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Radiant's Freight Market Update

May 16, 2024

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This week: Turbulence and uncertainty in Asia-Europe container shipping, U.S. retailers anticipate record import volumes for 2024 peak season, & Canadian government intervenes to prevent rail strike.

Current Critical Industry Trends

Xenata’s chief analyst, Peter Sand, explains the current landscape best: “You take away all sense and rationale. And whatever is left, is the container shipping market.”

Against that backdrop, we expect rates to continue to increase, particularly combined with already announced peak season surcharges. Capacity continues to be impacted by carrier imposed blank sailings, as well as increased volumes. Added to this are the impacts of sailing schedule changes and geo political events like the Red Sea actions, which could have a potential effect on port congestions at both origin and destination ports.

Turbulence and uncertainty in Asia-Europe container shipping. Recent weeks have seen chaos in Asia-Europe container shipping. Drewry’s World Container Index noted a 20% spike in 40ft rates from Shanghai to Rotterdam and a 16% rise to Genoa. Carriers prioritize higher-paying shipments due to soaring rates and limited capacity from Asia. Shippers may face new surcharges, with predictions of further rate hikes surpassing previous peaks. Xeneta's spot rate index for Asia-North America also surged, rising 145% per 40ft, while the WCI shows a 116% increase.

Challenges in Asia-Pacific port operations. Ocean carriers like ONE, Hapag-Lloyd, and X-Press Feeders note increased port waiting times in China and Southeast Asia due to longer vessel transits, rerouting around the Cape of Good Hope, adverse weather, and higher traffic volumes. Port congestion in key hubs like Singapore, Shanghai, Ningbo, and Port Kelang is causing delays of three to six days for ship turnarounds. X-Press Feeders reports delays of 0.96 days in Singapore and 2.03 days in Shanghai. Chinese ports also face container shortages, exacerbating supply-side challenges. Ongoing conflicts in Gaza and Houthi attacks on commercial vessels further complicate resolving delays. Recent data indicates just over half of vessels arrived on time in March.

U.S. retailers anticipate record import volumes for 2024 peak season. U.S. retailers expect sustained high import volumes exceeding 2 million TEUs monthly throughout the 2024 peak shipping season, according to NRF's Global Port Tracker. Jonathan Gold, NRF's VP for supply chain and customs policy, highlights a significant increase compared to previous years. Projections indicate May imports at 2.06 million TEUs, June at 2.03 million TEUs, July at 2.02 million TEUs, and August at 2.1 million TEUs, with year-on-year increases ranging from 5.5% to 10.7%. Despite uncertainties, retailers maintain optimism for import growth, suggesting a return to normal seasonal patterns.


NTSB report reveals electrical issues preceded Dali collision. The NTSB's preliminary findings on the Dali container ship collision with the Francis Scott Key Bridge revealed new details regarding two instances of power loss and subsequent propulsion failure before the accident. Read a full report with visuals from Maritime Executive here.


Top ports anticipate sustained import volumes. Forecasters anticipate import volumes at the nation's leading seaports to remain robust throughout 2024, with loaded import volumes expected to surpass 2 million TEUs through October. Factors contributing to this sustained demand include persistent consumer spending on goods, marking the highest levels seen in nearly two years.

ILA and USMX nearing completion of port worker contracts. The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) are on the verge of finalizing local contract negotiations covering port workers along the US East and Gulf coasts, alleviating concerns of potential strikes. Both parties are ahead of schedule in crafting a coastwide master contract, with local bargaining anticipated to conclude by the previously set May 17 deadline.


Biden Administration implements tariff increases targeting China. The Biden administration has announced tariff increases on various Chinese-made goods, including electric vehicles, batteries, critical minerals, semiconductors, and solar cells. These measures, revealed by United States Trade Representative Katherine Tai, involve maintaining existing Section 301 tariffs on China while introducing additional tariffs in strategic sectors. With a focus on safeguarding U.S. manufacturers against unfair trade practices, these adjustments cover imports valued at $18 billion in clean energy and technology sectors. President Biden's administration sees these tariffs as incentives for China to address issues identified in Section 301 investigations, noting that previous actions have not led to sustained reforms. Notably, a new 25% tariff on Ship to Shore (STS) cranes from China, previously untaxed, is included in the latest tariff adjustments for 2024.


17 states sue to block California’s ACF rule. A group of states has filed a lawsuit against California's Advanced Clean Fleets (ACF) rule, mirroring previous actions against the Advanced Clean Trucks (ACT) rule. The lawsuit, directed at Steven Cliff of the California Air Resources Board, aims to halt ACF implementation pending an EPA waiver. Unlike ACT, which focuses on truck manufacturers, ACF targets companies purchasing and operating trucks, with both rules aiming for a fully zero-emission vehicle fleet in California by the mid-2040s. Read more from FreightWaves.


Canadian government intervenes to prevent rail strike. The Canadian government has intervened to prevent a rail strike, citing potential risks to public health and safety. The Teamsters Canada Rail Conference planned industrial action against Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC), which would have impacted the country's entire rail network beginning May 22. The government requested clarification from the Canadian Industrial Relations Board on essential rail services, delaying the strike pending further investigation.


Air cargo demand continues to surge amid global conflicts. Global air cargo demand rose 11% year over year in April, driven partly by conflicts in the Red Sea region. Shippers and forwarders are gearing up for peak season planning in Q4, eyeing market share opportunities, particularly in e-commerce, according to Supply Chain Dive.

UN considers creation of negotiable cargo documents. The United Nations Commission on International Trade Law (UNCITRAL) is exploring the development of negotiable cargo documents for air cargo transportation. Unlike existing transport documents, such as air waybills, these negotiable documents would serve as titles to transfer ownership of goods during transit. This initiative aims to enhance flexibility and security in international trade, though implementation may take several years pending a new convention.


Tractor-trailer thefts in Mexico totaled 153 in April. In April, Mexico saw 153 tractor-trailer thefts, averaging about five per day, according to the National Association of Vehicle Tracking and Protection Companies (ANERPV). This marks a 7.7% increase from last year. From January to April, there were 546 thefts nationwide, a 5% rise compared to the previous year. The state of Mexico led with 138 thefts, followed by Puebla (131), Hidalgo (43), Guanajuato (41), and Jalisco (39).


IBM invests $730 million in Quebec semiconductor plant. IBM is injecting $730 million into its Bromont, Quebec semiconductor plant to expand packaging and testing capabilities, positioning Canada as a key player in the global semiconductor market. The investment aims to create jobs, drive innovation, and meet increasing global demand. Collaborating with the Government of Canada and Quebec, additional investments will strengthen the local semiconductor ecosystem, fostering growth and innovation, according to Supply Chain 24/7.


USPS delays mail processing consolidation amid reliability concerns. The U.S. Postal Service (USPS) has postponed the consolidation of mail processing operations until at least Jan. 1, 2025, following scrutiny from lawmakers regarding its impact on delivery reliability. Postmaster General Louis DeJoy announced the pause in transferring mail processing operations from local plants to larger regional hubs. Even after Jan. 1, 2025, the USPS will proceed with consolidation at a moderated pace, reflecting a commitment to balance operational efficiency with service reliability.


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.