Freight Forward: Vying for Yellow Assets

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.

Drama continues to swirl around bankrupted Yellow as the focus turns to its assets. During a bankruptcy court hearing, Yellow revealed that Estes is offering to pay $1.3 billion for all of Yellow’s terminals.?“Estes felt it was important to try to bring a proposal to the Yellow bankruptcy estate and its creditors that would add some value for the benefit of all case constituents and reduce some of the uncertainty surrounding this bankruptcy process,” Estes said in a statement to the Journal of Commerce.??Bill Cassidy writes that Yellow and Estes already have a relationship. Although they compete for freight and customers, Estes owns several of Yellow’s terminals and leased them to Yellow. The $1.3 billion bid would give Estes the choice of more than 160 facilities owned by Yellow to use, lease, or sell.?

• However, it seems that?Old Dominion Freight Line Inc. has now offered $1.5 billion to acquire Yellow Corp.’s 169 terminals according to Transport Topics.?
• The Yellow fallout has led to much less capacity and LTL prices rising Cassidy writes.“We’re already starting to see LTL prices creep up,” Bart DeMuynk, strategic advisor at project44, said in an interview. He expects LTL rates to increase about 7% on average, although companies that relied more on Yellow’s carriers will pay a higher price.?

J. B. Hunt Transport Services does not expect much of a peak for the intermodal sector writes Ari Ashe. “While there are some customers that are a little bit more positive, there are still several that are not very positive at all,” Darren Field, president of J. B. Hunt’s intermodal division, said at the Deutsche Bank Conference conference. “I don't have any customers really predicting a significant peak season. We're not hearing a lot about needs for capacity in an elevated manner for the holiday shopping season.”?

Parcels

• UPS International Brotherhood of Teamster union members will wrap up their contract votes tomorrow, Aug 22. Leaders of the Teamsters are making a push across the country to ensure all union members vote and to encourage ratification of the five-year contract. In 2018, the contract passed despite receiving a majority vote.
• Flexport introduced Flexport Parcel in a blog post last week. The service was made possible via its recent acquisition of Shopify Logistics/Deliverr. The service is available to existing Flexport customers and through the EasyPost dashboard.

Ocean

US imports from Asia increased for the fifth consecutive month in July to 1.46 million TEUs — the highest since last September.?July’s imports were up more than 35% from the 2023 low of 1.08 million TEUs recorded in February and matched in March, according to PIERS, a sister product of the Journal of Commerce within S&P Global. However, the share of Asian imports landing on the West Coast in July fell to 53.1%, down from 59.3% in June and the lowest since last November. The share was 60.4% when longshore contract talks began in May 2022 writes Bill Mongelluzzo.

Container terminal operators are expanding their footprint and cargo handling capabilities across global port and landside operations in anticipation of growing trade volumes and sourcing shifts from diversified supply chains. Despite the currently depressed container shipping market, terminal operators are looking to the future and focusing much of their attention on emerging markets such as Southeast Asia, India, Africa, and Latin America where they believe much of the growth will originate writes Greg Knowler.

Port Houston joins South Carolina Ports in using a data-sharing platform from container terminal technology provider Portchain that will allow them to “digitally agree” with its ocean carrier customers on vessel arrival times writes Eric Johnson.

Reforms

• The Ocean Shipping Reform Technical Act of 2023 (OSRA 2.0) has been stalled in the House since May 23 when the House Transportation and Infrastructure Committee passed an amended version of the bill. Industry observers say the lack of movement is likely tied to federal regulators still sorting through the fallout of last year’s passage of the Ocean Shipping Reform Act of 2022 writes Teri Errico Griffis.
• US Federal Maritime Commission (FMC) in the latest yet-to-be-finalized rulemaking draft released June 12, has taken the suggestions of some agricultural exporters, along with other shippers, to forbid container lines from refusing shipments because the economics aren’t justifiable. The FMC’s explanation for the changes isn’t exactly straightforward writes Mark Szakonyi in his weekly column. “Profit and business factors may be present when engaging in negotiations, but these factors would have to be considered alongside other factors presented when the commission is determining what the true driving factor is for refusing to deal in a given case and whether that driving factor is reasonable,” the agency wrote.??
• As the excesses of the pandemic market defied logic, so too does the response or at least some aspects of it writes Peter Tirschwell in his weekly column. Case in point: how regulators plan to implement the prohibition against “unreasonable refusal to deal or negotiate with respect to vessel space accommodations” by ocean carriers that was codified within US shipping law last year. The question boils down to the definition of “unreasonable,” and given that Congress provided little insight into what that means in practice, it’s up to the US Federal Maritime Commission (FMC) to clarify that through rulemaking mandated by the Ocean Shipping Reform Act of 2022 (OSRA-22), signed into law in June 2022.?

Economic Data

• Existing Home Sales – Tuesday, Aug 22
• S&P Flash PMI for August – Wednesday, Aug 23
• Durable Goods Orders for July – Thursday, Aug 24

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