report, cocoa prices are expected to remain elevated until a new cocoa crop from West Africa enters the market later this year. The sharp increase in cocoa prices could impact chocolate manufacturers' profitability and consumer pricing strategies.


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.