Transportation Updates
Cass Information Systems, Inc: Oct 15th
The Cass Freight Index for Shipments declined 1.7% m/m and 5.2% y/y. Expenditures increased 2.4% m/m, driven by higher freight rates despite declining fuel costs. Inferred Rates rose 4.2% m/m but fell 1.4% y/y, signaling potential price stabilization. The Truckload Linehaul index rose 0.3% m/m but remained down 3.4% y/y, with contract bids still competitive. Private fleet insourcing continues to extend the soft freight cycle, with recovery expected in 2025.
Overcapacity continues to weaken the US and Canadian Class 8 tractor markets, suppressing for-hire carrier profitability. Vocational equipment demand remains strong, supported by infrastructure stimulus and clean energy initiatives. ACT Research predicts lower tractor demand in 2025 due to high dealer inventories and weak market conditions. Despite August's lower-than-expected performance, September’s Class 8 used-truck sales saw an 11% increase. Auction and wholesale transactions declined in September, though interest rates attracted buyers to the used truck market.
Logistics Management: Oct 11th
US-bound container imports rose 14.4% year-over-year in September, reaching 2.52 million TEUs, marking three consecutive months above 2.4 million TEUs. September imports were up 23.5% compared to pre-pandemic levels in September 2019, with total imports for 2024 up 16.5%. Port transit delays improved at most top US ports despite elevated import volumes. Import volumes from China remained high, with July, August, and September setting records, although September's imports were down 3.3% from July's peak. Potential challenges include the US Maritime labor agreement and the Middle East conflict, which may impact supply chains through year-end.
US traffic fatalities remain over 40,000 annually since 2021, with 40,990 deaths reported last year. Motive's data shows most commercial vehicle collisions occur during slow-moving scenarios like high traffic and parking lots. The highest collision rates happen on weekdays between 4-6 p.m., particularly at slower speeds. Rural areas account for 54% of fatal large truck collisions, with dangerous routes identified in Florida and Texas. Holidays see a spike in crashes, with Christmas having the highest increase (32%) in collisions compared to other times.
The economy is the top concern for the trucking industry in 2024, driven by rising costs, weak freight rates, and uncertainty. Operational costs hit a record $2.27 per mile in 2023, with equipment and labor costs being major concerns for fleets. Truck parking remains the No. 2 issue overall, while lawsuit abuse reform and insurance costs have climbed in importance. The driver shortage issue continues to fall, ranking at No. 9, as marijuana use and driver retention challenges persist. Battery electric vehicles and FMCSA's Compliance Safety Accountability (CSA) system re-enter the top 10 list of industry concerns.
The Wall Street Journal: Oct 20th
Maersk and Hapag-Lloyd formed the Gemini alliance to improve on-time shipping performance and reduce port calls. Gemini aims to reach 90% reliability, up from the current 55%, by using larger ships and fewer stops. Freight rates remain high; shipping from China to California costs $4,834, while rates from Asia to Europe have dropped. Maersk and Hapag-Lloyd plan to resume using the Red Sea route once it’s deemed safe after ongoing conflicts. The US Federal Maritime Commission will monitor Gemini for potential anti-competitive behavior.
Economic Updates
The Wall Street Journal: Oct 14th
OPEC revised its oil demand growth forecast downward, predicting an increase of 1.93 million barrels/day in 2024 and 1.64 million in 2025. Demand remains above the historical average despite weaker prices due to strong air travel, road mobility, and industrial activities. Concerns over China's growth persist, with its demand forecast lowered to 580,000 barrels/day this year. OPEC's crude oil production dropped by 604,000 barrels/day in September due to supply disruptions in Libya and Iraq. Global economic growth projections remain steady, though geopolitical uncertainties may threaten near-term growth.
SupplyChainBrain: Oct 18th
US-China trade tensions increased container imports from China to Mexico by over 61% in early 2024. Mexican ports, particularly Manzanillo and Lazaro Cardenas, saw significant growth in Chinese container volumes. Concerns arise that Mexico may serve as a bypass for Chinese goods entering the US, avoiding tariffs. The US imposed tariffs on Mexican steel and aluminum, but some Chinese goods still bypass tariffs. The trade shift reflects ongoing adjustments in global supply chains due to geopolitical tensions.
The Wall Street Journal: Oct 14th
Most logistics companies are keeping seasonal hiring stable, with UPS increasing hires to 125,000 due to a shorter holiday season. Amazon, Target, and Walmart are holding steady, while the US Postal Service is reducing its seasonal hiring to 7,500 workers. Companies are cautious in an uncertain retail economy, with Deloitte projecting slower holiday spending growth of 2.3%-3.3%. Some firms expect a flatter demand period, leading to phased hiring rather than large recruitment pushes. Logistics sector payrolls have dropped, with parcel carriers anticipating 106 million daily parcel deliveries during the peak season.
The Wall Street Journal: Oct 16th
Prologis reported Q3 earnings of $1 billion, up from $746 million the previous year. Core funds from operations reached $1.43 per share, surpassing analysts' estimate of $1.37. Warehouse construction has dropped 43%, reducing new supply as companies take cautious leasing approaches. The industrial real estate vacancy rate rose 6.4%, up from 4.6% a year ago. Prologis adjusted its 2024 earnings forecast to $3.35-$3.45 per share amid tight supply and strong demand.
Specific Articles
Forward Air hires investment bankers to explore a sale due to pressure from key investors after the Omni Logistics merger. Activist investors, holding significant shares, argue for a sale to address high debt and improve strategic direction. The Omni merger raised concerns among Forward's customers and shareholders, impacting relationships and share value. Forward Air's acquisition of Omni added $1.4 billion in debt and shifted voting control, frustrating some investors. Shareholders seek quicker resolution as integration challenges and financial strain persist despite leadership changes.
Daylight Transport ranked No. 1 overall in Mastio’s 2024 LTL value and loyalty survey; Old Dominion tops national carriers. Top 5 overall carriers include Averitt Express, Old Dominion, Peninsula, and Dayton Freight Lines. The survey evaluated 164 carriers based on service, pricing, technology, and customer service, among other metrics. Daylight also ranked the No. 1 inter-regional carrier, and Ward Trucking, Dayton Freight, and Southeastern Freight led regional groups. Ward Trucking and ABF made significant gains, climbing six spots in the overall rankings.
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