Freight Forward: 'No Alarm Bells Yet' in Air Cargo Space

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.

Ocean

• The tentative wage deal agreed to between longshore workers and maritime employers along the US East and Gulf coasts could create as much as $5 billion in new waterfront labor costs over the six-year life of the next contract, according to estimates compiled by the Journal of Commerce writes Michael Angell.
• Laura Robb writes that the three-day strike by dockworkers at East and Gulf coast ports earlier this month will bring a delayed reduction in capacity on some trade lanes and could affect cargo frontloading ahead of another potential work stoppage in January, container shipping according to analyst Lars Jensen.

“A three-day strike doesn’t sound like much but that doesn’t mean it’s over. The regular cost from just a three-day strike is going to be with us at least until the middle of November. Some of the ripple effects are only just now beginning to show themselves,” Lars Jensen, CEO of Vespucci Maritime and a Journal of Commerce analyst, told the South Carolina International Trade Conference.

• Rail container dwell times in the ports of Los Angeles and Long Beach increased to a two-year high in September as the port complex handled record one-month volumes of imports from Asia, driven in part by retailers diverting cargo from East and Gulf coast ports ahead of the longshore strike there writes Laura Robb and Bill Mongelluzzo. While dwell times for containers leaving the LA-LB complex by truck hit their highest level since October 2023, terminal operators say the average of 3.21 days is not contributing to congestion.

• Forwarders expect Asia-North Europe ocean spot rates to bottom out in October and then climb through the remainder of the year as carriers increase blank sailings and roll out rate hikes to target early Chinese New Year demand writes Greg Knowler. ?Data from visibility provider eeSea shows carriers are so far expected to blank 271,382 TEUs in October on Asia-Europe, representing 20% of available capacity on the trade.

• The Port of Montreal is warning shippers about the risk of delays and a growing container backlog due to dockworkers refusing overtime work writes Michael Angell.
• DP World confirmed it would move forward with a $1.3 billion expansion of the London Gateway terminal writes Keith Wallis. The project involves construction of the final two berths at the planned six-berth terminal plus a second rail terminal; work is expected to be completed by 2030, DP World said in a statement. An all-electric fourth terminal at London Gateway costing $460 million is due to become fully operational early next year, the port operator said.
• Heavier cargoes are becoming harder to handle due to port equipment and infrastructure limitations, while the myriad agencies tasked with granting clearances for interstate cargo transport complicate project cargo moves, Dharmendra Gangrade, head of logistics management at Indian engineering, procurement and construction company and diversified conglomerate Larsen & Toubro (L&T), told the Journal of Commerce writes Bency Matthew.
• India is seeking to repeal the 2018 legislation that abolished cabotage restrictions on the coastal shipping leg writes Bency Matthew. According to Matthew, the main reason behind the rethinking is that Indian-registered container shipping fleets have suffered serious growth setbacks due to free market policies. Additionally, there has been a number of shipper complaints in recent years against foreign liners over wild rate moves.

Air

• With e-commerce shipments filling much of the available air freight capacity out of Chinese airport hubs, shippers of traditional air freight have spent the year working out the most effective fixed-rate deals or block space agreements (BSAs) to lock in the required capacity. Shippers have also adjusted inventory levels to cover any shortfalls should space become a problem in the traditional fourth-quarter peak season for air freight writes Greg Knowler.

“Space will be tight out of China, but we have been working with our long-term forwarding partners to ensure we have the space we need and when we need it,” Mark Fullarton, director of global transportation at Zebra Technologies, told the Journal of Commerce. “We have plans in place to mitigate any shortages, so right now there are no alarm bells.”

• In my latest Cargo Facts column, I question whether express carriers will benefit from shorter peak season.
• CNBC – Boeing and its machinists’ union have reached a new contract proposal. The new proposal includes 35% wage increases over four years, a higher signing bonus of $7,000, guaranteed minimum payouts in an annual bonus program and higher 401(k) contributions among other changes.

Inland

• A theft of cargo from a Union Pacific (UP) train on the west side of Chicago highlights several challenges combating such crime, including how to handle interchanges between two Class I railroads in a major city writes Ari Ashe. The incident also raises the question of whether the suspects received inside information because they hit only a handful of Hub Group boxes and rail-owned containers labelled “EMP” with electronics inside. Video shows the thieves ignoring dozens of other containers.
• The Surface Transportation Board (STB) approved CSX’s purchase of almost 94 miles of rail from the Meridian & Bigbee Railroad (MNBR) that runs between Burkeville and Myrtlewood in Alabama. Separately, STB gave the green light for CPKC to acquire from MNBR about 50 miles of rail line between Myrtlewood and Meridian, Mississippi. The approvals clear the way for trains to run between Mexico and CSX’s Fairburn terminal in Atlanta, with further connections across the Southeast writes Ari Ashe.
• North American railroads hauled nearly 2.17 million domestic containers in the third quarter as a surge in demand in Southern California drove a 6% year-over-year increase in volumes, according to the Intermodal Association of North America (IANA). The figure exceeds the Journal of Commerce’s quarterly forecast of 2.09 to 2.15 million boxes writes Ari Ashe.
• The US truckload spot market is settling after two weeks of hurricane- and strike-inspired surges in pricing and volume, indicating the market isn’t at a long-awaited turning point in either freight demand or spot pricing — at least not yet writes Bill Cassidy.
• Fleet Owner - JB Hunt CEO Shelley Simpson said her team was getting “better signals” from customers noting the trucking firm’s growing confidence that the freight market has returned to more seasonal demand patterns.
• Bloomberg - More people are switching to slower delivery options to save money, and profits at FedEx and UPS are getting squeezed. The two biggest shipping firms in the US recently cut their forecasts, blaming the shortfall in part on customers turning to cheaper options, like ground shipping instead of air delivery.

That's it for now. Thank you for reading! 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