Freight Forward: Volume Shifts & Expectations

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.

• Los Angeles, Long Beach, Oakland, Seattle-Tacoma, Vancouver and Prince Rupert registered strong import growth in June, with volumes up 6% while rail container dwell times improved from the month before, according to port managers writes Bill Mongelluzzo. According to data from the Pacific Merchant Shipping Association (PMSA), the average dwell time for containers that left Los Angeles-Long Beach marine terminals by rail in June fell to 4.73 days from 6.44 days in May. The average dwell time for containers moved by truck increased slightly to 2.7 days from 2.47 days in May.
• Ocean carriers will be required to document their policies for handling exports, notify shippers about schedule and service changes, and ensure adequate loading time for ships under new rules laid out by the US Federal Maritime Commission (FMC) as the agency seeks to level the playing field between exporters and liner operators writes Michael Angell.
• Air and ocean trades out of Asia are heading for strong peak seasons as the Red Sea disruption keeps shipping capacity in short supply and strong demand for e-commerce and a modal shift fills all available air freight space.?Kuehne + Nagel CEO Stefan Paul said 70% of the capacity offered by Apex (KN’s air subsidiary) has already been presold for the third and fourth quarters writes Greg Knowler.

• From Bloomberg - Temperature-controlled storage and logistics provider, Lineage, raised about $4.4 billion in an initial public offering and is the largest offering so far this year. According to March 31, Lineage has 482 warehouses in 19 countries with 3 billion cubic feet of capacity the filing show. For more, see WSJ's article - Why a Cold-Storage Company Just Delivered the Year’s Hottest IPO (Subscription may be required.)

Columns

• Contract flexibility offers release valve for pressure of spot rate swings, Jeremy Masters, Managing Director,?Shipping Masters

Ocean Carriers & Freight Forwarders Earnings

• CMA CGM halved its net profit in the second quarter despite strong demand in the US and Europe that increased its volumes and ongoing Red Sea disruptions to commercial shipping that pushed rates higher writes Greg Knowler
• Deutsche Bahn’s DB Schenker subsidiary continued its highly profitable run through the first half of 2024 and remains by far the most profitable division in its?infrastructure-challenged and loss-making?parent writes Greg Knowler.
• DSV is expecting the solid growth in its second quarter air and ocean volume to continue at least through the third quarter, but there are signs that the high demand driven by early shipments on the trades out of Asia has peaked writes Greg Knowler. “We see a situation where the destocking that has taken place has probably come to an end and now there’s a more balanced situation between demand and supply,” CEO Jens Lund said. “I don’t see too many of our customers building up inventory levels at this moment.?
• Kuehne + Nagel is expecting a “significant” improvement in profitability in the second half of 2024 as higher ocean freight rates negotiated with customers in the second quarter kick in and combine with ongoing demand for high-margin sea-air solutions and a strong end-of-year peak season writes Greg Knowler.

Log Tech

• A report from McKinsey said venture funding into the logistics segment fell to $2.9 billion in 2023, down almost 90% since it hit a peak of $25.6 billion in 2021. Last year’s funding level was the lowest in the sector since 2015 writes Eric Johnson.

?Inland

• The threat of a Canada-wide rail strike caused some intermodal rail freight to shift to the US and away from Canadian National Railway (CN), company officials say writes Bill Cassidy.?
• UP’s containerized intermodal traffic rose 6% year over year in the second quarter and was up 6% in the third quarter through July 22. Much of the gain can be attributed to a?surge in US imports?from Asia. But some of the railroad’s additional containers were diverted from Canadian ports by importers concerned about the possibility of a strike by the Teamsters Canada Rail Conference writes Bill Cassidy.

The bottom is behind us,” Knight-Swift CEO Adam W. Miller said Wednesday during the company’s second-quarter earnings call.

• The US truckload sector is slowly pulling out of a two-year downturn, with expectations rising for seasonal growth in the second half of 2024, according to executives at Knight-Swift Transportation Holdings, the largest US truckload operator writes Bill Cassidy.
• ODFL’s LTL shipment count rose 3.1% year over year in the second quarter to 48,444 shipments per day, pushing LTL tonnage up 1.9%, the company said in its earnings report. Weight per LTL shipment dropped 1.2% year over year writes Bill Cassidy.?“We had a little bit stronger retail-related performance in the second quarter,” CFO Adam Satterfield said. “Industrial [freight] was okay but kind of reflects the industrial environment.” About 65% to 70% of ODFL’s freight is tied to manufacturing.?

• Bill Cassidy writes that increased manufacturing activity?in Mexico and double-digit growth in its cross-border supply chain business drove UPS to acquire Estafeta, the largest privately-owned package carrier and logistics integrator in Mexico according to UPS. (For more on UPS Q2 earnings and Estafeta, check out my ACN column.)
• According to The Information (Subscription may be required), Stord is buying the e-commerce fulfillment services operations of Pitney Bowes according to a memo sent to Pitney Bowes staff. This is the company’s 2nd e-commerce acquisition in 4 months following its purchase of ProPack Logistics in April.

?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