NS and FEC Announce Domestic Intermodal Service Expansion, Amazon Faces Antitrust Lawsuit From FTC, U.S. States, Aviation and Trade Sectors Prepare for Potential U.S. Government Shutdown.

Ocean

Container freight rates to drop to 2016 levels. According to the latest Market Pulse report from consultant Linerlytica, overcapacity, and stalled demand are driving container shipping rates to new lows. According to the analysis, rates from Asia to Europe are already lower than in 2019, and there is a severe risk that rates will fall to 2016 levels unless drastic capacity management levels are implemented. “Although overall capacity across the four main trades from Asia to Europe and North America is expected to fall by 14-22% in October mainly from blanked sailings, there have been very few actual service withdrawals with just three services permanently suspended to the U.S. West Coast so far,” according to the report.

CMA CGM increases mid-sized dual-fuel methanol containership order. CMA CGM has expanded its order for methanol-propelled containerships by adding eight vessels to its existing China deal. Placed with Shanghai Waigaoqiao Shipbuilding (SWS), the charge for eight 9,200 TEU containerships is worth $1 billion. According to SWS’s parent company, China CSSC Holdings, the newbuildings have been commissioned by a “European customer” and are expected to be delivered in 2027 for use on mid-haul routes. These will be the largest box ships ever built and the first methanol-fueled vessels by SWS.

Ports

Port of Savannah volumes fell 28% from previous year’s highs. In August, port of Savannah volumes fell yearly despite rising rail volumes at the Georgia port’s Garden City Terminal. August throughput at the port totaled 413,300 twenty-foot equivalent units, 28% less than August 2022, the Georgia Ports Authority’s busiest month on record. According to GPA President and CEO Griff Lynch, port volumes have dipped due to continuing building work. “We are in the midst of rebuilding some of our berths, which has reduced our operating capacity in August,” Lynch explained on Tuesday.

Trucking

Diesel prices in the United States have decreased for the first time since mid-July. According to data released on September 26, by the Department of Energy’s Energy Information Administration (EIA), the national average price per gallon of diesel gasoline fell during the week of September 25 after nine consecutive weeks of increases. The national average dropped by 4.7 cents to $4.586 per gallon. This followed a 9.3-cent hike to $4.633 per gallon for the week of September 18 and a 4.8-cent increase to $4.50 per gallon for the week of September 11.

Rail

Norfolk Southern and Florida East Coast Railway announce intermodal services expansion. According to Freightwaves, Norfolk Southern and Florida East Coast Railway (FEC) have jointly announced an expansion of their domestic intermodal services in Florida. The extended intermodal service has two parts. Norfolk Southern (NS) will add FEC’s intermodal terminals in Fort Pierce and Fort Lauderdale to its network, alongside its existing operations at FEC terminals in Titusville and Miami. Moreover, NS and FEC will use a steel wheel interchange to FEC at Jacksonville, to provide customers with improved access to markets in Chicago, Cincinnati, Harrisburg (Pennsylvania), St. Louis, Kansas City (Missouri), Memphis (Tennessee), and Lathrop and Southern California.

Air

Aviation and trade sectors prepare for potential U.S. government shutdown. Aviation and logistics officials are dissatisfied with Congress’ inability to fund the government beyond this Saturday, as reported by FreightWaves. They warn that suspending all non-essential activities by the end of the month would have severe consequences for trade. Although airlines will continue to fly and goods flow through land and sea ports, worker shortages may reduce processing efficiency, causing delays for travelers and shipments.

International

Russia grappling with fuel shortages, prompting diesel ban and gasoline exports. Russia banned gasoline and diesel fuel exports last Thursday, September 21, to stabilize soaring local prices and boost the country’s fuel supply. The government mandate stated that the limits would be temporary but did not specify when they would lift them. The action was likely to raise global fuel prices. The ban will not apply to the other Moscow-led Eurasian Economic Union trading bloc members – Armenia, Belarus, Kyrgyzstan, and Kazakhstan.

Alpine rail freight connection remains closed over concerns of possible new landslide. Rail freight traffic between France and Italy through Modane remains suspended due to a major landslide several weeks ago in the Maurienne Valley. The estimated 10,000 tonnes of rock that fell from the mountainsides caused damage to the local road, one of the bridges on the A43 motorway leading to the Fréjus road tunnel, and a nearby railway line and tunnel. Although road traffic resumed on September 8, the rail infrastructure is expected to remain closed until next month due to safety concerns. SNCF, the French national railway company, has stated that repairs on the railway line cannot begin until 3,000 to 4,000 cubic meters of unstable rock that still threatens to detach from the mountain are removed.

Mexico records $1.37 billion trade deficit. Mexico’s trade deficit for August was $1.37 billion, a significant improvement from the previous year’s $5.7 billion deficit. Exports increased by 3.8% to $52.36 billion, while imports decreased by 4.3% to $53.73 billion. Petroleum exports fell by 4.6% to $3 billion, while imports dropped by 37% to $4.7 billion. The petroleum deficit of $1.7 billion was partially offset by a non-petroleum trade surplus of $354 million. Manufacturing exports rose 4.3% to $47.15 billion, with vehicle exports up 11%. Mining exports showed a 12.6% year-on-year increase to $774 million.

Air France – KLM Group To Order 50 Airbus A350s. Air France-KLM Group, which also includes Transavia, plans to update its widebody fleet by purchasing 50 Airbus A350s with an option for 40 more. This move will make the company the world’s largest aircraft operator. The purchase will include both -900 and -1000 models. According to the group, the first deliveries are planned for 2026 and will continue until 2030. The deal has yet to be signed.

Other

FTC and 17 states filed antitrust lawsuit against Amazon. The Federal Trade Commission and 17 state attorneys general have sued Amazon.com for reportedly using its monopoly power to inflate prices, degrade quality, and stifle innovation. The 172-page complaint, filed in the Western District of Washington, alleges exclusionary conduct that prevents competitors from growing and emerging. Following a four-year investigation, the FTC lawsuit states that Amazon’s anticompetitive behavior violates the law, including its online superstore for shoppers and online marketplace services for sellers.

Potential U.S. government shutdown expected to disrupt trade activity. The United States is likely to have its fourth partial government shutdown in the last decade— posing issues for U.S. agencies responsible for trade activities. Republicans and Democrats must reach an agreement on spending bills for the fiscal year of 2024 by September 30, 2023. If negotiation continues, nearly 438 government agencies must suspend normal operations on October 1, 2023. This suspension will force non-essential federal workers into furlough, disrupting vital U.S. trade activities.

While details regarding the government shutdown remain uncertain, the trade industry must prepare for impacts on trade operations throughout the United States. If you have any questions, you can contact our team of experts.