Freight Forward: High Expectations for 2H 2024

Welcome to Freight Forward, where each Monday, I’ll recap what happened in supply chains the previous week through JOC.com articles and additional sources and also what to expect for the week ahead.

I’m Cathy Roberson, a supply chain writer and researcher. For this weekly series, I serve as a research analyst for the Journal of Commerce (JOC), for whom I identify trends, provide thoughts and input into stories, and assist with express and parcel last-mile queries.

“We haven’t seen numbers this high for this many months in almost two years,” Jonathan Gold, the NRF’s vice president for supply chain and customs policy, said in a statement. “Regardless of what headlines about the economy might say, consumers are shopping and retailers are making sure they have merchandise on hand to meet demand.”

• Retailers have once more upgraded their forecast for US imports, saying they expect monthly volumes consistently above 2 million TEUs well into the 2024 peak shipping season writes Bill Mongelluzzo.

• Pricing power is beginning to return to ocean carriers, as US retailers raise their import forecasts for the first half of 2024 and container volumes increase. But Bill Cassidy writes that imports alone apparently aren’t enough to jumpstart US freight demand and haul surface transportation providers out of a two-year slump. Any improvements are likely to be gradual, not sudden, according to several sources. (Nice story with contributions from Ari Ashe, Greg Knowler and Bill Mongelluzzo)

• Rail container backlogs are increasing at some marine terminals at the ports of Los Angeles and Long Beach amid a surge in imports from Asia. Bill Mongelluzzo writes some terminal operators at the largest US port complex say while the railroads are providing sufficient rail cars to handle current eastbound intermodal traffic to the US interior, terminals are bumping up against their storage capacity and fear the facilities could become congested quickly if imports strengthen further in May and June.

• CMA CGM is using OpenEnvoy, an invoice auditing software vendor, to verify that bills received by its key customers are accurate before being sent. CMA CGM and OpenEnvoy have spent more than a year refining the process through a jointly developed AI solution writes Eric Johnson.

• Cargo owners with freight onboard the Dali could face claims well above the value of their merchandise as part of the shipowner’s effort to recoup salvage costs under its general average declaration, according to maritime insurance experts writes Michael Angell.

Columns

• Import demand, weather strains already stretched shipping system - Mark Szakonyi

• ‘Resilience’ to container shipping shocks fades in post-COVID era – Peter Tirschwell

•  US import dynamics illustrate mobility, and volatility, of IPI – Larry Gross

Air

• The air cargo rally that began late last year is set to extend through the traditionally quiet summer months and into a potentially even more robust peak season, as a modal shift from ocean to air to mitigate the effects of Red Sea disruption on container shipping is combining with a huge increase in volumes from Chinese e-commerce marketplaces writes Greg Knowler.

Additional info from a previous ACN column of mine - Change in de minimis could impact US air cargo volumes

Earnings

• Lower ocean and air freight rates weighed on DHL Global Forwarding in Q1, with the company seeing sharply reduced earnings and revenues despite an increase in volumes, particularly from Asia writes Keith Wallis. DHL CFO expects Q2 to be similar to Q1 but believes there will be an improvement in the second half of the year. 

Per my ACN column on DHL Express - “We have significantly reduced our air capacity, but we also want to maintain a premium quality transit time in our network and that is why we don’t flex down even more on the aviation side,” DHL CFO Kreis told analysts. “We are currently making the conscious decision to run at these low weight load factors in both the intercontinental and the regional air networks,” said Kreiss.

• Yang Ming Marine Transport nearly tripled net profit in Q1 on the back of higher freight rates and improved economic conditions while holding out the prospect of an even better nine months ahead writes Keith Wallis.

•  Roll-on/roll-off (ro/ro) vessel operators Wallenius Wilhelmsen and Höegh Autoliners reported mixed results for Q1 amid strong vehicle exports and a tightening of capacity due to longer vessel transits writes Keith Wallis. Wallenius Wilhelmsen handled 13.2 million cubic meters of ro/ro freight, down 9.7% from Q4 2023, while Höegh’s volumes fell 8.6% to 3.2 million cubic meters during the same period.

• Forward Air reported an $88.8 million net loss in Q1, its first post-merger accounting period writes Bill Cassidy. While revenues from Omni, intermodal drayage and truckload operations declined, Forward did see some “green shoots” in its core LTL network, Rebecca Garbrick, CFO and treasurer, said during the earnings call. LTL shipments increased 1.4% year over year in the first quarter and another 4% in April, while weight per shipment rose 7.4%, a sign of larger, heavier volumes and a changing freight mix.

Inland

Intermodal

•  Union Pacific Railroad (UP) wants regulators, customs officials and unions to allow Mexican train crews to operate in a limited area within the US in order to create faster transits and reduce the likelihood of migrants accessing trains along the border near Eagle Pass, Texas writes Ari Ashe. UP CEO Jim Vena believes the US border with Mexico should work similarly to the Canadian border. When a Canadian Pacific-Kansas City (CPKC) or Canadian National Railway (CN) train crosses into the US, the Canadian crew takes the freight to a designated point on the US side where a US crew assumes control. 

 Trucking

• Candor Expedite’s launched a new service, Candor Food Chain. The service is based on a reusable cold packaging solution that allows pallet and box-sized frozen and refrigerated shipments to go by regular transport and stay frozen or refrigerated for up to nine days writes Eric Johnson.

• US truckload carriers aren’t waiting for capacity to exit the market; they’re parking and selling trucks to bring supply closer in line with demand and shore up pricing.  But persistent excess capacity is keeping the truckload market soft. Trucking’s long bottom market may stretch further than many expect writes Bill Cassidy.

 That’s it for now. Please be sure to hit the subscribe button to receive the latest updates.

For readers interested in reading more Journal of Commerce stories, click here to subscribe. Enter code FFNL20 at checkout to receive a 20% discount on any subscription option. (Note that this is only for first-time subscribers or for upgrading a current subscription). What did I miss? Have a question? Let me know in the comments. I’ll be checking back throughout the week to answer questions, address comments, and share additional insights. In the meantime, here’s wishing everyone a good freight week ahead.

-Cathy