Radiant's Freight Market Update

This Week: Radiant Road & Rail Shares Insights on Leveraging Rail Intermodal, DOT Focusing on Truck Capacity at U.S. Ports, Panama Canal Capacity Cuts Affect Shipping.

Ocean

Panama Canal capacity cuts affect shipping. The Panama Canal's record-setting drought is impacting various shipping segments. While attention has been on larger ships using Neopanamax locks, smaller Panamax locks used by U.S. grain-carrying dry bulk vessels face significant challenges. Due to the drought, many of these vessels now prefer the Suez route, causing a notable shift in trade patterns.

Ports

Major Texas seaports to receive $37m in federal funding. Texas' three major seaports are set to receive approximately $38 million in federal funding to enhance supply chain operations and trucking capacity, according to FreightWaves. This funding is part of a $653 million grant initiative by the U.S. Department of Transportation to improve 41 coastal and inland ports. Port Freeport, located 60 miles south of Houston, will get nearly $16 million to expand its Velasco Terminal, including a new cross-dock warehouse and truck gate.

DOT focusing on truck capacity at U.S. ports. The Biden administration is allocating $290 million out of $653 million in new federal grants to enhance truck capacity at U.S. ports. The U.S. Department of Transportation, through the Port Infrastructure Development Program (PIDP), announced funding for 41 port projects in 2023. Among them, 11 focus on improving truck freight flow at coastal and inland ports. Transportation Secretary Pete Buttigieg expressed optimism about this development, emphasizing its positive impact on supply chains and consumer prices.

Trucking

Global freight recession to persist through 2024. Soft pricing in the shipping sector is expected to persist through 2024 and might extend into 2025, as capacity in the logistics industry outpaces sluggish demand. The trucking sector, already under significant financial strain, anticipates reduced freight orders and revenue during the holiday season. According to a recent CNBC Supply Chain Survey, no growth is expected in the first half of 2024, with a modestly positive outlook for the year's second half.

Rail

Radiant Road & Rail shares insights on leveraging rail intermodal. With a recent decline in traffic, there is an opportunity for more shippers to utilize rail intermodal shipping. According to the Association of American Railroads (AAR), U.S. rail intermodal traffic recorded 8.3 million units in the first eight months of 2023, reflecting a 9.2% decrease from 2022. Despite this decline, U.S. rail intermodal shipping constituted around 27% of revenue for major U.S. railroads in 2022, surpassing other rail traffic segments. “The rails are more versatile than many people give them credit for,” says Radiant Road & Rail senior vice president and general manager Christopher Brach. “The better shippers can forecast their supply chain needs, the more applicable intermodal transportation can be.”

Discover how Radiant Road & Rail can help streamline your supply chain with intermodal shipping by connecting with an expert.

Air

Boeing confirms cyberattack on global services division. Boeing has confirmed a cyberattack affecting its global services division, following a claim by a prominent Russia-linked ransomware group. A Boeing spokesperson stated via email that they are aware of a cyber incident affecting parts of their parts and distribution business, emphasizing that it does not impact flight safety, according to Supply Chain Dive. Some sections of the global services site are currently offline. Boeing has not disclosed the identity of the threat actor, the attack's specifics, or whether a ransom has been paid. The company has not yet filed a disclosure with the Securities and Exchange Commission regarding the incident.

International

China showed import growth and export declines in October. China's exports in October registered a 6.4% year-on-year decline in U.S. dollar terms, as reported by China's customs agency. During the same period, China's imports increased by 3%. China's imports from the U.S. experienced a 3.7% drop in October compared to the same period the previous year, based on CNBC's analysis of customs data.

U.S. to build terminal at Sri Lankan port. The U.S. unveiled a $553 million initiative to construct a deep-water container terminal at Sri Lanka's Port of Colombo, positioning itself in competition with China in the realm of international development financing. This project is touted as vital infrastructure for Sri Lanka, with the potential to “transform Colombo into a world-class logistics hub at the intersection of major shipping routes and emerging markets,” according to the U.S. International Development Finance Corp. The DFC loan of $553 million for the West Container Terminal aims to expand shipping capacity and enhance prosperity in Sri Lanka, all without increasing the country's sovereign debt, while simultaneously bolstering the positions of U.S. allies in the region, according to DFC CEO Scott Nathan.

Mexico to surpass China as top U.S. importer. Mexico has doubled its imports to the U.S. since 2010 and is poised to surpass China as the primary supplier of foreign-made goods and services to the nation this year, according to Market Watch. China had held this unofficial title since 2008. Mexico had become one of the top three U.S. trading partners following the NAFTA free-trade deal in the late 1990s, and after the pandemic many companies shifted operations to Mexico, while others sought alternative supply sources to reduce reliance on China. Mexico, for the first time, has become the U.S.'s largest trading partner and is now surpassing China as the leading importer. Government figures for the first six months of 2023 show U.S. imports from Mexico at $239 billion, compared to $219 billion from China and $214 billion from Canada.

Other

What shippers should know about UPS & FedEx rate increases. UPS and FedEx are implementing a 5.9% average rate increase on shipping services starting on Dec. 26 for UPS and Jan. 1 for FedEx in 2024. While this is a smaller hike compared to the 6.9% increase in 2023, it still poses challenges for customers. Both companies have revealed detailed information about the rate increases and accompanying surcharges. Experts note that the rivals closely align in their changes, going beyond the 5.9% average. Read more from Supply Chain Dive here.