Transportation Updates
Transport Topics: Dec 16th
The trucking industry faced its longest and deepest freight downturn since the 2007 financial crisis, lasting 34 months. Tonnage improved slightly, rising 3% since January, but remains below the September 2022 peak, per ATA data. Carrier failures averaged 400 per month recently, a sharp drop from 1,700 monthly failures in 2023. Experts predict gradual recovery in 2025, driven by easing capacity, rate stabilization, and potential economic growth. Cost-saving measures, technology adoption, and supply-side corrections are key strategies for navigating market challenges.
Journal of Commerce: Dec 18th
Canadian Pacific Kansas City (CPKC) completed a $100 million second rail bridge between Laredo, Texas, and Nuevo Laredo, Mexico. The project eliminates delays by dedicating each bridge span to one-way traffic, boosting cross-border intermodal reliability. The new capacity supports recent intermodal services and prepares for growth from nearshoring and auto sector recovery. Temperature-controlled warehousing and heavier reefer loads are enabled, increasing efficiency and competitiveness for cross-border shippers. Advanced surveillance systems, including VACIS technology, enhance security by detecting unauthorized freight or passengers.
The ILA halted contract talks over automation, focusing on semiautomated cranes at East Coast and Gulf Coast ports. President-elect Trump backed the ILA’s stance against automation, adding pressure on employers to modify their position. US consumer demand and record imports have driven high profits for ocean carriers despite ongoing labor tensions. With a contract extension ending January 15, the likelihood of a brief port strike is growing. A short strike could lead to compromises on automation testing and job guarantees, satisfying both union and employer demands.
The Port of Los Angeles handled 884,315 TEUs in November, up 16% year-over-year and 15% above its five-year average. Total year-to-date volume reached 9.38 million TEUs, 19% higher than 2023 and on track to exceed 10 million units. Rising consumer spending and geopolitical factors, including tariff concerns, drove increased imports and record Black Friday sales. Empty container volumes rose 13%, reflecting more incoming imports and potential export opportunities for US agricultural goods. Improved rail dwell times and expanded automation initiatives aim to enhance capacity and reduce delays at the port.
Trucking M&A activity accelerates in Q4 due to tax implications, annual budget deadlines, and practical financial comparisons. Sellers often aim to finalize deals before the new year to align with personal goals, such as retirement or career changes. Legal, accounting, and advisory resources face significant pressure during year-end negotiations, impacting deal execution. Historical trends show a high volume of transactions in Q4, with firms like Tenney Group reporting 60% of deals during this period. Recent examples include Schneider National’s acquisition of Cowan Systems and Hub Group’s last-mile business purchase.
FTR Transportation Intelligence: Dec 20th
October’s Trucking Conditions Index increased to 0.49, recovering from September’s -2.47, signaling a more favorable market environment. Higher truck utilization, lower costs for equipment, and easing freight rate pressures supported the improved market conditions. Forecasts predict the index will become sustainably positive by mid-2025, maintaining this trend into 2026. Freight volume expectations have softened, while tighter capacity could lead to modest growth in freight rates. Proposed tariffs on Mexican and Canadian imports might temporarily disrupt demand but are likely to normalize by 2025.
Trucking insurance premiums have risen 5% annually, mainly due to increased cargo theft and high-cost legal judgments. Telematics data on braking, turns, and speeding helps insurers evaluate risk and promote safer driving practices. Insurtech companies require historical telematics data before offering quotes, emphasizing driving behavior over traditional metrics. Risk-based pricing through telematics allows safer carriers to access competitive rates despite external cost pressures. Telematics adoption improves safety and efficiency, helping insurers and carriers manage rising costs and sustain coverage.
Economic Updates
The Federal Reserve lowered its target rate to 4.25%-4.5%, marking a full percentage point reduction since September. Future cuts are expected to slow, with only two more reductions projected in 2025, per the Fed's "dot plot." GDP growth for 2024 was revised upward to 2.5%, but inflation remains above the Fed's 2% target. Treasury yields rose, reflecting market skepticism about the Fed’s ability to continue easing rates significantly. Chair Jerome Powell emphasized caution, noting rates are less restrictive but further changes require careful economic assessment.
The Wall Street Journal: Dec 19th
Existing home sales in November saw a 6.1% year-over-year increase, marking the largest annual gain since 2021. Rising inventory, partly driven by homeowners responding to life changes, boosted sales despite mortgage rates returning to higher levels. The seasonally adjusted annual rate of sales hit 4.15 million, exceeding forecasts and reaching the highest level since March 2024. Median home prices rose 4.7% year-over-year to $406,100, while typical time on market increased to 32 days from 25 last year. Economists suggest sustained sales growth in 2025 depends on improved mortgage affordability and continued inventory availability.
Specific Articles
Transport Topics: Dec 19th
FedEx plans to separate its FedEx Freight unit, forming North America's largest publicly traded LTL carrier. The split allows FedEx and FedEx Freight to focus on tailored strategies while maintaining operational and service synergies. FedEx Freight achieved $9.4 billion in revenue for 2024, with strong profit growth and significant margin expansion in recent years. The separation, expected within 18 months, requires regulatory and board approval, aiming to unlock greater market value. Collaboration agreements between the two entities will enhance operations, technology, and cost efficiencies post-separation.
Pitt Ohio has acquired Wisconsin-based Sutton Transport, adding 13 terminals and expanding its Midwest network. Sutton Transport operates 384 power units and employs over 800 people, including dock and office staff. The acquisition boosts Pitt Ohio’s revenue to over $1 billion, making it the 12th-largest LTL carrier in the US Sutton Transport will operate independently until full network integration, with Missouri terminals merging within 45 days. Pitt Ohio has grown through acquisitions, including stakes in Dohrn Transfer, Ross Express, and Teal’s Express.
Missouri-based RBX Inc., with 265 trucks and 255 drivers, filed for Chapter 11 bankruptcy protection. The company reported assets of up to $50,000 and liabilities ranging between $10 million and $50 million. RBX intends to reorganize, though no specific reason for the bankruptcy filing has been provided. Inspections reveal a truck out-of-service rate above the industry average but a driver out-of-service rate significantly lower. The court has mandated detailed financial disclosures and restricted RBX’s financial operations to monitored accounts.
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