Freight Forward: Increasing Volumes Despite Rising Rates

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.

• Matson achieved strong Q2 earnings due to high demand and high ocean freight rates writes Michael Angell. Matson said it’s benefiting from high air cargo rates, which have some shippers switching to an expedited ocean service.

“The company expects the shift from air freight to expedited ocean and the continued growth of e-commerce goods to drive long-term demand for its China service.” - Matson statement.?

• Shippers and forwarders in Brazil are seeing container freight rates continue to surge on northbound trades to the US, Central America and the Caribbean amid tight capacity and strong demand writes Keith Wallis.
• Ocean Network Express (ONE) reported a $779 million net profit for its fiscal first quarter Wednesday, up 52% year over year amid an early peak season that tightened the supply-demand balance, with the carrier reporting 100% ship utilization on trunk routes out of Asia writes Greg Knowler.

• SeaLead Shipping and TS Lines filed an agreement with the US Federal Maritime Commission to enter a vessel-sharing agreement. The agreement will add capacity to the trans-Pacific market. The deal covers Sea Lead’s recently launched Asia West Coast (AWC) service to the Port of Long Beach writes Michael Angell.
• The Panama Canal is looking to increase the number of daily vessel transits to 36 as of September as it seeks to resume normal transit levels in the coming months following robust rainfall levels in June and July writes Keith Wallis.

“Due to the continued supply chain disruption caused by the situation in the Red Sea, which is now expected to continue at least until the end of 2024, coupled with robust container market demand, AP Moller Maersk [has upgraded] its full-year 2024 guidance,” the carrier said in a statement.

• Despite what it described as a “lack of clarity of supply and demand in Q4,” Maersk expects full-year EBITDA to be between $9 billion and $11 billion, up from a prior forecast of $7 billion to $9 billion; and EBIT of $3 billion to $5 billion, up from $1 billion to $3 billion writes Greg Knowler.
• Most forwarders who spoke with the Journal of Commerce noted that carriers are “overly” overbooking vessels from India to North America through better stowage planning and to make up for potential no-shows or late arrivals of booked containers. They claimed so-called “buffer bookings” are now extending up to 30% of weekly vessel allocations out of Nhava Sheva on the direct East Coast connections writes Bency Mathew.

Air

• Widespread disruption from July’s global IT outage on Microsoft systems that caused flight delays and cancellations lasting more than a week did not derail the resurgent air freight markets.? “The resulting cargo backlogs saw cargo load factors on some impacted airlines increase up to four percentage points compared to the previous week,” Xeneta noted in a market update adding that load factors had mostly recovered to pre-outage levels by July 28 writes Greg Knowler.

• With charters nearly or already booked between Asia and the United States, it’s going to be a race for any remaining peak-season air capacity I write in my latest Air Cargo Next column. Chinese-based e-commerce providers have booked up most available charters in preparation for peak season Vice President of global sales and marketing for Dimerco Express Group, Kathy Liu, said in a recent webinar. Kuehne + Nagel is experiencing similar demand. “Two-thirds of our volume, which we have secured, is already presold for the third and fourth quarter,” Kuehne+Nagel Chief Executive Stefan Paul told analysts July 23. But DSV CEO Jens Lund told analysts on July 24, “I think there’s still a lot of normal capacity in airlines in the market where we will be able to source volume.” ?

Columns

• Smaller forwarders tap into frustration of overheated ocean market, Peter Tirschwell
• Nervous US shippers have few options in the face of port strike threat, Mark Szakonyi
• Decades on, ‘supply chain visibility’ remains a work in progress, Lars Jensen

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Log Tech

• A recent $200 million infusion will benefit Altana by ?“fueling an ambitious phase of product development to power AI-driven, collaborative workflows on top of this data platform, enabling the public and private sectors to collaboratively manage security, procurement, compliance, global trade, sustainability, and more across multi-tier value chains,” it said in a statement writes Eric Johnson.
• Interesting bit from Gartner which found that 76% of logistics transformations fail to meet critical performance metrics. A Gartner survey found that 80% of respondents had attempted four transformations in five years, averaging almost one a year. Internal change resistance played a greater role in obstructing the success of their transformation initiatives than outside pressures.

Inland

• C.H. Robinson Worldwide is selling its European Surface Transportation business (EST) to focus on global freight forwarding and North American trucking writes Bill Cassidy. EST will be acquired by sennder Technologies.
• Knight-Swift Transportation Holdings is acquiring LTL carrier, Dependable Highway Express (DHE) which will give Knight-Swift a presence in California, Arizona and Nevada writes Bill Cassidy.
• Uber Freight is setting up an internal LTL network for shippers moving goods within Canada and between Canada and the US writes Bill Cassidy. “It’s a network within a network,” Craig Watson, vice president and managing director for Canada at Uber Freight, told the Journal of Commerce in an interview. “We’ve wrapped an engineered LTL network within our end-to-end managed transportation network.”

• Large publicly traded LTL companies added significant numbers of shipments in Q2 and say they continue to make gains in Q3 writes Bill Cassidy. LTL carriers are winning more freight from current customers, and they’re diversifying into areas that bring more shipments to their docks. The addition of new terminals in many markets is also creating opportunities to build freight density, which elevates shipment counts.

Hub Group reported an 8% year-over-year increase in intermodal volume during Q2 writes Ari Ashe. Despite the volume increase, Hub Group doesn’t believe rates will rise for shippers until 2025, a change from three months ago when the company predicted a shift in the back half of this year.

?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