Radiant's Freight Market Update

This week: East Coast port strike threat has shippers looking to West Coast, high-tech sails reduce cargo ships' fuel consumption, & EU to impose tariffs on Russian grain imports.

Ocean

Red Sea and Gulf of Aden designated "warlike" zones by seafarers. International seafarers’ unions have designated the Red Sea and Gulf of Aden as “warlike” zones, urging carriers to avoid transits through these increasingly volatile waters. The decision was made at a recent meeting of the International Bargaining Forum (IBF), prompted by the deaths of three crew members from the bulk carrier True Confidence, struck by a Houthi missile on March 7.

Ports

East Coast port strike threat has shippers looking to West Coast. Cargo owners are being advised to prepare for a potential strike at US east and Gulf coast ports, which could disrupt traffic flows as early as 1 October, amid peak shipping season. The six-year labor contract between the International Longshoremen Association (ILA) and United States Maritime Alliance (USMX) expires on 30 September, affecting 46 ports from Maine to Texas. Talks stalled after just a few weeks, with ILA president Harold Daggett indicating a potential strike from 1 October onwards.

Record year for Port NOLA's container-on-barge service. In 2023, the Port of New Orleans (Port NOLA) saw a record 20,500 container moves through its container-on-barge service, the highest since the program began in 2016. This service, in collaboration with the Port of Greater Baton Rouge and Ingram Marine Group, forms the largest network of its kind in the US, providing an alternative to road transport via barges on the Mississippi River. The initiative aims to reduce emissions, with nearly 2.9 million pounds of CO2 and over 130,000 gallons of diesel fuel conserved in 2023 alone.

Cargo volumes surging at Port of LA. The Port of Los Angeles experienced significant growth in cargo volume in February, processing 781,434 TEUs, marking a 60% increase from the previous year. This growth trend, the seventh consecutive month of year-over-year increase, saw loaded imports up by 64%, loaded exports by 61%, and empty containers by 54% compared to 2023. Overall, the port handled 1,637,086 TEUs in the first two months of 2024, reflecting a 35% increase over the previous year.

Trucking

California trucking faces legal challenge over AB5. California's trucking industry is coming to terms with the likely end of its fight against AB5, the state's independent contractor law. Despite the possibility of appeals following the U.S. District Court's rejection of arguments from the California Trucking Association (CTA) and the Owner-Operator Independent Drivers Association, legal experts doubt the feasibility of further challenges. AB5, enacted in 2019, imposes stringent guidelines for determining worker classification, favoring employee status. While the Owner-Operator Independent Drivers Association considers an appeal, CTA has expressed "extreme disappointment" with the court ruling.

Tougher penalties for overpass collisions in British Columbia. Truck drivers in British Columbia could face fines up to $100,000 and 18 months imprisonment for collisions with overpasses, under proposed changes to the Commercial Transport Act by the province's Ministry of Transportation and Infrastructure. The amendments respond to 35 incidents since late 2021 involving over-height commercial vehicles striking bridges and overpasses.

Rail

FRA awards $900k for interstate rail projects in Illinois, Louisiana, and North Carolina. The Federal Railroad Administration (FRA) granted Illinois, Louisiana, and North Carolina $900,000 in funding for planning and development of interstate rail projects under the FRA's Interstate Rail Compacts grant program. These compacts facilitate collaboration between states to enhance intercity passenger rail services, covering administration, planning, and marketing needs. Read more on how the states plan to use the funding here.

Completion of Cincinnati Southern Railway sale. The sale of Cincinnati Southern Railway to Norfolk Southern has been finalized, with the city receiving $1.6 billion plus $20 million in deferred fees. Funds from the sale, projected to generate approximately $55 million annually, will be invested in city infrastructure rehabilitation, modernization, or replacement, as mandated by law. Voters approved the sale in a closely contested election last November, marking the end of a lease dating back to 1881.

Air

FedEx pilots unified against contract dispute. Following an intense debate over ending federal mediation of contract talks, the board overseeing the pilots' union at FedEx Express is projecting a united front. Despite internal divisions, there's growing cohesion within the Air Line Pilots Association's (ALPA) Master Executive Council, signaling a more assertive stance against the company's perceived resistance. ALPA has requested the National Mediation Board to end bridge-making efforts, potentially paving the way for arbitration or a strike. Read more from FreightWaves here.

International

Canada and Germany announce port collaboration for hydrogen export-import corridor. The Port of Argentia, in Newfoundland, Canada, and the Hamburg Port Authority in Germany have signed a Letter of Intent (LOI) to cooperate on the export-import of green hydrogen. This initiative aligns with the Canada-Germany Energy Partnership and Hydrogen Alliance, aiming to establish the ports as leaders in the global energy transition by facilitating a hydrogen corridor.

Technology

High-tech sails reduce cargo ships' fuel consumption. In a bid to curb greenhouse gas emissions from the shipping industry, some cargo shipmakers are turning to sail technology. The Pyxis Ocean, a bulk carrier owned by Mitsubishi, is equipped with "WindWings,” and has slashed fuel consumption by as much as 12 tons per day, thanks to automated sails that harness wind energy. Developed by BAR Technologies, these sails optimize thrust and reduce drag, significantly reducing emissions during optimal wind conditions. Read more here.

Other

EU to impose tariffs on Russian grain imports. In response to pressure from farmers and some member states, the EU plans to impose tariffs on grain imports from Russia and Belarus. While Russian and Belarusian shipments to the bloc are relatively low, the move is viewed as symbolic. The proposed tariffs include a duty of 95 euros per metric ton on cereals and 50% tariffs on oil seeds and derived products.

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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.