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Radiant's Freight Market Update

Jun 13, 2024

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This week: Dockworkers halt labor talks over automation dispute, Port of Baltimore reopens, tentative agreement reached to avert Canadian Border Agents' strike.

Current Critical Industry Trends

Dockworkers halt labor talks over automation dispute. Dockworkers at East and Gulf Coast ports have canceled labor talks and raised the threat of a strike later this year. The International Longshoremen’s Association (ILA) halted negotiations scheduled in Newark, N.J., to protest the use of automated machinery at ports, which they claim breaches existing labor agreements. This cancellation sets a tense tone for negotiations aiming to secure a contract for over 45,000 dockworkers before the current agreement expires on September 30. A strike during the holiday import season could significantly impact the U.S. economy. The ILA's leader, Harold Daggett, has warned of a potential strike if a new contract is not reached, while the National Retail Federation urges resolution to avoid economic disruption.


Asia-Europe shipping rates surge amid supply chain disruptions. Spot rates on the Asia-Europe trade lane could surpass $20,000 per FE, driven by tight market conditions, high demand, and port congestion. Rates have spiked due to early peak season, longer routes around Africa due to Red Sea closures, and container shortages. Analysts predict rates could exceed pandemic levels. Current indices show significant increases, with additional surcharges expected.


Port of Baltimore reopens after Francis Scott Key Bridge collapse. The shipping channel at the Port of Baltimore has fully reopened 11 weeks after the Francis Scott Key Bridge collapsed due to a cargo ship collision. The US Army Corps of Engineers deemed the passageway safe for transit after extensive cleanup efforts, including removing 50,000 tonnes of wreckage. The incident, which killed six construction workers, led to an international effort involving 2,000 salvage responders. The investigation by the FBI and US Coast Guard is ongoing, while rebuilding the bridge is expected to take over four years and cost up to $1.9 billion.


Tentative agreement reached to avert Canadian Border Agents' strike. The union representing over 9,000 Canadian border agents reached a tentative agreement with government negotiators, potentially avoiding a strike that could disrupt trade with the U.S. The proposed contract, details of which are set to be disclosed soon, follows negotiations aimed at addressing demands including wage parity, job security, and telework options. With a strike deadline looming, the agreement, if ratified, will cover approximately 11,000 employees at the Canada Border Services Agency and includes wage increases and other benefits.

Summer shipping demand elevates truckload market spot rates. ​​Summer shipping demand has boosted the truckload market, with spot rates up 4% over 2023. The Outbound Tender Volume Index surged 7.1% from late May to early June, supporting spot rates beyond Memorial Day. While the market shows signs of recovery, there's still ample capacity to manage the increased demand. Spot rates have been consistently higher year-over-year since May, but tender rejection rates remain below 5%, indicating ongoing oversupply.


Strike risk continues for Canadian Rail Employees following deadlocked negotiations. Negotiations between the Teamsters union (TCRC) and Canadian National Railway (CN) fell apart last week after only one day, with both sides refusing to compromise. Rail workers' planned strike was delayed due to a government request for a safety review by the Canada Industrial Relations Board (CIRB). The union proposed staggered negotiations to minimize disruption, which was rejected by CN and Canadian Pacific Kansas City (CPKC). CN's offer of binding arbitration was also declined by the union, which criticizes the rail operators for not negotiating in good faith. A strike remains possible pending the CIRB decision.


Air cargo rates surge with double-digit growth forecast. Xenta predicts significant air cargo growth this year despite concerns over China's e-commerce restrictions. Strong regional demand has led to a 9% year-on-year rise in global air cargo spot rates and a 12% increase in demand in May. The Middle East & Central Asia to Europe corridor saw rates soar by 110% due to Red Sea disruptions. Tripled ocean shipping rates from Asia to Europe and the U.S. have made air cargo more appealing. However, geopolitical tensions and U.S. actions on Chinese e-commerce could impact rates by increasing market capacity.


French port strikes loom over pension reform dispute. France's major ports, including Le Havre and Marseille-Fos, face significant disruption as labor unions plan multiple one-day strikes and four-hour work stoppages this month to protest pension reforms increasing the retirement age. The first 24-hour strike hit Le Havre last Friday, blocking terminals and delaying ship calls. Other affected ports include Dunkirk, Rouen, Bordeaux, and Nantes Saint-Nazaire. Further strikes are scheduled for June, potentially extending into July.

Asian ports lead CPPI rankings. The 2023 Container Port Performance Index (CPPI) shows China's ports leading in performance, with East and Southeast Asian ports securing 13 of the top 20 spots. Yangshan port in China ranked first again, while six other Chinese ports made the top 20. India's Visakhapatnam port jumped to No. 20 from No. 115 in 2022, and Mundra port rose to No. 27 from No. 48. Middle Eastern ports saw a decline, with Abu Dhabi’s Port of Khalifa dropping from No. 3 to No. 29. U.S. ports like Charleston and Philadelphia also improved significantly.


New fuel economy standards set for 2031. Starting in 2031, new vehicles in the U.S. must average 38 miles per gallon (mpg) under new Biden administration rules, up from 29 mpg. These rules aim for a 2% annual increase in fuel economy for cars and light trucks, aligning with efforts to boost electric vehicle (EV) sales to 50% by 2030. The changes are expected to save 70 billion gallons of gasoline and reduce 710 million metric tons of CO2 emissions by 2050.


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.