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Radiant's Freight Market Update

Nov 23, 2023

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This Week: Mexico Orders Railroads to Prioritize Passenger Services over Freight Operations, Airfreight Rates Rising Due to Global Weather Events, Red Sea Shipping Under International Security Warning.


Scheduled capacity on main box tradelanes considered unsustainable. With less than six weeks left in 2023, Sea-Intelligence analysis shows that post-Golden Week scheduled container capacity on transpacific and Asia-Europe routes is currently considered unsustainable. Compared to 2019, capacity has surged in key trade lanes: Asia-North America's west coast by 24.9%, Asia-North America's east coast by 31.9%, Asia-North Europe by 10.7%, and the Asia-Mediterranean route by 36%.


Port of Savannah records fourth busiest October. The Port of Savannah recorded its fourth-busiest October last month, handling 449,000 twenty-foot equivalent container units—5% higher than pre-pandemic October 2019, despite a 22% decrease from October 2022. The increase is attributed to the Garden City Terminal's full operational capacity, allowing 35 weekly vessel calls, a 26% rise compared to October 2022.

Port of Oakland sees drop in cargo volumes, increase in exports. The Port of Oakland saw a 12% YoY decline in cargo volumes to 178,627 TEUs in October, but experienced a positive trend in exports. Loaded exports reached 68,974 TEUs, marking a 4% YoY increase—the highest in 2023. Port of Oakland Maritime Director Bryan Brandes emphasized the port's status as the preferred export gateway for agricultural products, with import container volumes at 73,281 TEUs, down 8% YoY from 79,459 TEUs.


GSA to modernize two border crossings between Washington and Canada. The U.S. General Services Administration has granted a $1.35 million contract for a pre-design project study aimed at modernizing two land ports of entry between Washington state and Canada. The project, designed to alleviate congestion for commercial vehicles, focuses on the Sumas port operating 24/7 at the north end of State Route 9 and the Lynden port at the Kenneth G. Ward border crossing, open 16 hours daily along State Route 539. The study will involve developing a modernization project schedule and plan for both locations.


BNSF adds sites in Iowa and Kansas to certified site development program. BNSF has added Fort Madison and Glenwood in Iowa, along with De Soto in Kansas, to its certified sites program for industrial development, according to FreightWaves. These sites underwent thorough analysis, considering infrastructure, utilities, site availability, and environmental standards. Both Iowa sites are certified by the Iowa Economic Development Authority. Fort Madison, spanning 116 acres, is off US Highway 61, while the Glenwood Mega Site, over 1,600 acres, is strategically located near Interstates 29 and 80. BNSF currently has 35 sites listed as part of its certified sites program.

Mexico orders railroads to prioritize passenger services over freight operations. This week, the Mexican government mandated that private railway companies, including Canadian Pacific Kansas City (CPKC) and Ferromex, must incorporate passenger service into their regular freight operations. The decree, published in the Mexican government’s official gazette, requires CPKC and Ferromex to submit proposals for providing passenger service by January 15. If they decline, the government will involve Mexico's army or navy in managing the designated passenger lines. The federal government owns Mexico's freight railway system, with CPKC and Ferromex operating under concessions. The decree mandates the use of over 10,000 private rail lines for four short intercity and three long passenger routes from central Mexico to cities along the U.S.-Mexico border, according to FreightWaves.


Airfreight rates rising due to global natural events. Airfreight rates continue to rise due to various factors like adverse weather, volcanic activity, and geopolitical tensions, causing capacity constraints. According to TAC Index, the Baltic Air Freight Index rose by 4.6% in the week ending November 20 compared to the previous week. China led the increases, with prices out of Hong Kong up 11.5% week-on-week, though down 2.2% year-on-year. Outbound Shanghai rose by 5.3%, reducing its year-on-year decline to 1.3%, especially driven by "double-digit gains to Europe." Volcanic activity in Iceland, with thousands of recent earthquakes, raised concerns, recalling the disruption to European airfreight in 2010 during a similar event. Read more from Air Cargo News here.


Red Sea shipping under international security warning. An international coalition dedicated to maintaining maritime security in the Middle East region issued a warning for shipping in the Red Sea area, according to Maritime Executive. The caution follows provocations and threats from Houthi rebels in Yemen. The International Maritime Security Construct expressed ongoing concern about a heightened threat level in the Red Sea, particularly in the approaches to the Bab al Mandeb. The coalition advised ships on proper procedures for transiting the Red Sea and Bab al Mandeb. The strait, a vital shipping lane connecting the Indian Ocean, the Suez Canal, and the Mediterranean, has witnessed increased tensions, impacting oil tankers and container ships traveling between Asia and Europe.


Ford and Stellantis finalize UAW contracts. The United Auto Workers union overwhelmingly approved new contracts with Ford and Stellantis following a similar deal with General Motors. The ratified agreements will increase industry-wide pay, require automakers to absorb higher costs, and contribute to reshaping the auto business toward electric vehicles. Stellantis workers, responsible for Jeep, Dodge, and Ram vehicles, voted 68.8% in favor, resolving a contentious labor dispute marked by name-calling and costly strikes. The Stellantis deal passed with approximately a 10,000-vote margin, concluding ballot counts on the afternoon of Nov. 18.