Freight Forward - US Imports From Asia Hit a High

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.

Except this week. It's going out a bit early. ??

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.

US imports from Asia hit a six-month high of 1.35 million TEUs in April, according to PIERS, a sister product of the Journal of Commerce within S&P Global, writes Michael Angell. That’s the highest level seen since October 2022, when imports hit 1.402 million TEUs, PIERS data shows.? While April imports were down 18.6% from the same month a year earlier, they were up almost 25% from March.?

As imports pick up, trans-pacific carriers are wrapping up 2023-24 service contract negotiations with non-vessel-operating common carriers (NVOs) and shippers, writes Bill Mongelluzzo. A broad mix of deals is being signed that includes fixed and floating rates and contracts that include the price of the inland rail or truck move, sources say. Most contracts should be signed by June 1. Sources told the Journal of Commerce that negotiations are mostly concluded on NVO contracts with rates that float with the spot market, known as freight-all-kinds, or FAK. The initial FAK rates this year are generally in the range of $1,350 to $1,500 per FEU to the West Coast, the sources said, with East Coast rates about $1,000 higher.

Meanwhile, Ocean Network Express (ONE) agreed to pay a $1.7 million civil penalty to avoid a formal investigation by the US Federal Maritime Commission (FMC) for allegedly violating the interpretive rule on detention and demurrage, writes Teri Errico Griffis. As part of the settlement, ONE did not admit to any violation of the law, the FMC said in a statement. The carrier said it would commit to complying with the Ocean Shipping Reform Act of 2022 (OSRA-22) and the FMC’s interpretive rule on detention and demurrage.

According to Bloomberg, a severe drought is affecting the Panama Canal and is forcing container vessels to lighten their loads and pay higher fees. Beginning May 24, vessels will have to carry less or cut the weight of their cargo. A second decrease will occur on May 29. As a result, some carriers?have announced new fees for goods shipped on the route beginning June 1.

Europe

Greg Knowler writes that demand for rail-dominated combined transport in Europe contracted 13.9% in the first quarter, according to the International Union for Combined Road-Rail Transport (UIRR). “Combined transport is caught in a perfect storm,”? Ralf-Charley Schultze, president of the UIRR, said, pointing to rail freight’s challenges that include ongoing poor schedule reliability, a shortage of train capacity, and persistently high traction electricity prices. Also not helping are lower diesel prices for long-haul trucking, a series of strikes in France and Germany, and weak consumer demand.

The Port of Hamburg reported an almost 17% drop in volume in the first quarter, following its larger European hub rivals Rotterdam and Antwerp in posting negative growth as the loss of Russian business drove the year-over-year declines, writes Greg Knowler. Axel Mattern, CEO of Port of Hamburg Marketing, said in a statement that Russia was Hamburg’s fourth-largest trading partner at the beginning of last year.?

“Sanctions came into force after the invasion of Ukraine ... [and now] freight volumes to and from Russia are now missing from the general view,” he said. “In addition, the at-times unstable economic situation in China on account of the pandemic has continued into this year. Neither of these factors was without repercussions on the Port of Hamburg.”?

Inland

Trucking

High demand for manufactured goods and produce are pushing up the volume and the value of goods moving north from Mexican factories and farms into the US, writes Bill Cassidy. And that is keeping northbound truck rates from Mexico high compared with US national averages, according to Jordan Dewart, president of Redwood Mexico.?

“Nearshoring is, in fact, starting, but it’s not yet going to tilt the scales,” Mike Parra, CEO for the Americas at DHL Express, told the Journal of Commerce. “The challenge is that it doesn’t happen overnight. It’s going to take some years. But we're starting to see growth happening in North America, not just between Canada, the US, and Mexico, but down into South America as well.”?

In an interesting move, Bill Driegert, an executive at Uber who led the development of the ride-sharing service’s freight brokerage division, was hired by Flexport to build its own domestic transportation services, writes Eric Johnson. “[Driegert’s] mission in this new role will be to develop and scale our end-to-end customer offering for trucking,” Flexport CEO Dave Clark said in an internal memo obtained by the Journal of Commerce. “In this role, Bill and his team will own the [profit and loss] for a free-standing trucking business along with product, tech, pricing, and procurement for our global trucking services.”?

Intermodal

CSX Transportation and J. B. Hunt Transport Services were the top-performing intermodal providers in North America through the first four months of 2023, according to a Journal of Commerce survey of more than 100 shippers and intermodal marketing companies (IMCs) analyzed by Ari Ashe.?

Many respondents noted that while they were pleased with the performance of railroads or intermodal providers, they believe that performance is driven by softer volumes and remained unconvinced that service won’t deteriorate again when demand rebounds.

Meanwhile, beginning in June, BNSF Railway will begin regular intermodal service from the Port of Houston to Dallas and Denver, writes Michael Angell. In a service advisory, BNSF said it will offer service from Houston’s Barbours Cut container terminal to its Alliance facility in Dallas and to its Denver intermodal facility beginning June 2.? The service to Alliance will have twice weekly cutoffs on Tuesday and Friday evenings, with scheduled container availability on the following Thursday and Sunday mornings, respectively. The service to Denver is once weekly.? “Based on vessel arrival, these new intermodal service schedule updates have the potential to increase in frequency to meet growing intermodal demand at the Port of Houston,” BNSF said in the advisory.

Economic Calendar

• Tuesday, May 23 - S&P Flash PMI for May
• Thursday, May 25 - Q1 GDP (second reading)
• Friday, May 26 - Durable Goods Orders for April

(BTW, the March inventory-to-sales ratio came out last week. In my Friday Air Cargo Next column, I wrote about it, including retailers' cautious approach to inventory replenishment. ??)

That’s it for this week. Let me know if you prefer Sunday or Monday delivery of the Freight Forward.

Also, please be sure to hit the subscribe button to receive the latest updates.

For readers interested in reading more JOC stories, click on CATHYR20 to receive a 20% discount (Note this is for first-time subscribers.).

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?????