Freight Forward: YoY Declines to Continue

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.

Year-over-year lower volumes are forecasted to last through the end of the year. “Year-over-year import volumes have been on the decline at most ports since late last year, and declining exports out of China highlight the slowdown in demand for consumer goods,” said Ben Hackett, founder of Hackett Associates. “Our view is that imports will remain below recent levels until inflation rates and inventory surpluses are reduced.” JOC’s Bill Mongelluzzo writes that consumer spending in the coming months will be compromised somewhat by high inflation, while retailers are being conservative in placing purchase orders with factories in Asia because of bloated inventories, citing the latest Global Port Tracker.?

Indeed, JOC’s Greg Knowler writes that ocean carrier Yang Ming reported Q1 revenue fell more than 300%, with a net profit 20 times lower at $112 million.?“The demand in the global market registered a downward incline because of the ongoing war between Ukraine and Russia, the consecutive imposition of interest rate hikes by the US Federal Reserve, and the current status of customer inventory, all of which stalled global economic recovery,” Yang Ming said in an earnings statement. The carrier said the market in the first quarter “suffered delayed shipping and operational constraints due to the Lunar New Year holiday, factories adjusting shipping schedules, and manpower allocation driven by market demand.”

In its Q1 earnings, Hapag-Lloyd CEO Rolf Habben Jansen told analysts,?“I don't think that means that we're now going to see a quick recovery, but I do think it underlines the point that destocking is slowly but steadily coming to an end and at some point, we quite likely will see a pickup in demand.”

Greg writes that according to Habben Jansen, that point will likely be reached at the end of the second quarter or the beginning of the third and continue through China’s Golden Week in early October.

Ports

Savannah will add 1.5 million TEUs of annual capacity later this year at a terminal that already has the longest US contiguous berth and then open an expanded separate terminal in January 2025 with another 1.5 million TEUs in capacity. Ultimately, Georgia Ports Authority (GPA) aims to have 3 million TEUs of additional capacity by mid-2026, according to JOC’s Mark Szakonyi.

Opportunities

CMA CGM granted Bolloré a put option, which confers the right, but not the obligation, to sell the businesses, writes JOC’s Michael Angell. In a separate statement, Bolloré said it accepted the put option “strictly as an offer,” and it would now bring the offer to the rest of the Bolloré Group for consideration.

Inland

For-hire trucking companies in the US added 12,600 real jobs from March and 14,000 jobs over two months, according to non-seasonally adjusted data from the Bureau of Labor Statistics (BLS), writes JOC’s Bill Cassidy.?

US truckload rates continued to slide in April and show no signs of hitting a bottom, with logistics companies believing an oversupply of capacity must be thinned before the decline stops, writes JOC’s, Ari Ashe.

Mazen Danaf, an economist with Uber Freight, said that its data shows that not enough trucks are coming out of the market as shippers have pulled back on transporting freight.?“We believe that demand was about 1% to 2% lower than a year ago as of March, while supply is about 6% to 7% higher than what it was a year ago,” Danaf said on a May 10 webinar. “We saw about seven months of declines in the net [truckload] carrier population of about 10,000 carriers in total. However, that [loss] is much less than the number of new motor carriers added in the prior two years, or about 120,000 carriers. So, the trucking market remains oversupplied.”

Top Shippers

For subscribers, a special issue of the Journal of Commerce is out that ranks the top 100 ocean freight importers and exporters. As part of the issue, journalists wrote industry overviews.

Those that were published on the JOC.com website last week:

• Shipments of alcoholic beverages to the US took a dip last year as port congestion, poor schedule reliability, changes in vessel services, and the limited supply of refrigerated containers combined with a continued shift in consumption patterns that saw more consumers drinking at home rather than at bars and restaurants writes Michael Angell. US imports of wine, beer, and distilled spirits slipped 1.3% to 477,162 TEUs last year, following a particularly strong 2021 in which volumes rose 4.4%, according to PIERS, a sister product of the Journal of Commerce within S&P Global.
• US toy imports came down slightly from record levels last year but remained well above the historical average amid excess inventories prompted by unusual consumer buying patterns during the COVID-19 pandemic, according to toy manufacturers, writes JOC’s Eric Johnson. Even with a 4.6% year-over-year decline, the 1.26 million TEUs of toys and games brought into the country in 2022 was still the second-highest volume ever, according to data from PIERS.
• Containerized imports of televisions, mobile phones, computers, gaming consoles, and a variety of other devices and gadgets sold under the electronics banner declined 2.1% to 1.66 million TEUs in 2022, according to PIERS. That decline, however, followed a 4% increase that boosted electronics imports to a record high of 1.7 million TEUs in 2021, writes Bill Cassidy.
• US agriculture exports rebounded in the second half of last year as port and inland congestion eased and vessel reliability improved, but exporters say lingering service issues continue to hamper overseas sales in early 2023, while tensions with China threaten to derail growth in shipments to the largest importer of US foodstuffs writes JOC’s Teri Errico Griffis.

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???????