Radiant's Freight Market Update

This week: Bridge collapse halts port operations in Baltimore, states warn truckers ahead of solar eclipse, & Boeing to spend billions on safety and production fixes.

Ocean

Panama Canal continues to adapt operations following historic drought. In response to the unprecedented drought conditions faced by the Panama Canal, adjustments have been made to its daily booking slots and maximum draft, forcing shippers to reconsider their transportation strategies. However, as of March 18, the canal has expanded its daily booking slots from 24 to 26, with further enhancements announced on March 25, allowing for 27 slots per day. According to a spokesperson for the Panama Canal via email, diligent water conservation efforts have facilitated these adjustments, maintaining a draft of 44 feet throughout the dry season.

Ports

Bridge collapse halts port operations in Baltimore. The collapse of a major bridge in Baltimore's port following a container ship collision has halted traffic and port operations. Ocean carriers are citing 'force majeure' due to the collapse, informing shippers and U.S. retailers that they are no longer accountable once cargo is delivered to alternative ports.

Radiant's thoughts go out to the families, the workers and the many others who are directly suffering as a result of this incident and the challenges yet to come.

Port Houston imports strong in February. Port Houston, the nation's fifth-largest container port and primary bulk cargo hub, saw strong imports in February despite Panama Canal transit limitations, according to FreightWaves. General cargo imports spiked 49% month over month, compensating for a slow January. However, year-to-date general cargo tonnage is down 10% compared to 2023. Steel imports, nearly 13% of total tonnage in February, rose 24% month over month and 6% year over year, though year-to-date tonnage fell 25%.

Canada invests in Port of Thunder Bay expansion. Canada has allocated C$6.7 million from the National Trade Corridors Fund to enhance the Port of Thunder Bay's capacity. The investment includes C$3 million for revamping the waiting area at Keefer Terminal and C$3.7 million for upgrading the wharf, expanding cargo laydown space, and enhancing rail infrastructure at the vital grain transport hub.

Trucking

States warn truckers ahead of solar eclipse. Ahead of the April 8 total solar eclipse spanning Texas to Maine, state transportation departments are advising truckers to avoid travel due to expected heavy traffic from eclipse watchers. The 2017 eclipse caused major congestion. Officials are sharing plans to minimize disruptions, suggesting truckers take a voluntary holiday in areas where severe traffic could render the day unproductive for freight vehicles.

Rail

RSI petitions STB to avert looming boxcar crisis. The Railway Supply Institute (RSI) has petitioned the Surface Transportation Board (STB) to review compensation rules for boxcar owners, aiming to prevent a "boxcar cliff" amid a dwindling boxcar fleet in the U.S. RSI highlighted the “outdated” Arbitration Rule in their argument, which keeps leasing rates low, hindering new boxcar construction. The current system incentivizes railroads to offer non-compensatory rates to boxcar owners, threatening supply chain stability, according to RSI, and they are urging reform to encourage investment in boxcar infrastructure, emphasizing the importance of rail shipping for the economy and sustainability. Stakeholders have 20 days to respond before the STB's review.

Air

FedEx deactivates aircraft in bid to cut costs. FedEx has parked 17 freighter aircraft since November and relinquished options to purchase seven Boeing 767 cargo jets as part of a multiyear cost initiative. Despite lower revenue, this strategy contributed to better-than-expected operating profit in the third quarter. FedEx Express plans to enhance savings and yields by repurposing a portion of its fleet for its large U.S. and European less-than-truckload business, according to FreightWaves.

Boeing to spend billions on safety and production fixes. Boeing is expecting to spend between $4 billion to $4.5 billion to rectify production issues following recent safety incidents. The company plans to slow 737 Max production to below 38 units per month initially, with potential gradual increases later, subject to FAA approval. Boeing has acknowledged the need to prioritize safety and compliance over production speed. CFO Brian West said: “For years, we’ve prioritized the movement of the airplane through the factory over getting it done right, and that’s got to change.”

International

Ukraine to resume container shipping. Ukraine is aiming to revitalize its transport sector, facing hurdles from reduced production volumes and geopolitical tensions. While sea harbors have reached 75% of pre-war levels, threats from Russia's navy and border blockades have prompted a new long-term strategy. Plans include reestablishing ferry services from Chornomorsk to Georgia, Bulgaria, and Turkey, alongside container lines. Deputy Minister Yuriy Vaskov anticipates a spring launch, exploring partnerships with ship owners and carriers for motor and rail ferry services, according to World Cargo News.

Technology

Intel boosts U.S. semiconductor production with federal funding. Intel received a significant boost for its U.S. semiconductor production plans with $8.5 billion in federal funding from the CHIPS and Science Act. The funds will support projects in Arizona, New Mexico, Ohio, and Oregon, aimed at scaling up or establishing semiconductor manufacturing and R&D facilities. The infusion of capital raises questions about Intel's plans to expedite domestic chip supply chain expansion, crucial for the U.S.'s semiconductor industry growth. Read more from Supply Chain Dive here.

Other

Water crisis impacting global supply chains. Water scarcity poses a significant challenge for supply chains, according to a recent study by environmental non-profit CDP. The report highlights water-related risks jeopardizing at least $77 billion of global supply chain value, with $7 billion facing immediate danger. Half of the surveyed companies actively engage their supply chains on water risk, implementing measures such as water conservation requirements and promoting innovation in water use to mitigate risks. Read more from Supply Chain 24/7 here.

Rising U.S. sugar imports drive prices up. The U.S. is expected to import the largest amount of high-duty sugar in at least six years, primarily due to decreased supplies from Mexico. Around 750,000 metric tons of sugar, taxed at the highest level of import duties, are estimated for importation in 2023/24, keeping consumer sugar prices high. Limited supplies from countries holding quotas have hindered cheaper sugar imports, contributing to doubled high-duty sugar imports in the past five years.

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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.