Radiant's Freight Market Update

This week: U.S. Importers Rush to Avoid Shipping Disruptions, Potential Progress in Port Labor Negotiations, & FMC Dismisses Container Pricing Regulation Claims.

Current Critical Industry Trends

U.S. importers rush to avoid shipping disruptions. U.S. importers are rushing to avoid expected shipping delays and increased costs driven by potential East and Gulf Coast port strikes, Panama Canal droughts, and new tariffs on Chinese goods. As a result, port congestion is rising, particularly in Asia and Europe, leading to surging freight rates. Some importers are opting for more expensive airfreight to ensure timely deliveries, adding to the overall cost pressures currently in the supply chain​.

Potential progress in port labor negotiations. The United States Maritime Alliance (USMX) and the International Longshoremen’s Association (ILA) are making minor headway in port labor negotiations, aiming to avert disruptions. This progress is crucial as the existing contract expiration looms, raising fears of strikes that could severely impact port operations and the broader supply chain. ​

Ocean

FMC dismisses container pricing regulation claims. The Federal Maritime Commission (FMC) has issued a final rule that restricts ocean carriers from refusing to provide vessel space for customer containers without reasonable justification. This rule, mandated by the Ocean Shipping Reform Act of 2022, aims to enhance fairness and transparency in the shipping industry. Despite objections from carriers, the FMC clarified that it is not regulating rates but using them as a benchmark to ensure fair negotiations. Carriers must also submit annual export policies to aid the FMC in assessing compliance. The rule, effective from September 23, allows flexibility in pricing while ensuring regulatory oversight on container space refusals and the use of sweeper vessels.

Ports

Port of Long Beach sees significant increase in cargo volumes. The Port of Long Beach experienced a 41% year-over-year increase in cargo volumes in June 2024, the port’s “busiest June on record,” processing 842,446 total TEUs. This surge is attributed to improved port efficiencies and increased demand.

Port of Los Angeles receives grant for optimizer technology. The Port of Los Angeles has secured an $8 million grant to enhance its Port Optimizer technology. This advanced system aims to improve cargo tracking and data sharing among stakeholders, leading to greater operational efficiency and reduced congestion. The port will use the grant to fund three projects: the California Ports Mobile application for increased visibility on container movement, an improved truck appointment system using artificial intelligence, and better user visibility into greenhouse gas emissions.

Trucking

Truck tonnage declined in June. The American Trucking Associations (ATA) reported a 2.2% decrease in truck tonnage for June 2024 compared to May, marking the second consecutive monthly decline. The year-over-year tonnage is also down by 0.8%. ATA Chief Economist Bob Costello attributed the drop to softer consumer demand and a slowing industrial economy, which have impacted freight volumes across the board. Despite this, the overall tonnage index remains higher than pre-pandemic levels, indicating a resilient, albeit fluctuating, trucking industry.

Rail

Shippers prepare for possible Canadian rail strike. Shippers and freight brokers are making contingency plans for a potential strike by Canadian rail workers, which could disrupt supply chains. The Teamsters Canada Rail Conference, representing Canadian National Railway (CN) employees, has authorized a strike, prompting companies to divert cargo to other transportation modes and routes to avoid potential delays and losses. A strike by the Teamsters Canada Rail Conference (TCRC) cannot begin until 72 hours after the Canadian government decides whether the strike would impact public health and safety. The Canadian Industrial Relations Board (CIRB) will rule by August 9, or provide an update if a decision is not made by then.

Air

Air cargo operations recover after CrowdStrike outages. Air cargo operations are still recovering following a significant IT outage at CrowdStrike that disrupted numerous airlines' logistics systems. The outage impacted air cargo management, leading to delays and complications in cargo handling and tracking. Most carriers only faced minor impacts, while some airlines are still continuing to work toward restoring normal operations and mitigate the backlog caused by the outage.

International

Hong Kong reportedly supporting Russian sanctions evasion. Hong Kong has been pivotal in helping Russia evade sanctions by providing a safe haven for blacklisted shipowners, according to a recent report. Seven Russian shipping companies, including three under Western sanctions, have Hong Kong subsidiaries controlling 31 vessels. Companies like Fesco and Sovcomflot established these subsidiaries post-Ukraine invasion to potentially avoid stricter sanctions. Despite global sanctions, Hong Kong’s chief executive confirmed in 2022 that the city would not enforce them. The report calls for Western regulators to sanction Hong Kong and Chinese banks, logistics firms, and insurers. It also highlights Hong Kong's role in trading with other sanctioned nations like Iran and North Korea​.

Technology

CMA CGM and Google announce AI collaboration. CMA CGM announced a strategic partnership with Google to integrate artificial intelligence (AI) across its global operations. Google's AI tools will help CMA CGM optimize vessel routes, container handling, and inventory management, with the goal of improving delivery times and reducing costs and carbon footprints.

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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.