Freight Forward: Shipping Rates Continue to Fall

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.

Shipping rates continue to decline. Greg Knowler writes that container shipping rates on the Asia to Europe corridor are at levels not seen in years due to excess capacity and competition between forwarders. Markus Panhauser, senior vice president for Europe at DHL Global Forwarding, said the low rates being offered to the market are based on expectations from forwarders that the capacity overhang will keep prices down into 2024. Panhauser added that carriers were offering far higher rate levels than forwarders, especially on longer-term fixed-rate contracts.

Bency Mathew writes that carrier rate levels on the India-US trade lane have fallen since the end of September due to excess capacity and a muted peak season.

• Meanwhile, the Port of Prince Rupert announced it has begun construction of a rail-to-container transloading facility that will increase the Western Canadian port’s capacity to export agricultural, forestry, and resin products while achieving a better import-export mix. Bill Mongelluzzo writes that the project will connect the new transload facility with Fairview Container Terminal, giving unit trains 10,000 feet in length direct access to the site from the Canadian National Railway network.
• The state of South Carolina will launch a project to raise the Charleston area’s major bridge, a 10-year effort that will allow the North Charleston Terminal to handle vessels up to 20,000 TEUs by attracting cargo volumes moving through the Suez Canal, writes Teri Errico Griffis .? The terminal, now limited to working vessels under 8,000 TEUs, will also increase its capacity from 500,000 TEUs to 2.4 million TEUs once the Don Holt Bridge, which crosses the Cooper River, is raised from its current 160-foot clearance. ?

Chart of the Week

• Exports of raw materials and intermediate goods and the import of specialized equipment to produce those goods are helping US Gulf Coast ports more effectively weather the widespread downturn in container imports than those on the West and East coasts, writes Michael Angell . Along with expansions in the energy and petrochemicals industry, Port Houston Authority Executive Director Roger Guenther said the port is also handling more specialized imports related to newer automotive and electronics manufacturing coming to Texas.

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Inland

• A glimmer of hope among the weak earnings reported by JB Hunt last week was growth in intermodal volume. J. B. Hunt said its volume increased 1% year over year in the third quarter after posting declines in each of the last three quarters. Transcontinental loads originating or terminating on the West Coast rose 4% year over year in the third quarter, writes Ari Ashe .
• The depressed US truckload market is a long way from a turnaround, but trucking executives and analysts believe shipper concerns about subpar service and carrier failures will prevent spot prices from falling further in 2023 and early 2024, writes Bill Cassidy . “The market is beginning to show signs of sensitivity when supply leaves suddenly, or a provider cannot perform with freight lanes that were awarded by offering the cheapest price,” David Jackson, president, and CEO of Knight-Swift Transportation Holdings, said during an earnings call Thursday. Jackson said he is looking toward 2024 for more significant pricing gains. “It does appear the stage has been set for positive rate pressure in the next bid season,” which would begin in early 2024, he said. “If bid season began today, we’d have a tough time seeing it be positive.”

• Truckload freight broker Convoy will shutter its freight brokerage business and sell off its core technology, writes Eric Johnson . From a volume perspective, Convoy grew to be the 20th-largest US truckload freight broker in 2022, with revenue of $1.1 billion in 2022, according to Armstrong & Associates. The impact, one source told the Journal of Commerce, will not be close to as acute as the shuttering of less-than-truckload carrier Yellow.
• Slync filed for bankruptcy in advance of selling off its technology, CEO John Urban told the Journal of Commerce last week, writes Eric Johnson . Slync, the company, and brand, will no longer exist after the sale. The bankruptcy filing, made last Wednesday in Delaware, was largely prompted by a Sept. 27 lawsuit filed against Slync by former CEO Chris Kirchner, who is seeking money from the company to cover legal fees associated with his defense against criminal charges brought by the US Department of Justice and Securities and Exchange Commission.
• Freight broker Transfix announced it had landed a $40 million funding round from venture capital firms, writes Eric Johnson . “We don’t have control over what the market rate is, but we do have control over where we deploy resources and think strategically about how to grow the volume,” Transfix CEO Jonathan Salama told the Journal of Commerce last Thursday. “It basically comes down to how much does it cost you to execute a load?”

Economic Outlook

• Tuesday, Oct 24 - S&P Flash US Manufacturing PMI
• Wednesday, Oct 25 - Q3 GDP (1st Estimate)
• Wednesday, Oct 25 - Advance Retail and Wholesale Inventories for September
• Wednesday, Oct 25 - Advanced US Trade Balance in Goods for September

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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