Radiant's Freight Market Update

This week: U.S. imports up in December despite trade disruptions, Red Sea conflict impacting domestic transportation, and FedEx expects 50% cut in USPS air contract.

Ocean

U.S. imports up in December despite trade disruptions. Despite widespread concerns about trade disruptions, U.S. imports in December defied expectations by rising. According to data from Descartes, the United States imported 2,107,012 twenty-foot equivalent units of containerized goods in December. This figure reflects a 0.4% increase from November and a notable 9.2% year-on-year growth.

Red Sea attacks drive surge in ocean shipping rates. Ocean shipping rates are experiencing a significant spike in specific lanes due to increased attacks in the Red Sea, resulting in higher operating costs for carriers. As of January 3, rates from Asia to Northern Europe witnessed a staggering 151% week-over-week rise, exceeding $4,000 per forty-foot equivalent unit; rates from Asia to the U.S. West Coast grew by 63% to $2,713 per FEU. Additionally, carriers have announced surcharges ranging from $500 to $2,700 per container, and these surcharges for all Asia to North America shipments are set to begin in mid-January. Read more from Supply Chain Dive here.

Ports

Optimistic outlook for U.S. ports in 2024. Port leaders in the United States are expressing optimism for 2024, anticipating positive outcomes for container operators. Substantial investments are going into ports, totaling billions in federal, state, and private construction funding. “There is unprecedented federal investment in the nation’s ports, about $18 billion, and our industry is riding a crest, a newly formed crest and dedication to the ports,” Cary Davis, CEO of the American Association of Port Authorities, told Transport Topics. Beyond federal funding, state governments are contributing billions as well, with California announcing $1.5 billion available for its container ports, including $450 million specifically allocated to support zero-emission projects.

Red Sea conflict impacting domestic transportation. The conflict in the Red Sea is causing disproportionate increases in shipping rates, incentivizing shippers to bring freight into the North American West Coast from Asia. Inbound east coast rates are surpassing those to the west, leading to a resurgence of the "Panama Spread" to over $1,100. The ongoing drought in Central America is further complicating matters, limiting freight flow through the Panama Canal and increasing transit times. SONAR’s Container Atlas notes a nearly 2.5-day increase in transit times from Shanghai to the Savannah, Georgia port since October, attributed to canal capacity limitations due to water scarcity. Because recent developments are directing additional volume towards the West, this could cause bottlenecks like the ones seen during the pandemic.

Trucking

Proposals to address truck parking shortage gain traction. Transportation officials explored various proposals to alleviate the shortage of truck parking while at the Transportation Research Board Annual Meeting earlier this week. Discussions focused on developing mechanisms that allow state DOTs to target investments in trucking parking strategically. Attendees suggested leveraging artificial intelligence and other technological advancements to provide truck drivers with real-time information on available spaces. This initiative coincides with plans from both the public and private sectors to invest in increasing capacity, which Congress is considering a $700 million funding package for, according to Transport Topics.

Rail

Norfolk Southern looks to reduce emissions through biofuels. Norfolk Southern aims to significantly cut emissions by increasing the use of biofuels, according to its inaugural Climate Transition Plan (CTP). Fuel management will play a crucial role, given that fuel accounts for over 90% of NS' scope 1 and 2 greenhouse gas (GHG) emissions. Scope 1 pertains to emissions directly from company operations, while scope 2 emissions generally originate from external sources. The CTP aligns NS' business strategy with the goals of the Paris Agreement and the broader push toward a low-carbon economy, according to a release.

Air

FedEx expects 50% cut in USPS air contract. FedEx Corp. is expecting a 50% reduction in its air express unit's USPS business post-contract expiration, potentially leading to layoffs. The USPS's shift from air to ground transportation, aimed at cutting losses, has significantly impacted FedEx Express. The potential loss of postal delivery in 29 cities could result in 200 to 300 excess pilots by October, prompting FedEx to consider reducing flight hours and offering early retirement packages. The USPS transformation has already slashed air transportation expenses by $600 million year-over-year due to a 90% decline in mail and package volume through air carriers. Read more from Freight Waves here.

International

Chinese company Cosco halts shipments to Israel amid Red Sea tensions. Chinese state-owned shipping giant Cosco has reportedly suspended shipments to Israel via the Red Sea due to escalating tensions in this critical shipping route, according to CNBC. The specific details behind Cosco's decision have not been disclosed, but the move comes in the wake of increased attacks on ships in the Red Sea by Iran-backed Houthi militants. As China's largest shipping firm, Cosco commands almost 11% of the trade market share.

Other

Walmart expands drone delivery services in Dallas-Fort Worth. Walmart is extending its futuristic on-demand drone delivery services to an additional 1.8 million homes in the Dallas-Fort Worth area of Texas, according to an announcement from the retailer. This expansion allows Walmart to offer drone delivery to approximately 75% of the area's population. The drone deliveries will be facilitated by Zipline and Wing, a subsidiary of Alphabet, Google's parent company.

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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.