Freight Market Update 12/19/24
Freight 360
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WEEKLY?UPDATE
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PRODUCE?UPDATE
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?? $300M Boost for Ag Exports.?The USDA is doubling down on its efforts to promote U.S. agriculture abroad, announcing a second wave of Regional Agricultural Promotion Program (RAPP) grants worth $300 million. This brings 2024’s total RAPP funding to $600 million, supporting 67 partners targeting emerging markets like Africa, Latin America, and Southeast Asia. The initiative is part of the Biden-Harris administration’s broader push to diversify export markets and strengthen global demand for American agricultural products.
Under Secretary Tom Vilsack, the USDA has already driven record exports, including $196 billion in 2022. Programs like RAPP and the Agricultural Trade Promotion Program (ATP) are helping U.S. producers access dynamic, high-growth regions while mitigating reliance on major markets like China and Canada. This round also dedicates $25 million to Africa-focused projects and $100 million to specialty crop exporters, underscoring USDA's commitment to global food security and market diversification.
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MARKET UPDATE
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?? Market Overview The freight market continues to evolve as supply and demand dynamics shift across different modes. For the week ending December 14, 2024, dry van, reefer, and flatbed segments displayed varying levels of activity influenced by manufacturing, seasonal trends, and economic fundamentals. Key regions such as Savannah, Philadelphia, and the Quad Cities showed distinctive trends reflecting their respective market drivers. While dry van load volumes surged and capacity tightened, reefer markets were bolstered by strong import activity from South America, and flatbed markets showed consistent expansion due to steady manufacturing growth.
?? Dry Van Market Trends The dry van sector saw notable improvements as manufacturing activity showed signs of recovery. The ISM Manufacturing PMI climbed to 48.4% in November, with new orders entering expansionary territory for the first time in seven months. Savannah emerged as a key focal point, with truckload volumes up 16% year-over-year, driven by a 12% increase in import activity compared to the previous year. Tightened capacity and a load-to-truck ratio of 5.74 reflected increased demand, pushing spot rates up to $1.74 per mile, a $0.09 increase year-over-year. However, as the peak shipping season winds down, rates may begin to stabilize.
??? Flatbed Market Overview Flatbed markets continued their steady expansion, supported by growth in the logistics sector as reflected by the Logistics Manager’s Index (LMI) at 58.4. The Quad Cities, home to manufacturing giants like John Deere and military installations like Rock Island Arsenal, highlighted the strength in industrial demand. While load postings dipped 10% week-over-week, year-over-year volumes remained 13% higher. Flatbed load-to-truck ratios stood at 15.30, significantly above last year’s 8.29, with spot rates increasing to $1.99 per mile. This indicates sustained strength in flatbed demand as industrial production maintains a healthy pace.
NEWS UPDATE
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?? Record-Breaking November at LA Port.?The Port of Los Angeles continues its record-breaking streak, processing 884,315 TEUs in November—a 16% year-over-year jump and 15% above its five-year average. This surge came during what’s usually a post-peak lull, putting the port on track to surpass 10 million TEUs for just the second time in its 117-year history. Imports climbed 19% to 458,165 TEUs, while exports rose 11%. Empty containers also spiked 13%, signaling more inbound goods are on the way.
Executive Director Gene Seroka attributed the growth to strong consumer spending, geopolitical factors like unresolved East Coast labor talks, and importers hedging against potential tariff changes under the incoming Trump administration. The port is also leveraging empty containers for U.S. agricultural exports, aided by new initiatives like a container depot in California’s Central Valley. With December volumes expected to reach 900,000 TEUs, LA is poised for a strong start to 2025, driven by Lunar New Year inventory pushes from Asia.
On the horizon, the port is tackling challenges from automation to rail service improvements. Innovations like the Port Optimizer truck reservation system are already streamlining operations, while a focus on trade with Mexico and Asia promises continued growth. Despite potential softening in early 2025, analysts predict sustained momentum into the summer.
?? $139M for Smarter Roads.?The USDOT is shaking up transportation with $139 million in Strengthening Mobility and Revolutionizing Transportation (SMART) grants. Spanning 42 states, these funds aim to deploy cutting-edge tech like sensors, smart traffic signals, and drones to boost efficiency and safety. Transportation Secretary Pete Buttigieg emphasized the grants' potential to tackle challenges ranging from rural medical supply delivery to disaster resilience.
This round includes $54 million for planning and prototype projects (Stage 1) and $85 million for implementing proven solutions (Stage 2). Highlights include Tennessee's $1.98M truck parking system, Baltimore’s $1.97M smart traffic signals post-Key Bridge collapse, and a $12.4M Alaska-California drone initiative for disaster response. Other projects range from border wait-time sensors in Washington to a seamless QR transit system for the 2028 Olympics in Los Angeles.
Stage 2’s big-ticket items also include $14.8M for New York’s smart infrastructure inspections and $12.1M for L.A.’s Olympic-ready transit upgrades. With initiatives like these, the USDOT is paving the way for safer, tech-savvy travel nationwide.
?? Amazon Faces Historic Strike.?Amazon is grappling with the largest strike in its U.S. history, as delivery workers at seven fulfillment facilities walked off the job on December 19. The strike, organized by the International Brotherhood of Teamsters, affects key sites in New York City, Atlanta, Southern California, San Francisco, and Skokie, Illinois. Thousands of workers are protesting Amazon’s refusal to bargain, with Teamsters president Sean M. O’Brien blaming the company’s “insatiable greed” for holiday delivery disruptions.
Amazon argues it has no obligation to negotiate, claiming the workers are employed by third-party delivery companies. However, the National Labor Relations Board (NLRB) has ruled that these workers are Amazon employees, accusing the company of breaking the law by refusing to engage in collective bargaining. Amazon is fighting back, challenging the NLRB’s constitutionality alongside SpaceX in federal court. Despite the strike, Amazon insists operations at the affected facilities will continue as usual.
? Will ILA Strike in January?.?With the January 15 expiration of the International Longshoremen’s Association (ILA) contract looming, uncertainty hangs over U.S. supply chains. Talks with the United States Maritime Alliance (USMX) have stalled, raising concerns about another strike. The ILA, bolstered by support from President-elect Donald Trump, remains staunchly opposed to automation at ports, a key sticking point in negotiations. Experts are split on the likelihood of a strike, but all agree the stakes are high for shippers already grappling with geopolitical challenges and holiday pressures.
Industry leaders are bracing for disruption. Mike Short of C.H. Robinson sees a strike as “increasingly likely” and is advising customers to adjust inventory, switch ports, or consider air freight. Meanwhile, Lars Jensen of Vespucci Maritime predicts carriers may use a prolonged strike to justify passing costs to customers. With negotiations at a standstill and time running out, the outcome is a toss-up. Whether the ILA strikes or not, its fight against automation signals a deeper battle over the future of dockwork in an increasingly automated world.