Your Gateway to Logistics Excellence - Week of September 23rd

Transportation Updates

Cass Transportation Index Report August 2024

                 Cass Information Systems Inc.: Sept 15th

• The Cass Freight Index for Shipments rose 1.0% month-over-month but declined 1.9% year-over-year, marking the smallest decline in 18 months as goods demand slowly increases.
• Freight expenditures fell 2.0% month-over-month and 9.0% year-over-year, driven by lower rates and falling fuel prices.
• Cass Inferred Freight Rates dropped 3.0% month-over-month, reaching new lows, with a 7.2% year-over-year decline due to reduced diesel costs.
• The Truckload Linehaul Index decreased 0.6% month-over-month and 3.3% year-over-year, indicating ongoing market softness and competitive pricing.
• Freight demand faces near-term uncertainties due to the U.S. election season, with potential post-election recovery expected in 2025-2026.

US East and Gulf Coast Ports Brace for Potential Strike as Container Imports Surge

                 gCaptain: Sept 17th

• US container imports surged 12.9% in August 2024, with East and Gulf Coast ports handling nearly 2.5 million TEUs.
• The International Longshoremen’s Association (ILA) may strike on October 1, 2024, as contract negotiations stall, risking disruption of nearly half of US ocean trade.
• Retailers are rushing shipments to avoid delays, causing short-term spikes in demand for leased containers and potential equipment shortages.
• Maersk warns that even a brief strike could lead to weeks of backlog, increased port congestion, and higher demurrage fees.
• Strong US inventories could mitigate the impact, but companies are advised to diversify sourcing and explore alternative ports.

Port of Los Angeles Sees Record-Breaking Cargo Surge

                 gCaptain: Sept 18th

• The Port of Los Angeles handled 960,597 TEUs in August 2024, marking its busiest non-pandemic month ever, up 16% year-over-year.
• Consumer spending and inventory replenishment are driving the surge, pushing the port 17% ahead of 2023’s pace.
• The Port of Long Beach also set records, handling 913,873 TEUs in August, a 33.9% increase from last year.
• Long Beach imports surged 40.4% amid concerns over potential tariffs and East Coast labor negotiations.
• Both ports are experiencing strong year-to-date performance, reflecting robust consumer demand and supply chain activity.

Economic Updates

Fed Cuts Rates by Half Percentage Point

                 The Wall Street Journal: Sept 18th

• The Federal Reserve cut interest rates by 0.5%, lowering the benchmark rate to a range of 4.75% to 5%.
• The aggressive rate cut aims to prevent a gradual cooling of the labor market from becoming more severe.
• The decision reflects Fed Chair Jerome Powell's focus on maintaining labor market strength amid declining inflation.
• Stocks initially rose but ended the day lower; economists were surprised by the larger-than-expected cut.
• Future projections suggest more rate cuts, aiming to stabilize the economy without triggering a recession.

New-home construction posts biggest increase in 6 months

                 MarketWatch: Sept 18th

• New-home construction surged 9.6% in August, reaching a 1.36 million annual rate, exceeding Wall Street expectations.
• Single-family housing starts rose 15.8%, while multi-family starts dropped 6.7%, with the Midwest and South seeing the highest growth.
• Building permits, a future construction indicator, rose 4.9% overall, with a significant increase in permits for middle housing units.
• Falling mortgage rates likely boosted demand for new homes despite high construction financing costs.
• Despite August gains, housing permits are down compared to last year, suggesting fewer new homes may be delivered in 2025.

Specific Articles

Deloitte ranks Wisconsin's 75 largest privately-held companies by revenue

                 FDL Reporter: Sept 19th

• Northwestern Mutual, ABC Supply, American Family Insurance, and S.C. Johnson lead Deloitte’s Wisconsin 75 ranking.
• Newcomers Evans Transportation Services and VJS Construction Services join the list, highlighting economic diversity.
• Companies on the list employ over 321,000 workers across sectors like manufacturing, transportation, and construction.
• Deloitte's PJ DiStefano notes companies focus on productivity and cost reduction amid economic challenges.
• Repeat recognition on the list reflects strong governance, seasoned leadership, and effective employee training programs.

FedEx unveils 5.9% rate increase, surcharge hikes for 2025

                 Supply Chain Dive: Sept 16th

• FedEx will implement a 5.9% average rate increase for US deliveries, exports, and imports starting January 6, 2025.
• Services affected include Ground Economy, Ground Multiweight, International Premium, Freight Priority, and Freight Economy.
• Additional surcharges will target residential, rural, and oversized deliveries, increasing costs for specific package types.
• Two-day air service rates will see higher increases, pushing some shippers to switch to ground delivery options.

Yellow Loses Pension Ruling, Upending Shareholder Bankruptcy Bets

                 The Wall Street Journal: Sept 16th

• A bankruptcy judge ruled that Yellow is liable for $6.5 billion in unfunded pension benefits for its 22,000 workers.
• The ruling limits Yellow’s ability to pay unsecured creditors, including BNSF Railway and smaller companies.
• Yellow is expected to raise $2.5 billion from asset sales, enough to repay secured creditors but insufficient for unsecured claims.
• The judge rejected Yellow’s argument that pandemic-era federal aid to pension plans should reduce its liability.
• Yellow’s shares fell sharply after the ruling, reflecting investor concerns about the impact on shareholder recovery prospects.

Descartes tackles fraud in latest acquisition

                 FreightWaves: Sept 18th

• Descartes acquired MyCarrierPortal (MCP) for $24 million upfront, with an additional $6 million contingent on revenue targets.
• MCP helps shippers and brokers verify carrier identities, ensuring compliance and reducing fraud risks.
• The acquisition enhances Descartes' Know-Your-Carrier capabilities, integrating with its existing FraudGuard tool for better onboarding and compliance.
• Carrier fraud and cargo theft are persistent industry issues, prompting Descartes to invest in fraud reduction technologies.
• This marks Descartes' fourth acquisition in 2024, following deals with BoxTop Technologies, OCR Services, and Aerospace Software Developments.

Mahle CEO: "We will fail if we don't use blue hydrogen"

                 Clean Trucking: Sept 17th

• Mahle CEO Arnd Franz emphasizes that using blue hydrogen is crucial for scaling hydrogen infrastructure in trucking.
• Blue hydrogen, produced from natural gas, has a carbon footprint but helps accelerate hydrogen adoption compared to green hydrogen.
• Franz warns that zero-emission goals will fail without the initial use of blue hydrogen to lower costs and build infrastructure.
• Significant green hydrogen projects are emerging in Australia, South Africa, Brazil, and the EU, positioning the EU as a potential exporter.
• Hydrogen fuel cell and combustion technologies are expected to outperform diesel in fuel economy, despite current fossil fuel reliance.

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