Freight Forward - Improving Signs, Sort of

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 parcel last-mile queries.

Green shoots of US import demand may be emerging due to the stickiness of the April 15 GRI and commentary such as from Knight-Swift.?“There are some indications that we're starting to see a pickup in some of the containers that are about to make their way over the ocean and come into the West Coast again,” David Jackson, president, and CEO of road hauler Knight-Swift, told analysts during first-quarter earnings.

Indeed, the April 15th GRI levied by trans-Pacific container lines has moderately succeeded, according to JOC’s Greg Knowler. Data from Platts, a sister company of the Journal of Commerce within S&P Global, shows that North Asia to US West Coast rates has increased 38% to $442 per FEU since mid-April. ?

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Another GRI is on its way on May 1 on the Asia to North America trade lane. Hapag-Lloyd, CMA CGM, Evergreen, Ocean Network Express, Zim Integrated Shipping Co., and Cosco Shipping are increasing rates to $1,000 per FEU, and HMM plans to increase rates to $2,000 per FEU.

Meanwhile, Lars Jensen, founder and CEO of Vespucci Maritime, wrote in a LinkedIn post last Friday that “Despite the large declines seen in the spot markets, the comprehensive SCFI covering all trades out of China is 27% higher than the average level seen in full-year 2019 before the pandemic.”

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As possible upticks in US imports may be appearing, the International Longshore and Warehouse Union (ILWU) said it had reached a “tentative agreement” with West Coast employers on “certain key issues” but indicated a final deal on a new contract was still being hammered out by the two sides according to JOC’s Bill Mongelluzzo.

Meanwhile, ocean freight carrier CMA CGM is looking to get even bigger as Bolloré Group said it was in “exclusive negotiations” to sell its forwarding and logistics division to CMA CGM for an enterprise value of euro 5 billion ($5.5 billion). The exclusive period for CMA CGM will run until May 8, and any deal reached will be subject to regulatory approvals, writes Greg Knowler.

Inland

?Rail and Intermodal

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Schneider National and CPKC (Canadian Pacific-Kansas City Southern Railway) have struck a partnership to use a new single-line domestic intermodal service between Mexico and the US Midwest. According to JOC’s Ari Ashe, the decision could be upsetting to UP executives only four months after beginning its partnership with Schneider. UP had lobbied against the Canadian Pacific-Kansas City Southern combination and kicked CP out of a shared container program in Canada in 2022.

?Another great story from Ari concerns demurrage penalties. Over the last two years, US cargo owners have been hit with demurrage penalties at inland rail ramps that were never issued before the COVID-19 pandemic. The practice of when an ocean container is made available on Friday afternoon, and the railroad is open on weekends, but the chassis providers are closed, and then guess what? Yes, demurrage charges. It did not necessarily make sense to open depots on weekends last year when there were few if any, available bare chassis. However, there is a greater equilibrium between chassis supply and demand this year, making the conversation more relevant.

Trucking

A weak freight market is firing interest in acquisitions, with transportation and logistics companies of all sizes looking for bargain-priced businesses to add assets, customers, and services and to scale their offerings, writes Bill Cassidy.?Two such acquisitions were announced last week. New Jersey-based NFI Industries doubled its distribution footprint in Canada by acquiring SDR Distribution Services, a third-party logistics firm based in Vaughan, Ontario. And Massachusetts-based RoadOne IntermodaLogistics acquired Ace Transport Miami, a niche heavy-haul intermodal drayage company in South Florida.

Breakbulk

Bill Cassidy writes from the Journal of Commerce’s Breakbulk & Project Cargo Conference in New Orleans last week on speaker Laurence Allan, director of economics and global risk at S&P Global Market Intelligence, talk on how new dynamics in global relations are changing how shippers move freight and source materials ranging from critical minerals to finished goods. Allen described this dynamic as “the new pragmatism,” that is, new ways of operating in an international environment.?

“You will have to be sure the market where you want to move production has the capacity to handle it,” Allen said.?

In another key session, the International Maritime Organization (IMO)’s Carbon Intensity Indicator (CII) came under attack. The International Maritime Organization (IMO) designed the measure, which took effect Jan. 1, to help reduce maritime shipping greenhouse gas emissions by calculating the intensity of emissions generated by individual cargo ships. Thomas Damsgaard, head of Americas for shipping association BIMCO, called for more data saying, “We need regulations that work in practice, not on paper.” But do not mistake his frustration for opposition, writes Cassidy. “Having a not-fit-for-purpose IMO regulation is probably better than not having one [at all] because this is a first step, and this is going to be evolving,” Damsgaard said. He expects the CII will be revised and improved, starting at a July meeting this year. “I think it is very likely we will see changes come, and cargo will become a part of this framework going forward,” Damsgaard told the conference. “[Then] we can continue this purposeful decarbonizing of our industry.”?

?The Gateway

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

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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