STAY INFORMED AND UP TO DATE WITH THE LATEST DRAYAGE NEWS

Back to Resources

Feb 22, 2024

Stay Informed and Up-to-Date with the Latest Drayage News

News

Welcome to our Drayage News Updates blog, your go-to source for weekly bullet points on the latest events in the dynamic world of drayage shipping. Get the latest news and industry updates for drayage, container shipping and imports for the U.S. Stay informed about current happenings and gain valuable insights into the industry’s trends, regulations, and innovations. Our concise and straightforward summaries will keep you up to date with the ever-changing landscape of container shipping, making us your trusted destination for all things Drayage.

March 25th: What you should know about the Port of Baltimore

  • The Port of Baltimore is the busiest US port for car shipments and the largest by volume for handling farm & construction machinery, as well as agricultural products. Other top imports are paper and plywood. 
  • It is also the second busiest US port for coal exports. Other key commodities exported from the port are LNG, wastepaper, ferrous scrap and light trucks. 
  • The port handles nearly $800bn in cargo and services nearly 1,800 vessels yearly according to Maryland State Archives. 

March 18th: Container Spot Rates Dip After Lunar New Year Celebrations Despite Market Strength

  • Container spot rates from Asia to the United States are experiencing a seasonal dip post-Lunar New Year celebrations, despite market strength, attributed to increased carrier capacity and slow negotiations by major US retailers on annual service contracts.   
  • While container spot rates have dropped significantly, they remain higher than the previous year’s lows, suggesting a resilient market. Platts reports Asia-US rates of $3,000 per FEU to the West Coast and $4,500 to the East Coast, down from recent highs but not reaching last year’s levels, which sunk down to $1,050 and $2,050 for the West and East coast respectively. 
  • US retailers anticipate growth in imports from Asia, leading to increased projections for the second quarter and beyond, signaling positive signs for market expansion.  (JOC

March 11th: YoY February Imports Up 22.9%, Boosting Freight Demand

  • While February imports are down 6% from January (normal seasonality), it’s important to note that YoY February imports are up 22.9%, which is a good sign for freight demand. While other factors are headwinds for freight, imports are providing a solid tailwind for the industry. 

March 5th: Red Sea Disruptions Impact Ocean Carrier On-Time Reliability in January

  • In January, ocean carrier on-time reliability decreased in January as a result of the disruptions in the Red Sea to 51.6%. This indicator is typically in the 70-80% range. (JOC)
  • However, February experienced a bit of a rebound, at least in terms of shorter delays. The average delay for a ship from Asia to the East Coast, dropped from 11 days down to 8.5 days. 

February 26th: Delay and Cost Increase in Cargo Shipments Due to Red Sea Attacks 

  • The attacks on merchant vessels in the Red Sea have led to delays in cargo shipments and increased shipping costs. However, the impact on inflation is expected to be muted due to soft demand and ample availability of ships. 
  • According to Alan Murphy, CEO of Sea-Intelligence Maritime Intelligence, “The present situation therefore does not present any reason to believe we will see a resumption of the Suez-routing anytime soon from the global carriers…Consequently, shippers should clearly plan for round- Africa as the new normal.” (JOC)  

February 21st: Backlog at Oakland Terminal to be cleared in 2 weeks with added shift 

  • As reported by the JOC: A backlog of nine vessels at Oakland International Container Terminal (OICT), should be cleared within two weeks as OICT has temporarily added a third shift each day to reduce congestion at the facility. (JOC)

February 5th: Shipping Costs Surge as Container Spot Rates Reach New Heights

  • Elevated container spot rates that have been increasing dramatically since the start of the new year.
  • As of January 29th, spot rates from Asia to the West Coast are $4,421 or up 115% over this same time last year.
  • East Coast spot rates from Asia are $6,165 or up 90.9% year over year.

January 29th: Shippers Advised To Plan Wisely to Tackle Rate Hike Challenges

  • Importers, especially those constrained by contractual restrictions on surcharges, may face challenges in absorbing additional rate hikes.
  • To navigate these issues, shippers are advised to understand their supply chain needs, utilize data for inventory planning, consider splitting shipments, collaborate with trusted logistics partners, explore different shipping modes and ports, diversify container types, and budget for potential delays during this critical period.

January 23th: Import Volume from Asia to US Set to Decline During Lunar New Year Period

  • We spoke above about some of the impacts of Lunar New Year on imports from Asia to the US.
  • Looking back to 2018 and the subsequent years, every year, less the COVID era, accounted for a 19-38% drop in import volume (TEUs) from Asia to the US from January to March.
  • This year’s decline in import volume is expected to be more in-line with 2018-2019 levels.

January 15th: Descartes Reveals 2023 Imports Surpass Pre-COVID Years, With a 4.6% Increase Over 2019

  • According to Descartes, 2023’s full-year imports came in at 24,959,664 TEUs. Compared to pre-COVID years, 2023 topped 2019 by 4.6%, 2018 by 3.8% and 2017 by 11.5%.
  • Imports ended the year strong on the Gulf and East Coasts with jumps of 29.5% (Houston), 5.1% (NY/NJ), 6.3% (Charleston), 2.6% (Savannah), and 11.3% (Baltimore) from November into December.
  • Numbers on the West Coast dropped month over month with Long Beach down 8.5%, LA down 5.3% and Tacoma down 26%.

January 8th: Freight Surge Expected at LA-Long Beach Ports Amidst Panama Canal and Suez Canal Threats

  • Increased freight is expected at Los Angeles-Long Beach Ports given drought headwinds at the Panama Canal. This being paired with the Suez Canal/Red Sea shipping threats are sure to raise shipping prices from Asia to North America. The Shanghai – LA spot rate has already jumped 30% since December 21st. (FreightWaves)
  • There are looming threats of a potential strike on the East Coast from the International Longshoremen’s Association (ILA). The ILA is seeking higher wages and pushing back against automation. The current contract is set to expire in October 2024.

December 18th: US Retailer Express Optimism for Import Forecasts for Early 2024 After Strong Holiday Sales

  • In November, the West Coast’s market share of imports from Asia increased by five percentage points, reaching 58.6%. Ongoing challenges in the Panama and Suez canals, including missile attacks, may further drive cargo to the West Coast. (JOC)
  • The full impact of canal disruptions is yet to be experienced, and diversions to the West Coast may become more discernible in January.
  • US retailers are optimistic about early 2024, increasing import forecasts due to strong end-of-year holiday sales. December imports are expected to jump 11.5% over December 2022, with January imports projected to climb 6.6% year over year. (JOC)

December 11th: Port of Los Angeles Aims to Enhance Efficiency with New 80-Acre Near-Dock Storage and Maintenance Site

  • The Port of Los Angeles intends to improve fluidity at its six container terminals by developing an 80-acre near-dock site that will be used for container storage and chassis maintenance and repair. (JOC)

December 4th: Panama Canal Restrictions Prompt THE Alliance to Seek Alternative Routes via Suez Canal

  • The Alliance’s ocean carriers have decided to suspend Panama Canal transits until February for three of their weekly container services between the US and Asia. In response to the ongoing drought in the region, leading to increased delays for vessels, the Panama Canal Authority has imposed significant restrictions on ship transits. These restrictions are expected to become even more stringent in the upcoming months. Consequently, the carriers have opted for longer sea routes through the Suez Canal to navigate these challenges. (JOC)

November 27th: Efficient Terminal Operations as Container Dwell Time Reaches Yearly Low in Ports of NY/NJ

  • Container Dwell Time, the time a container sits at the port after being discharged from the vessel, at the Ports of NY/NJ is at one of the lowest levels of the year at 2.17 days, indicating that terminal operations, on average, are flowing relatively smoothly. 

November 20th: US Retailers Anticipate Record Holiday Sales Despite Lower Import Volumes Throughout the Year

  • In October, US imports from Asia reached the highest point in 2023, with containerized imports increasing by 5.9% from September and 12.4% from October 2022, as retailers rushed to stock up ahead of the holiday sales season. (JOC)
  • Despite the October surge, year-to-date imports were down by 16.6% YoY, attributed to softer import volumes throughout the year due to factors such as inflation and high-interest rates.
  • However, US retailers are still anticipating record holiday sales this year of $966.6bn, up 3% to 4% over last year, and the Global Port Tracker forecasts continued year-over-year growth in imports at least through March 2024.

November 13th: Port of Houston Experiences Growing Congestion

  • Over the past 2 weeks, ocean container dwell time at the Port of Houston increased by a full day, to 4 days wait time, for picking up a container once discharged, indicating increased congestion.

October 30th: NACPC Launches MPOC to Double Chassis Pool and Boost Interoperability in Memphis

  • The North American Chassis Pool Cooperative (NACPC) has launched the Memphis Pool of Choice (MPOC) in response to frustration among truckers and cargo owners with restrictions on chassis used for hauling ocean containers. The goal is to double the pool’s current 2,500 units within a year, with NACPC and Milestone Equipment Holdings as primary chassis suppliers. (JOC)
  • MPOC aims to promote interoperability, allowing any chassis to be used with any container. NACPC is competing with Consolidated Chassis Management (CCM) in the Memphis market, claiming to offer a better chassis pool, while CCM believes NACPC’s approach may further fragment interoperability and hinder efficiency. (JOC)

October 23rd: Trans-Pacific Carriers Turn to Lázaro Cárdenas Port to Overcome Draft Limitations at Panama Canal

  • Trans-Pacific ocean carriers are increasingly using Mexico’s Port of Lázaro Cárdenas as an alternative route to reach the US Midwest, bypassing the draft limitations of the Panama Canal. This shift is driven by the desire to tap into the port’s strategic advantages and growing intermodal opportunities. (JOC)
  • Although Lázaro Cárdenas is the second-busiest container port in Mexico, it was not a regular stop for trans-Pacific services. However, this is changing rapidly. Carriers like Zim Integrated Shipping are now adding it as a direct call, creating a gateway for US-bound cargo with an emphasis on selected US inland destinations.

October 16th: West Coast Ports Report Surge in Market Share for US-bound Freight from Asia

  • US Imports from Asia show a slight YoY gain in September at +1.4%, up from August’s -14.7% YoY. A significant portion of this freight has landed on the West Coast. Port and terminal sources are confident the uptick in West Coast market share will continue. (JOC)
  • Gene Seroka, executive director of the Port of Los Angeles, said retailers in September began to return an increasing share of their discretionary cargo to the West Coast following the ILWU contract ratification. Key items to watch for shippers looking to move freight back to the West Coast are the Panama Canal water levels and the East Coast ILA contract negotiations ahead in 2024. (The Business Journals)

October 9th: Port of Savannah Battling Backlog of Vessels Amid Recent Closures

  • The Port of Savannah is working its way through a backlog of 16 vessels that have been stacking up in recent weeks amid a string of closures. While shippers say the situation – which could linger through mid-November – is less than ideal, many noted there has been no significant impact yet. (JOC)
  • Savannah’s Container Discharge Dwell time is currently 2.37 days, which is in line with where it has been through the summer; it’s also the shortest of the major ports across the country.

October 2nd: PN2 Service Absorbs Calls as The Alliance Cancels PN3 Service Following Market Turmoil

  • The Alliance, a group of major ocean carriers, has suspended its Pacific Northwest 3 (PN3) service due to the current market situation, adding to a series of canceled sailings and service changes aimed at balancing ship supply with import demand. The Pacific Northwest 2 (PN2) service will absorb calls to the Asian ports previously served by PN3. (The Loadstar)
  • The trans-Pacific trade route is experiencing significant service cuts and blank sailings as Asian imports to the US decline. Drewry’s canceled sailings tracker indicates that the trans-Pacific will account for the majority of canceled sailings between mid-September and the end of October, potentially leading to schedule disruptions and delays for shippers and beneficial cargo owners.

September 26th: Container Shipping Industry Takes Bold Steps Towards Decarbonization with Green Corridor Announcement

  • A green shipping corridor was announced between the ports of LA, Long Beach, and Shanghai to combat the global climate crisis. These are accelerated decarbonization efforts steps in reducing the emissions of container ships, but that comes at a cost which would be pushed to down to the customer. Some analysts are expecting costs to be in the trillions over the next 2-3 decades.
  • Zim, one of the worlds largest shipping lines, is looking to take advantage of the Port of Savannah’s expanded refrigerated cargo infrastructure by creating a direct route to the West Coast of South America.

September 18: On-Time Performance for Trans-Pacific Vessels Set to Plummet as a Result of Mass Cancellations

  • Trans-Pacific lines are responding to the weak import volumes by blanking 200k+ TEUs of capacity in September and have announced an additional 370k+ TEUs in blanks for October, about 14% of trans-Pacific capacity, according to Sea-Intelligence.,
  • To prevent freight rates from collapsing, trans-Pacific carriers will reduce effective capacity through a “massive number of blank sailings,” Alan Murphy, CEO of Sea-Intelligence, said. Those canceled sailings will drag down vessel on-time performance, which is already at the dismal levels ~40% to the West Coast and ~39% to the East Coast.
  • Given the above, and less any major disruption or enormous surge in demand, shippers should expect low container rates and low service levels heading into 2024.

Recent Posts

dry van shipping
STAY INFORMED AND UP TO DATE WITH THE LATEST DRAYAGE NEWS
WHAT IS BILL OF LADING?
Q1 2024 TRANSPORTATION OUTLOOK

WHAT IS BILL OF LADING?

Back to Resources

Feb 14, 2024

What is a Bill of Lading?

Blog

In the world of shipping and logistics, the Bill of Lading is an integral legal document that facilitates the transportation of goods from one place to another. In this guide, we provide comprehensive insights into the purpose and significance of this document.

Understanding the Bill of Lading

A Bill of Lading is a legal document serving as a receipt for goods being shipped. It is issued by the carrier (transportation company) to the shipper (supplier or owner of the goods) and functions as a passport for the cargo. It confirms the safe transportation of goods from the point of origin to the destination.

The Bill of Lading represents transparency, accountability, and peace of mind in the shipping industry, serving as a vital document for shippers to navigate the complexities of logistics.

Key Components of a Bill of Lading

The Bill of Lading consists of several critical components, including but not limited to:

  1. Shipper and Consignee Details: Identification information of the supplier and recipient of the cargo.
  2. Description of Goods: A comprehensive account of the type, quantity and sometimes the condition of the goods being transported.
  3. Special Instructions and Requirements: Any specific handling or delivery instructions that must be followed to ensure the safe and timely arrival of the goods.
  4. Names and addresses of both the shipper and receiver (consignee) and both should be easily readable in the document.
  5. Purchase orders or reference numbers that are required for pickup upon delivery.
  6. Special instructions for the carrier that may be needed to ensure the integrity of the package.
  7. Date of pickup that the consignee can expect the goods to arrive.
  8. Description of items like the quantity of goods, dimensions and weight, and information about the material.
  9. Packaging type i.e. cartons, crates, pallets or drums used during shipping.
  10. NMFC code that corresponds to the freight class of the shipment, which is based on density, ease of handling, liability, and value.
  11. Dept. of Transportation hazardous material destination whereby hazardous items must be disclosed and which handling measures are necessary.
  12. BOL number given by the issuer of the BOL.

The above details provide shippers with comprehensive insights into the specifics of the cargo, enabling them to make better plans to ensure successful delivery.

The Bill of Lading and Proof of Delivery (POD)

While a Bill of Lading confirms the transportation of goods, a Proof of Delivery (POD) certificate serves as tangible evidence that the shipment has arrived at its destination. Although both documents are related, they serve different purposes. A POD certificate details the items delivered, providing evidence that the goods were indeed delivered to the designated recipient.

Consequences of Not Having a Bill of Lading

When a Bill of Lading is missing, it can lead to significant delays, frustrations and unnecessary headaches for the shipper. The release of the cargo can be put on hold without the original Bill of Lading, disrupting the supply chain and causing avoidable stress.

To ensure a smooth supply chain, shippers must have a proper Bill of Lading on hand or obtain confirmation from the carrier if an alternative solution is available.

Best Practices and Tips for Using a Bill of Lading

To make the most of the Bill of Lading, shippers should follow some best practices, including:

  1. Ensure Accuracy: Ensure all the information on the Bill of Lading is correct and accurate to match the actual shipment.
  2. Retain a Copy: Retain a copy of the Bill of Lading for records purposes to serve as a reference in case of disputes or challenges.
  3. Communicate Clearly: Provide clear instructions to the carrier regarding special handling or delivery requirements to improve the chances of a successful voyage.

Conclusion

Understanding the Bill of Lading is vital in the logistics and shipping industry. The document represents transparency, accountability and peace of mind for shippers during the process. With proper adherence to best practices, using a Bill of Lading can significantly reduce stress, prevent supply chain disruptions and ensure the successful transportation of goods from point A to point B.

Recent Posts

dry van shipping
STAY INFORMED AND UP TO DATE WITH THE LATEST DRAYAGE NEWS
WHAT IS BILL OF LADING?
Q1 2024 TRANSPORTATION OUTLOOK

Q1 2024 TRANSPORTATION OUTLOOK

Back to Resources

Feb 12, 2024

Q1 2024 Transportation Outlook

News

Change is coming in the transportation industry. Rising spot rates bring increased volatility. Are you ready to navigate the coming year with a sound strategy? Our Q1 2024 Transportation Outlook informs you about key events that will influence the timing and magnitude of the volatility.

We will cover:

  • How are macro-economic indicators such as imports, Personal Consumption Expenditures (PCE), the inventory-to-sales ratio and industrial production influencing freight demand?
  • How much capacity remains from the pandemic and when will there be a balance of supply and demand?
  • What is the current state of Truckload Spot and Contract Rates and where are we predicting rates to go over 2024?
  • What can be expected for other transportation modes like Drayage, Less-Than-Truckload (LTL) and Parcel?

We know not everyone has time to read the entire outlook, so if you’re one of those who just want to get pointed to exactly what you’re looking for click below to jump to a certain section:


In The News and What to Watch

Inflation & Interest Rates

  • The US Federal Reserve’s preferred measure of inflation stayed at +2.6% year-over-year (YoY) and has been trending lower.
  • The Core Price Index (CPI) rose by 0.2% in December and was +2.9% YoY. This is the lowest rate of inflation since February 2021.
  • Prices for durable goods dropped by 2.3% YoY. Disinflation has been primarily driven by falling prices in furnishing, durable household equipment, recreational goods and vehicles.
  • Inflation for services also fell below 4% YoY for the first time since June 2021.
  • Interest rates remain high and make financing large purchases difficult for many. Rates will decline somewhat in the coming year but will likely remain elevated.
  • We also expect the YoY growth in housing prices to continue decreasing over the coming months.

The Fed’s Latest Update

  • The Federal Reserve maintained the target range for the federal funds rate at 5.25% to 5.5% after the February meeting.
  • While ruling out a rate cut in March, the Fed emphasized the need for greater confidence in sustained inflation movement before considering reductions.
  • The FOMC’s statement hinted at future policy adjustments, with a focus on assessing incoming data and balancing economic growth with inflation control.
  • Economists anticipate a “soft-landing” scenario, where the Fed can curb inflation without jeopardizing economic growth.
  • The central bank’s continued attention to economic indicators reflects a cautious approach, maintaining its highest targeted range for the federal funds rate in almost 23 years.

Consumer Confidence and Purchasing Power

  • One of the leading indicators of consumer spending is consumer confidence, or how the consumer feels about the current and future economic situation.
  • January’s US Consumer Confidence report indicated that the consumer is the most confident it has been since December 2021, with a 6.8-point increase from December 2023. This positive reading marked the third straight monthly increase.
  • Real Disposable Personal Income rose by 0.1% in December and was 3.7% higher YoY indicating an increase in purchasing power.
  • Savings that went up in November fell back to 3.7% in December.

Student Loan Repayments

  • In October 2023, Congress ended the student loan repayment pause that has been in effect since March 2020, which impacts roughly 25% of US consumers.
  • There was concern that the resumption of student loan payments would curtail consumer spending. However, contrary to many analysts’ expectations, the consumer remained resilient.
  • In a January 26 survey conducted by the University of Michigan, 60% of respondents who currently hold student loans claimed they would not spend less because of the repayment resumption.
  • Of all consumers, including those who do not have student loans, only 8% of the population plans to spend less.

Lunar New Year, Suez and Panama Canal Effects on Imports

  • Lunar New Year will run from February 10 to February 24. Lunar New Year’s effect on shipping includes heightened shipment volumes and increased rates leading up to the holiday, as well as extended wait times for containers during the holiday.
  • Currently, in the Asia-US trade sector, ocean carriers are rushing to implement general rate increases (GRIs) before the Lunar New Year, proposing hikes ranging from $600 to $1,000 per forty-foot equivalent unit (FEU), which will be in effect from February 1 to February 15.
  • Carriers also implemented GRIs earlier this month with the East Coast spot rate increasing from $4,050/FEU to $6,166/FEU and the West Coast spot rate increasing from $2,800/FEU to $4,100/FEU, according to Platts/JOC.
  • Carriers are also applying various surcharges like peak-season surcharges, war-risk surcharges and Panama Canal surcharges. The effectiveness and stickiness of these increases is uncertain.

Parcel: Money Back Guarantees, Demand Surcharges and GRIs

  • UPS announced in their Q4 2023 earnings call in January, that their US Domestic average daily volume declined by 7.4% compared to the prior year.
  • Air to Ground shifts: UPS’s total air daily volume was down 15% compared with the prior year as shippers shift volume out of the air onto the ground. FedEx announced its Express unit will lose half of its business with the United States Postal Service (USPS) when their existing contract expires. Both announcements follow the trend of shippers moving more volume from air to ground.
  • Demand Surcharges: Both FedEx and UPS announced in January they will implement demand surcharges and fees ranging from $2.00 up to $40.00 per package.
  • General Rate Increases: USPS announced price changes in January, with USPS Ground Advantage increasing by 5.4%, Priority Mail increasing by 5.7% and Priority Mail Express increasing by 5.9%.
  • Money Back Guarantees: UPS and FedEx both announced they would reinstate money-back guarantees on 2 Day Air AM service.

Core Macro-Economic Metrics

The freight industry is slowly returning to pre-Covid levels after years of turmoil brought on by massive macroeconomic developments. This stabilization is attributed to the resilient consumer, a measured recovery in manufacturing, an ongoing inventory depletion triggering potential restocking and positive trends in imports, particularly in containerized shipments.

While the next cycle is upon us and we will eventually see a shift in pricing power away from shippers, these factors cautiously suggest the freight industry is on track to return to its normal cycles, instead of the massive peak and valley experienced the past 3 years.

Source: Bureau of Economic Analysis (BEA), Federal Reserve, Census Bureau, Bureau of Labor Statistics

More Info:

Real Personal Consumption Expenditure (PCE)

  • PCE increased by +2.6% YoY in Q4 driven by both durable and non-durable goods indicating strong consumer sentiment.
  • Consumption of durable goods increased by 6.1% YoY while non-durable goods were up by 2.2% YoY.
  • Unlike the previous quarters where the spending was driven by gasoline and drugs, spending in Q4 was mostly driven by freight-generating sectors.

Industrial Production (IP)

  • IP for Q4 finally settled at -0.2% YoY which marks the first deflationary quarterly readings since Q1 2021.
  • Manufacturing Output, on the other hand, improved from -0.8% YoY last quarter to -0.5% YoY in Q4 coming out of automotive strikes.
  • The US manufacturing sector continued to contract, as per ISM PMI report, but at a slightly slower rate in December as compared to November.
    • The PMI for December came out 47.4% against 46.7% in November 2023.
    • Companies are still managing outputs appropriately as order softness continues.

Inventory to Sales Ratio

  • Inventory to Sales Ratio for November came to 1.37, which is the same as October.
  • On a YoY basis, the ratio went down by 0.6% which indicates that the inventories continue to deplete.
  • Sales went up by 1.0% YoY largely contributed by the retail sector in November.
    • At the same time, the retail inventories continue to stay high at +5.3% while wholesale inventories dropped by -3% YoY.
    • If the inventories continue to deplete triggering the restocking and the consumer base stays resilient, we should see increased freight activities soon.

Imports

  • Imports went up 0.5% in Q4 and were at -0.2% YoY against -1.7% in Q3.
    • Container imports growth turned positive after five quarters of decline and was at +6.6% YoY in Q4.
    • Significant increase in TEUs volume across the West Coast after eight quarters of volume decline. Port of Long Beach/Port of LA saw more than 25% YoY growth in TEU volume.

Freight Demand Metrics

Freight demand is currently at the lowest level in the past 13 quarters. However, it’s not the lowest it ever has been such as during periods during or following recessions. This is partially due to resilient consumers continuing to spend on goods even with the headwind of inflation.

Source: Cass Freight Index

Chart-2-Cass-Freight-Index-scaled

More info:

  • Freight volumes represented by CASS Freight Index show the continued decline in demand for the fifth consecutive quarter.
  • With December 2023 readings, Q4 2023 reported at -8.5% YoY, which is also 0.6% lower than Q3 2023.
  • The index for December 2023 and Q4 2023 is at its lowest in the past 13 quarters, indicating freight demand is at the lowest point in over three years.

Freight Supply Metrics

For five consecutive quarters, capacity reduction continues in this oversupplied capacity market. The last quarter of 2023 had the lowest-ever recorded net capacity addition of -7,204 revocations or carriers leaving the market.

For context as to just how much capacity entered the market from 2020 through 2021, when inflationary rates persisted for six quarters, an average of 25,269 new trucking companies were granted operating authority each quarter, surpassing the pre-pandemic average by 2.5 times.

Conversely, in the past six quarters with declining shipping costs, approximately 21,749 trucking companies had revoked their operating authority every three months, more than double the pre-pandemic average.

Comparing the above rates (entry vs. exit in their respective cycles), there is a strong indication that the industry is approaching the necessary supply correction to re-enter an inflationary market. Additionally, Class 8 Truck Orders and Net Orders reported negative figures in Q4 2023 on a YoY basis for the first time since the first quarter of 2022, highlighting a decline in truck order lead time and suggesting that capacity is exiting the market faster than it is entering.

Source: Federal Motor Carrier Safety Administration (FMCSA)

Chart-3-New-Authorities-Revocations-scaled

More Info:

  • Carrier revocations or exits continue to outpace new grants of authority for the fifth consecutive quarter, confirming the continued exit of capacity in an oversupplied market.
  • During the peak of the last freight cycle, in which we experienced 6 quarters of inflationary rates, 25,269 new trucking companies were granted operating authority each quarter. This is 2.5 times the quarterly average pre-pandemic.
  • On the flip side, during the last six quarters when shipping costs have been dropping, around 21,749 trucking companies have had their permission revoked every three months. Again, this is more than double the pre-pandemic average.
  • Since all the revocations are not reported to FMCSA, taking these numbers into account, we can deduce that we are nearing the supply correction needed to re-renter the inflationary market.
  • Retail Sales for Class 8 TR Orders went negative (on a YoY basis) in Q4 2023 for the first time since Q1 2022.
    • Net Orders also reported a negative 4.3% YoY in Q4.
    • Declining truck order lead time is a strong indicator of capacity exiting the market faster than capacity is willing to enter.

The good news is we’ve passed the bottom and are moving ahead into the next cycle. While analysis is important, if all you do is analyze data endlessly or wait for all the information, you’ll miss your chance to act. We learned from past cycles; where we’ve made mistakes and where we were right on the money. Reflecting on 2017 to 2018, what actions did you take? After that freight cycle, we saw routing guides fall apart, rate volatility, and rising costs for shippers. No two cycles are the same; however, we believe this next cycle will have similarities to ’17 and ’18. Keep that in mind as you are planning for this year and for the long run.”

Drew Herpich

Chief Commercial Officer at TI & NTG

TL Spot & Contract Curve (% YoY Change by Quarter)

What is the Beon Band?

The Beon™ Band rolls up YoY quarterly averages of spot and contract freight data to create projections for future freight cycles. This band is the outcome of the relationship between freight supply and freight demand, with freight demand being driven by the macroeconomic demand indicators. When we overlay the Beon™ Band with the demand curve in a single chart, we can see demand’s influence on the to-the-truck costs.

Source: Beon Band – Transportation Insight Holdings

Chart-4-TL-Spot-Contract-Beon-Band-scaled

When the Beon Band is overlayed with the macroeconomic indicators of freight demand, we can begin to understand how some of these factors are impacting freight rates and thereby forecast where we see the market going over the next couple of quarters.

Chart-5-beon-band-vs-economic-demand-scaled

Rate Forecast

Spot: Rates are climbing upward toward YoY inflationary. Capacity continues to exit the oversupplied freight market, which has seen declining demand over the past six quarters. We expect the market to eventually turn inflationary in Q1 2024, with a projected YoY increase of +2.5%. This suggests that in Q1 2024 truckload spot rates will surpass Q1 2023 truckload spot rates. Consumer demand is expected to rebound in the second half of the year. Moving into Q2 2024, we anticipate a faster YoY increase in inflationary rates averaging 10% to 15%.

Contract: After bottoming out in Q2 2023, with rates 13.9% lower than Q2 2022, rates have been gradually rising. The fourth quarter of 2023 reported a decrease of 7.3% YoY. We anticipate contract rates to gradually increase to -5.0% YoY in Q1 and fall within the range of –2.5% to 0% in Q2. Our projection indicates that the curve will turn inflationary on a YoY basis in Q3 2024. It is important to note that the contract curve typically lags the spot curve by approximately two quarters.

Carrier revocations of operating authority have outpaced new grants for five consecutive quarters, resulting in the continued reduction in capacity. This indicates that the market is ready to enter an inflationary leg of the freight cycle in late Q1 and early Q2. Shippers should review their transportation and procurement strategy, if not already, to ensure they have the right balance between cost and service to minimize routing guide disruption when capacity gets tighter and spot rates become more attractive than the contractual rates for carriers.”

Amit Prasad

Chief Data Science Officer at TI & NTG

Port to Porch Market Forecast

Drayage

Navigating through the remainder of Q1 2024 and into Q2, the drayage transportation landscape is poised for notable shifts and challenges. Notably, from February 10 to 16, Chinese ports will be closed in observance of the Lunar New Year. Consequently, between February 13 and March 22, a significant reduction in US import volumes from Asia is anticipated, with a projected return to relative normalcy in the last week of March. We say relative normalcy as it is crucial to note that other global events are impacting ocean traffic.

The water level limitations in the Panama Canal pose constraints on the passage of large vessels connecting Gulf and East Coast ports to Asia. Simultaneously, challenges are exacerbated by issues in the Suez Canal. Furthermore, the impending contract negotiation of the International Longshoreman Association (ILA) in Q3 raises concerns about potential labor disruptions and strikes in Gulf and East Coast ports, compelling shippers to seek more stable alternatives. These dynamics suggest a shift in import volumes back to the West Coast, positioning it to reemerge as the majority shareholder of US imports in 2024.

In summary, the first half of 2024 is anticipated as a strategic period for shippers to align their strategies and transition their routes to the West Coast where possible, paving the way for a pivotal Q3/Q4. Indications strongly point toward a significant rebound in West Coast ports, particularly in Los Angeles and Long Beach and perhaps even the Pacific Northwest, presenting an opportunity that necessitates preparedness and strategic capitalization.

Less-Than-Truckload

Looking back at Q4 2023 data, LTL tonnage and shipment count continued to decline in Q4, but the rate of decline slowed down. Per American Trucking Associations (ATA), the LTL tonnage index for Q4 was 7.4% lower on a YoY basis against 9.8% in Q3. Revenue per shipment went up in Q4 by 1.4% but is still 1.1% on a YoY basis. There is a strong correlation between the Purchasing Managers’ Index (PMI) reported by ISM and LTL tonnages reported by ATA which also suggests continued industry volume declination but the rate of decline slowing down

Chart-6-ISM-PMI-vs-YoY-Change-in-LTL-Tonnage-by-Quarter-scaled

Looking into 2024, the first quarter is typically a softer market for LTL, which is proving to be true this year. Despite this, Yellow’s exit and further consolidation in the marketplace is counteracting the downward pressure on rates. As a result, the LTL market is currently balanced. While LTL carriers have capacity, they are targeting specific areas where there is a need within their networks rather than devaluing their services.

Transactional pricing is fully embraced by LTL carriers today but is much more strategic than in the past. When combined with API technology, carriers can precisely target the lanes where they need freight and adjust as often as needed.

LTL carriers are adopting a similar approach with contractual pricing. While incumbent carriers are still seeking increases, they are also exploring new business opportunities where they are not hauling today. As a result, customers can expect to see a mix of rate adjustments where some lanes may increase, while other lanes may decrease in their contractual rates.

Parcel

Despite the availability of capacity and carriers trying to regain volume, the actions and rate increases implemented by carriers do not align with that current state. It is noteworthy that even with volume significantly down, UPS and FedEx are still charging demand surcharges.

One of the most notable changes with national carriers surrounds the reinstatement of some of their money-back guarantees on certain service levels. The second most noteworthy change is around UPS’s Q4 2023 earnings call.

Based on this call, UPS mentions that they will shift focus back to SMB shippers. For context from 2020 to 2021, more than half of UPS’s shipper base was SMB shippers. UPS CEO Carol Tome mentioned at the end of 2023, around 28% of their shipper base was SMB shippers, and that would be a critical focus for 2024. With volume significantly down for not only UPS, but also FedEx and other regional carriers, parcel carriers are eager to regain volume back into their networks.

Based on our Parcel team’s feedback and some recent contract negotiations we have seen from customers, here is what you need to know and how we recommend you plan for 2024.

For SMB parcel shippers, now is the time to try and renegotiate any small parcel contract you have. Typically, SMB shippers are aggregating their spending with one carrier. But it may be worthwhile to look at other carriers out there, especially given that UPS has blatantly announced the focus on the SMB parcel shipper segment.

For large and enterprise parcel shippers, while your volume is down and while carriers (even regionals) are getting competitive with pricing, plan for future state and diversify. Be planning for the next three to five years. If you can lock in long-term pricing now and determine new carriers you can introduce, and how you can better equip your network and your infrastructure to support multiple carriers, then once demand does catch up – your parcel strategy will be more resilient.


Leadership Talking Points

We’ve now addressed key events to watch this quarter and this year, the current state of macro-economic demand indicators and freight supply indicators, our forecasted truckload spot and contract rates, as well as our port-to-porch forecast. Armed with that information, here’s how you can answer some of your executive team’s questions about what to expect in 2024:

  • What is the current state of freight? The bottom of the market is behind us and we’re on the way into inflationary territory. As a result, there will be volatility in the form of rising spot rates and eventually rising contractual rates. In the last year and a half, rates were relatively consistent in terms of the spread between contract and spot. This year we will experience the shift when spot rates become more expensive than contract. This cross-over will bring volatility as carriers tend to gravitate toward freight that earns them more money per load.
  • What does this mean for shippers? Slowly but surely, like any prior freight cycle, enough capacity will exit the industry for there to be a balance between supply and demand. As enough capacity attrition occurs, carriers begin to push back on shippers’ rates and we begin to see rate renegotiations. Many carriers will also likely renege on contractual freight and chase higher rates on the spot market, which will break apart routing guides and make shipping freight more costly.
  • Transportation costs are still low, and we have no trouble finding trucks to move our freight. The freight market is like a faucet, not a light switch. Market transitions don’t happen instantly, but rather slowly, like the faucet slowly turning on. This is currently happening with stronger demand indicators and reduced capacity, signaling the shift into the next cycle. As carriers continue to exit the market, freight demand will rise, leading to significant changes. It’s important to note that during market changes, it’s not a sudden switch, but a gradual opening of the faucet.
  • Okay, so what do I do now? Keeping in line with the suggestions we put out in the Q4 Outlook, you can take the following measures to protect yourself from the volatility that is to come in 2024.
    • Ensure partner stability. Routinely assess partners’ financial and operational soundness to safeguard your supply chain – don’t just look at on-time performance and cost.
    • Evaluate shipping lanes. Assess high-volume and irregular lanes for partner reliability, seek contract opportunities – especially with blind spot lanes in your network – and determine a network of asset and non-asset carriers. While consolidation is important, it’s crucial to strike a balance that avoids vulnerability and preserves flexibility.
    • Optimize your network. Look at supplier and customer networks and determine ways to optimize. Implement quick wins based on the findings and incorporate the rest into your long-term strategy.
    • Renegotiate parcel contracts. If you ship parcel, even if you aren’t in a renewal period, it may be a good time to reach out to other carriers. Some carriers are getting very competitive with rates even for SMB shippers, so look at regionals, nationals and the post office now.

Recent Posts

dry van shipping
STAY INFORMED AND UP TO DATE WITH THE LATEST DRAYAGE NEWS
WHAT IS BILL OF LADING?
Q1 2024 TRANSPORTATION OUTLOOK

REMOVABLE GOOSENECK TRAILERS: A COMPREHENSIVE GUIDE

Back to Resources

Feb 02, 2024

Removable Gooseneck Trailers: A Comprehensive Guide

Blog

Are you considering a gooseneck trailer for an upcoming move? Do you have tall and oversized equipment that needs transporting? If so, you may want to consider a removable gooseneck (RGN) trailer. In this comprehensive guide, we’ll explore the advantages and versatility of RGN trailers, and provide an in-depth look at their components, uses, and practical tips for safe and efficient transportation.

Advantages of RGN Trailers

RGN trailers offer enhanced clearance space for tall machinery transport, allowing hauling of oversized equipment with ease. In addition to their ability to transport a diverse range of equipment, RGN trailers also provide flexibility in loading and unloading. With the detachable gooseneck component, machinery can easily be driven onto the trailer. This flexibility and versatility allow commercial industries such as mining, agriculture, and construction to perform their transport tasks with ease.

Components of RGN Trailers

To understand how an RGN trailer works, it’s crucial to understand its components. The gooseneck connects the trailer to the truck cab, providing a secure hitch for the transport of heavy machinery. The drop deck is responsible for creating a well that allows for taller equipment, in adherence to height regulation laws governing heavy equipment transportation. The step deck over the rear axles provides additional space for machinery to rest when necessary. Maximum clearance heights for step decks are typically 120 inches or 10 feet. A double drop deck trailer, also called a lowboy, low bed or float trailer, extends to 136 inches or 11 feet and 3 inches. The standard bridge clearance on most interstates is over 13’6″. The Federal Highway Administration (FHWA) sets bridge clearances between 14 and 16 feet, but special design exceptions may allow for a lower bridge.

Using RGN Trailers for Heavy Equipment Transport

The best way to transport heavy machinery is through RGN trailers. With their unique gooseneck design, RGN trailers offer efficiency, practicality, and ease in the transportation process. You can haul machinery such as mining shovels, wheel excavators, and drill equipment with ease. However, it’s crucial to follow guidelines and safety regulations when operating these trailers. Loading heavy machinery should be done properly, and all machinery should be secured to avoid accidents.

Types of RGN Trailers

RGN trailers come in different types, each offering diverse features and application uses. Standard RGN trailers have two to four support axles, but additional axles can be integrated for heavy loads. An extended RGN trailer provides more space and storage for machinery transportation.

Best Practices

To get the most out of RGN trailers, follow the best practices to ensure safe and efficient transportation. Proper safety precautions are necessary while lenient transportation guidelines may cause more harm than good. Preemptive checks of the trailer before use ensures any mechanical issues are resolved before transporting heavy equipment. Additionally, securing heavy machinery with accurate ties should always be a top priority.

Conclusion

In conclusion, removable gooseneck trailers offer versatility, efficiency and transport safety when it comes to hauling heavy machinery. RGN trailers are the go-to transportation trailers for tall equipment with a need for storage space, equipment that is not roadworthy and off-road trucks. So, whether you’re transporting mining equipment, off-road trucks, or agricultural machinery, consider investing in an RGN trailer. With proper knowledge of their advantages and components, transportation tasks can now be performed with ease.

Need help with an upcoming flatbed move? Click here.

Join our carrier network.

Recent Posts

dry van shipping
STAY INFORMED AND UP TO DATE WITH THE LATEST DRAYAGE NEWS
WHAT IS BILL OF LADING?
Q1 2024 TRANSPORTATION OUTLOOK

UNDERSTANDING DEMURRAGE AND DETENTION CHARGES

Back to Resources

Jan 22, 2024

Understanding Demurrage and Detention Charges

Blog

In the fast-paced world of container shipping, demurrage and detention charges can quickly add up. It is important for shippers to be aware of these charges, and how they can impact overall transportation expenses. In this blog, we cover the essential aspects of demurrage and detention charges and explore their impact on the maritime supply chain. Get ready to unlock a deeper understanding of these charges and how they can affect your shipping operations.

1. What are Demurrage and Detention Charges?

Demurrage refers to fees imposed by shipping lines when containers are held at the port beyond the allocated free period. For containers imported into the U.S., they are typically allotted a number of “free days” at the port. After the Last Free Day (LFD) if the container remains at the port, then demurrage fees will begin. It essentially is a storage fee for the container at the port. Prior to leaving the port, the container demurrage fees typically must be paid.

After the container is pulled from the port, containers continue to be on the clock. Once product is unloaded from a container (unless you own the container), the empty shipping container needs to be returned back to the port. All empty shipping containers must be returned to ports.  Detention relates to charges incurred when containers are retained by shippers or consignees outside the port beyond the allowed time limit. For shippers, this becomes critical to make sure containers are unloaded quickly and returned. For shippers with warehouses or unloading locations far from a port, sometimes these containers will be transloaded or cross-docked to a different shipment, so the empty container does not have to travel as far. Understanding the difference between these charges is critical to understanding your import fees, but also where you can mitigate these charges.

2. The Purpose of Demurrage and Detention Charges

Steamship lines and Ports employ demurrage and detention charges to ensure efficient container turnaround and encourage timely return or pickup of containers. Over the years with high import volume and port congestion, these charges have become even more critical (and challenging to navigate). These charges act as incentives to maintain a smooth flow of containers, reducing congestion and promoting the availability of equipment.

3. Who is Responsible for Paying Demurrage and Detention Fees?

For U.S. imports, the responsibility for paying demurrage fees varies. It typically depends on the shipment’s incoterm, which sets the terms of sale and outlines payment obligations for buyers and sellers at different stages of the shipment’s journey. Demurrage fees usually fall under destination and terminal charges, which are part of every incoterm.

Just like with demurrage, the responsibility for paying container detention fees depends on the agreed terms. It can be the importer or the exporter who takes on these charges. However, it’s generally recommended that the party in charge of arranging the container’s drayage and unpacking handles these fees because they have greater control over the container’s movement.

4. Addressing the Issue: Best Practices 

We believe in finding solutions to industry challenges. Hence, we explore the best practices proposed by the International Federation of Freight Forwarders Associations (FIATA) to streamline the charging of demurrage and detention. These practices advocate for clear communication, standardized documentation, and fair dispute resolution mechanisms. By adopting these best practices, you can minimize unnecessary costs, ensure fairness, and promote an efficient supply chain.

5. The Way Forward 

Moving forward, collaboration with both Steamship Lines and transportation partners becomes critical in managing demurrage and detention charges effectively. By fostering cooperation between shipping lines, transportation partners and understanding any nuances with ports, you can make better decisions regarding your shipping solutions.  Increased data sharing and transparency throughout the maritime supply chain will help streamline processes and enhance accountability.

As your trusted shipping partner, we want to equip you with the tools you need to avoid demurrage and detention fees. By following these four expert tips, you will be well on your way to optimizing your shipping operations and improving your overall supply chain efficiency.

  1. Plan Like a Pro: Freight is on the ocean for weeks and months, so plan ahead. Trying to dispatch freight and having a plan well ahead of your Last Free Day will help mitigate demurrage fees.
  2. Have a Backup Plan in Place: Being prepared for the unexpected is key to avoiding demurrage and detention fees. Whether it is having a backup dray provider or finding carriers at new ports if freight gets diverted and more, having a Plan B can save you from unnecessary headaches and costs.
  3. Know Thy Contracts Inside Out: Knowledge is power! Take the time to research and fully understand your contracts and the regulations and customs duties processes. Steamship Lines typically update contracts in the May/June timeframe, so review these and understand any changes and the impact on your freight costs. By understanding your obligations, you can avoid potential pitfalls and ensure a smooth sailing process.
  4. Transloading and Cross-docking: If your warehouse or final destination is far from your Port of Entry, consider a transload or cross-dock solution, so you don’t have to worry about detention charges and empty miles.

Conclusion:

In the fast-paced realm of container shipping, understanding demurrage and detention charges is essential to reduce unnecessary freight spend.  successfully. By comprehending their purpose, staying abreast of developments, and embracing best practices, you can optimize your shipping operations, minimize costs, and enhance your overall supply chain efficiency. We are committed to equipping businesses like yours with the knowledge and insights needed to thrive in the evolving container shipping landscape.

Recent Posts

dry van shipping
STAY INFORMED AND UP TO DATE WITH THE LATEST DRAYAGE NEWS
WHAT IS BILL OF LADING?
Q1 2024 TRANSPORTATION OUTLOOK

LTL CARRIER HOLIDAY REMINDER 2023

Back to Resources

Dec 20, 2023

LTL Carrier Holiday Reminder 2023

News

Check out the calendar for closure dates for less-than-truckload carriers this holiday season.

CARRIER22-Dec25-Dec26-Dec29-Dec1-Jan
Day of the WeekFMTFM
AAA Cooper TransportationCLOSEDCLOSEDCLOSED
ABFCLOSEDCLOSED
ACI Motor FreightCLOSEDCLOSED
A Duie PyleCLOSEDCLOSED
Averitt ExpressCLOSEDCLOSEDCLOSED
Central TransportCLOSEDCLOSED
Cross Country Freight SolutionsCLOSEDCLOSED
Day & RossCLOSEDCLOSEDCLOSED
DaylightCLOSEDCLOSED
Dayton Freight LinesCLOSEDCLOSEDCLOSED
Dependable Highway Express, IncCLOSEDCLOSED
Dohrn Transfer CompanyCLOSEDCLOSEDCLOSED
Dugan Truck LineCLOSEDCLOSED
EstesCLOSEDCLOSEDCLOSED
FedEx EconomyCLOSEDCLOSED
FedEx PriorityCLOSEDCLOSED
FFE Transportation ServicesCLOSEDCLOSED
Forward AirCLOSEDLimited OpsCLOSED
Frontline Freight Carrier USACLOSEDCLOSED
Magnum LTLCLOSEDCLOSED
Midwest Motor ExpressCLOSEDCLOSEDCLOSED
MJB FreightCLOSEDCLOSED
Mountain ValleyCLOSEDCLOSED
New Penn Motor Express, IncCLOSEDCLOSED
Oak Harbor Freight LinesCLOSEDCLOSEDCLOSED
Old DominionLimited OpsCLOSEDCLOSED
One Way Express OhioCLOSEDCLOSED
Pace Motor LinesCLOSEDCLOSED
PENINSULA TRUCK LINESCLOSEDCLOSED
Pitt Ohio ExpressCLOSEDCLOSEDCLOSED
R&L CarriersCLOSEDCLOSED
RoadrunnerCLOSEDCLOSEDCLOSED
Ross ExpressCLOSEDCLOSED
SaiaCLOSEDCLOSEDCLOSED
Southeastern Freight LinesCLOSEDCLOSEDCLOSED
Southwestern Motor TransportCLOSEDCLOSED
Standard ForwardingCLOSEDCLOSED
Sutton TransportCLOSEDCLOSED
Tax-AirCLOSEDCLOSED
TForceLimited OpsCLOSEDCLOSEDCLOSED
Total TransportationCLOSEDCLOSED
U.S. Road Freight ExpressCLOSEDCLOSED
US Special DeliveryCLOSEDCLOSED
Vocar TransportationCLOSEDCLOSED
WardCLOSEDCLOSEDCLOSEDCLOSED
XPO LogisticsCLOSEDCLOSEDCLOSED

Recent Posts

dry van shipping
STAY INFORMED AND UP TO DATE WITH THE LATEST DRAYAGE NEWS
WHAT IS BILL OF LADING?
Q1 2024 TRANSPORTATION OUTLOOK

DRAYAGE PER DIEM CHANGES COMING IN 2024

Back to Resources

Dec 14, 2023

Drayage Per Diem Changes Coming in 2024: A Positive Step for Shippers

News

The shipping industry plays a crucial role in global trade, facilitating the movement of goods and ensuring supply chain efficiency. However, challenges like penalty charges for delays in returning containers have long been a concern for shippers.

To address these issues and establish regulatory oversight, the Ocean Shipping Reform Act of 2022 (OSRA) was enacted. In 2024, there will be changes in Drayage Per Diem regulations as a result of OSRA and highlight the benefits they bring to shippers.

Proactive Measures to Avoid Penalty Charges

One of the key aspects of OSRA is the implementation of regulatory oversight on ocean carrier practices. The specific focus on per diem aims to proactively avoid penalty charges for delays in container return. By increasing oversight, the frequency and total amount of charges should be reduced, eliminating the need to go back three years to recoup losses. These changes will provide a more transparent and fair system for shippers.

Empowering Shippers and Increased Collaboration

While the new regulations are expected to improve processes, it is crucial for shippers to stay vigilant and be proactive in managing these charges. Working with a carrier who can fight on your behalf will be crucial, especially given the smaller window of time to address disputes. Shippers must take control of their operations and actively monitor and respond to any potential issues related to per diem charges.

Aiding Customers and Shippers

Aside from addressing penalty charges, OSRA 22 also aims to aid customers and shippers in other areas of the shipping process. One significant aspect is the focus on ocean rate practices. These changes will ensure more transparency and fairness in pricing, benefiting shippers by allowing them to make informed decisions.

Another area of focus is equipment availability and returns. Through the requirement for port operators, chassis owners and providers with a fleet of over 50 chassis to submit dwell time statistics to the Federal Maritime Commission (FMC), shippers will gain valuable visibility into equipment availability and dwell times. This information will allow for better planning and avoiding unnecessary delays.

Positive Impacts on Shippers and Customers

Overall, the changes brought about by OSRA 22, specifically the Drayage Per Diem regulations, are a positive development for shippers. The aim of these changes is to eliminate discriminatory practices from ocean carriers, provide greater visibility into the shipping process and improve the efficiency of ports.

By enhancing regulatory oversight, reducing penalty charges and increasing transparency, OSRA 22 enables shippers to have greater control over their operations and avoid unnecessary costs.

In conclusion, the 2024 Drayage Per Diem changes coming due to the Ocean Shipping Reform Act of 2022 bring significant benefits to shippers. By eliminating discriminatory practices, increasing visibility and promoting efficiency, these changes empower shippers to make informed decisions, avoid unnecessary charges and contribute to a more robust and reliable global supply chain.

Recent Posts

dry van shipping
STAY INFORMED AND UP TO DATE WITH THE LATEST DRAYAGE NEWS
WHAT IS BILL OF LADING?
Q1 2024 TRANSPORTATION OUTLOOK

ANNUAL LTL SHIPPING GENERAL RATE INCREASE (GRI)

Back to Resources

Nov 17, 2023

Annual LTL Shipping General Rate Increases (GRI)

Blog

It’s that time of year. Less-Than-Truckload (LTL) shipping general rate increases (GRI) season. As the shipping industry continues to evolve, carriers rely on GRIs to adjust their base rates, which can vary by lane and weight tiers. These rate increases serve a crucial purpose – addressing the ever-increasing cost inflation that impacts the entire network.

In this blog post, we’ll explore the reasons behind LTL GRIs and how they help balance demands and rising costs resulting from fuel, salary, equipment and technology.

Why LTL General Rate Increases Matter:

Countering Cost Inflation: In the fast-paced world of shipping, costs are consistently on the rise. LTL carriers face a myriad of expenses, including fuel, employee salaries, equipment and technology. Year after year, these costs continue to climb. Enter GRIs! These adjustments to base rates provide carriers with a means to counter the effects of inflation and maintain a sustainable operation.

Ensuring Network Balance: A well-balanced network is the key to success in the shipping industry. LTL carriers carefully analyze data, market demand and various factors to achieve optimal operational efficiency. By implementing GRIs, carriers can effectively manage their resources, capacities and costs, ensuring a harmonious balance between supply and demand.

Understanding the Impact on Shippers:

Navigating Cost Adjustments: It’s no secret that LTL GRIs have a direct impact on shippers and their transportation budgets. These annual rate increases necessitate proactive adjustments in cost calculations and planning. By anticipating these changes or partnering with companies with increased freight buying power, shippers can better prepare, ensuring minimal disruption to their financial strategies.

Shaping Strategic Decision-Making: Knowledge is power! Shippers must evaluate the implications of LTL GRIs on their unique shipping requirements and business objectives. By remaining informed and proactive, shippers can strategically select carriers, negotiate rates and explore alternative shipping methods to mitigate the impact of these rate increases.

Embracing Collaboration: In the face of LTL GRIs, collaboration between shippers and carriers becomes a crucial element. By fostering open communication channels, shippers can understand carriers’ reasons for implementing GRIs, seek opportunities for rate negotiation and explore mutually beneficial cost-saving measures. Shippers can also work with brokers to understand if their LTL rates are competitive and get bids from multiple LTL carriers.

Conclusion:

As the journey continues, annual Less-Than-Truckload (LTL) General Rate Increases (GRI) are critical to monitor to determine the impact to your overall shipping cost.

By addressing cost inflation driven by fuel, salary, equipment and technology, carriers can strike a balance between their operational demands and rising costs. Shippers, on the other hand, must remain prepared and proactive, understanding the impact of these rate increases and collaborating closely with carriers, brokers or managed transportation providers to optimize their shipping strategies.

By looking at your data or partnering with brokers or managed transportation providers to lock in rates, you can mitigate the impact to your business.

Recent Posts

dry van shipping
STAY INFORMED AND UP TO DATE WITH THE LATEST DRAYAGE NEWS
WHAT IS BILL OF LADING?
Q1 2024 TRANSPORTATION OUTLOOK

WINTER SHIPPING PROTECTION: SAFEGUARDING YOUR FREIGHT WITH PROTECT FROM FREEZE SERVICES

Back to Resources

Nov 10, 2023

Winter Shipping Protection: Safeguarding Your Freight with Protect from Freeze Services

Blog

As the winter season approaches, it’s crucial to prioritize the protection of your valuable freight. Fortunately, many carriers understand the importance of preserving temperature-sensitive products, offering a valuable solution known as Protect from Freeze services. These services, commonly utilized in Less Than Truckload (LTL) shipping, ensure your goods remain safeguarded from extremely low temperatures during transit. In this blog post, we cover the benefits and essential measures to consider when opting for Protect from Freeze services.

Safeguarding Your Freight with Protect from Freeze

Protect from Freeze services offer peace of mind by minimizing the risks associated with temperature fluctuations during transportation. By implementing specific measures, carriers take proactive steps to prevent your items from freezing, particularly in colder regions and throughout the winter months.

Temperature Monitoring

Carriers that offer Protect from Freeze services employ advanced temperature monitoring systems. These systems enable them to accurately track and maintain optimal temperature conditions within the trailers, ensuring that your goods remain unaffected by extreme cold temperatures.

Blankets and Temperature-Controlled Trailers

To provide an extra layer of protection, carriers utilize blankets during transit to insulate and shield your freight from freezing temperatures. Additionally, some carriers employ temperature-controlled trailers, which offer precise climate control to maintain the ideal conditions for your temperature-sensitive products throughout the journey.

Designated Areas for Idle Time

While not in motion, carriers allocate designated areas or rooms on their docks for freight that requires protection from freezing. These areas are carefully controlled to maintain the appropriate temperature and prevent any possible damage to your precious cargo.

Time Constraints for Faster Transit

To further reduce exposure to cold weather, carriers offering Protect from Freeze services prioritize faster transit times. By minimizing the time spent in freezing temperatures, they ensure that your goods arrive in pristine condition, unaffected by the harsh winter climate.

Booking and Communication Tips

When booking your shipment with a third-party logistics provider (3PL), it’s essential to select the appropriate Protect from Freeze service to avail yourself of the correct pricing. Make sure to communicate your requirements clearly and use the bill of lading (BOL) provided by the carrier to ensure they are aware and able to adhere to the necessary precautions throughout the shipping process.

Conclusion

As winter approaches, safeguarding your freight becomes paramount. Protect from Freeze services offer reliable protection for temperature-sensitive products, ensuring they reach their destination intact and unharmed by extreme cold temperatures. By partnering with carriers that prioritize temperature monitoring, employ blankets and temperature-controlled trailers, designate specific areas for idle time, and prioritize faster transit, you can confidently ship during the winter months. Prioritize the protection of your freight and experience worry-free shipping even in the harshest of winter conditions.

Recent Posts

dry van shipping
STAY INFORMED AND UP TO DATE WITH THE LATEST DRAYAGE NEWS
WHAT IS BILL OF LADING?
Q1 2024 TRANSPORTATION OUTLOOK

Q4 2023 TRANSPORTATION OUTLOOK

Back to Resources

Nov 06, 2023

Q4 2023 Transportation Outlook

News

A year ago, in Q4 2022, every indicator pointed to an economic climate unlike anything we’d ever experienced. We advised shipper and carrier partners to take the long view and develop a strategy that enabled them to fluidity navigate market shifts vs. exhaust resources by reacting to every jolt.

Ultimately, easier said than done. We can all agree that 2023 has been one for the books and difficult to navigate. As we close out the year, a lot of questions remain:

What is top of mind for shippers:

  • When is the next inflationary freight cycle?
  • What should I be looking for/doing now to stay ahead of this?
  • Do I have the right 2024 RFP strategy?

What is top of mind for carriers:

  • Will there be enough freight demand in the first half of 2024 to stay in business?
  • Will rates rise enough to cover inflated operating costs?
  • Am I working with the right 3PLs and customers?

Before we dive into this quarter’s edition of our Transportation Outlook, inclusive of our macroeconomic update, spot and contract rate forecasts and top tips for shippers and carriers, it’s important to align on today’s freight market landscape.

Since Q3 2022, spot rates have been slowly on the rise year-over-year (YoY) with contract rates following suit. We know the market is turning…the ultimate question is, at what velocity and magnitude will we see rates increase in 2024? How will record-high interest rates impact this?

As it stands, we predict that YoY change in spot rates will be around –2.5% at the end of Q4 2023. Our forecast positions spot rates to turn YoY inflationary in Q1 2024 and continue their ascent through the entirety of the year. With contract generally lagging spot by two quarters, we predict contract rates to follow spot on the journey upward moving from –11.2% in Q3 2023 to –7.5% at the end of Q4 2023.


Truckload Market Fundamentals

Just as we did last quarter, let’s revisit the fundamentals and key indicators that inform this forecast.

Supply | Carriers have exited, but there is still an oversupply of capacity relative to demand.

Since the middle of 2022, there hasn’t been a month where Carrier Net Revocations of Operating Authority has been less than 6,000. However, given the sheer volume of new entrants that burst onto the trucking scene during the pandemic (over 120,000 operators), we still have months to go until we see a normalization of carriers compared to the relative demand levels.

Freight Supply Metrics

NewAuthorities

Demand | Consumers have been resilient but are spending more consciously headed into 2024.

The consumer has proved to be resilient this year, but with record high consumer credit levels, resumption of student loan repayment and persistently high inflation, the consumer is beginning to tighten the wallet and focus on essentials. This is a signal that consumers are concerned about the future of the economy and as a result, we may see a reduction in goods purchases and thereby a reduction in freight demand.

Cass Freight Index: %YoY Change by Quarter

NTG Freight-Index Chart 3 scaled

Source: Cass Freight Index

  • Freight volumes represented by CASS Freight Index show the continued decline in demand for the fourth consecutive quarter.
    • With Sep. 2023 readings, Q2 2023 reported at –8.1% YoY, which is also 1.6% lower than 2023.
    • The index for August and Q3 2023 is at its lowest in the past quarter, indicating freight demand is at the lowest point in over two years.

Consumer Sentiment | Buying behavior is shifting to essentials only for many households.

The October Consumer Sentiment report from the University of Michigan came in lower than expected at 63.8, down 6% from Sept. 2023. The Consumer Expectations Index, which depicts consumers expectations for the future, declined 6.5% from September into October, to 59.3.

Inflation | Inflation made a comeback in Q3 and remains well above the Fed’s stated target.  

The Consumer Price Index (CPI) went up to 3.7% on YoY basis with energy prices being the primary driver. Personal Consumption Expenditure (PCE) index reported by BEA also shows inflation picking up for non-durable goods while durable goods further deflated in Q3. However, inflation remains high in the services sector with YoY growth close to 5% in Q3.

Interest Rates | Interest rates continue to rise each quarter and may rise again in Q4 2023.  

Roughly 70% of the US GDP is based on consumer spending. The Federal Reserve Bank has increased interest rates each quarter since Mar. 2022, when we saw an increase from 0.25% to 0.5%, and the latest being 5.25% to 5.50% reported on July 26, 2023. There is talk of another potential rate hike in Dec. 2023 of 0.25%.

Consumer Debt | Household debt is steady, signaling saving vs. spending behavior.

As interest rates increase, consumer debt also increases. According to the Federal Reserve Bank of New York, total household debt rose from $16 billion, or 0.1%, in Q2 2023. This is much less of an increase in overall debt levels when compared to the Q1 2023 increase of 0.9%, indicating that either consumers are running out of available credit or that they are being more cost-conscious when spending on credit cards.

The Key Economic Indicators: The Cause (% YoY Change by Quarter)

Key Economic Indicators

Source: Bureau of Economic Analysis (BEA), Federal Reserve, Census Bureau, Bureau of Labor Statistics

  • Real Consumption (Personal Consumption Expenditure (PCE) went up by 1% in Q3 2023 on a seasonally adjusted basis. The robust consumer spending reflects an optimistic side of the economy while inflation continues to be above the Fed’s target rate.
    • Real PCE went further up to +2.4% on YoY basis as compared to +1.8% in Q2 2023 with the goods sector showing significant signs of recovery.
    • Consumption for durable goods went up from +3.2% in Q2 2023 to +4.9% in Q3 2023 YoY primarily coming from a 6.2% YoY increase in consumption for motor vehicle and parts.
    • Non-durable goods reported +1.3% YoY consumption after staying low-to-negative for the past five quarters.
    • Consumption in services was slightly up at 2.4% YoY despite continued high inflation in the services sector.
  • After trending down for 10 quarters and nearly touching the X-axis, Industrial Production (IP) made a slight improvement in Q3 2023 and avoided falling below X-axis. In past years, an IP reading below the X-axis has coincided with an economic recession.
    • Reading for Q3 2023 was reported at +0.1% YoY against 0.02% in Q2 2023.
    • ISM Purchasing Manager’s Index (PMI) also reported 11 months of contraction in US Manufacturing Economy, but the index rose for the third month in a row in Sep. 2023 indicating that the rate of change has begun improving.
  • Imports went up by 1.4% in Q3 2023 but stayed negative at –1.4% on YoY basis.
    • The continued decline is after a record high level of imports in 2021 and first half of 2022, but it’s still higher than the pre-pandemic period.
    • Container imports for Sep. 2023 came in at +0.5% YoY and turned positive YoY after 13 months.
  • The Inventory to Sales Ratio further dropped to 1.37 in Aug. 2023 which is just 0.8% YoY.
    • Sales turned positive YoY in Aug. 2023 after staying negative for five months.
    • Inventory continues to drop from its peak at 20.6% YoY in Jun. 2022 to currently at +1% YoY in Aug. 2023.
    • While the overall ratio is still 0.2%, the manufacturing ratio turned negative YoY in Aug. 2023.
      • All these metrics indicate that manufacturing activities are likely to pick up again, which is a positive signal for increased freight volume.

In this dynamic transportation market, we’re witnessing an acceleration of capacity changes, with both carriers and brokers exiting the industry. Costs are on a gradual, but persistent rise, and this will inevitably shape the upcoming RFP cycle. As we move into Q1/Q2 of 2024, we anticipate a restocking phase if consumers continue to buy with the sales inventory ratio continuing to turnover. In these challenging times ahead, the key is to collaborate with reliable, well-funded partners who are prepared to navigate the uncertainty.”

Drew Herpich

Chief Commercial Officer at TI & NTG

Peak Season | Expect a better peak than 2022, but still underwhelming vs. traditional levels.

Peak activity will be more favorable than last year for bigger players in the retail and ecommerce space. Smaller and mid-size players aren’t expected to see much of an influx. Consumers will continue spending on groceries, clothes and holiday gifts, but it’s more likely that is with the big box retailers.


Suggested Actions for Shippers

Here are our top 3 tips for shippers when preparing for Q4 2023 and 2024:

  1. Ensure your partners are performing, and financially stable. Protect your supply chain by ensuring your partners, vendors and carriers, are financially stable and operationally sound to mitigate risks. Make financial assessments a routine part of your selection process to safeguard your operation.
  2. Identify lane opportunities and blind spots. With continued uncertainty, assess your high-volume lanes and ensure you have partners that meet expectations on price, service and reliability. Next look at irregular, volatile lanes and identify contract opportunities within your current network, if any. Most shippers know 70%-80% of their network, but have blind spots with the remaining 20%-30% of providers. Resolving those blind spots will result in a trusted network of primary and incumbent providers, a mix of assets and non-assets, that enables you to perform more consistently when faced with market disruption. Consolidation is always at the forefront of every shipper’s mind, but consolidating too much can leave you vulnerable and remove your ability to remain flexible.
  3. Don’t be afraid to challenge your supply chain strategy. If you’re struggling to find cost savings opportunities, lean on experts to conduct a supply chain optimization assessment, which will dive deeper into your supplier and customer networks and determine what locations, days, times, etc. are going to maximize savings. Gaining awareness of the opportunities available to optimize your supply chain can bring an added perspective when operating. Take some of these findings and start implementing quick wins where possible and work the rest into your long-term strategy.

Suggested Actions for Carriers

Here are our top 3 tips for carriers when preparing for Q4 2023 and 2024:

  1. Establish a long- & short-term strategy for your operation and communicate it. Whether you have one truck or a fleet, evaluate your needs and preferences, then communicate them to your customers, partners and internal team. With key customers, ask long-term questions about their initiatives, operational pain points, capacity requirements and service expectations. In the short term, make sure you remain adaptable with valued customers by adjusting to market conditions, adopting technology and being proactive with communication that earns trust.
  2. Expand your network and nurture those relationships. Building and maintaining a network of shippers, brokers and other key industry contacts is essential. Focus on fostering clear lines of communication with both current and prospective partners. Networking is not just about making connections but nurturing them through regular updates and proactive engagement. Never put yourself in a position where you’re one relationship away from losing your main source of revenue.
  3. Hold yourself accountable for the investments you’re making. Whether you’re investing in technology, more drivers, improved compensation/benefits, better equipment or new facilities and service offeringsmake sure you are holding yourself accountable for the desired outcomes/KPIs. Carriers should routinely assess the performance of their investments and understand how to turn them into more revenue. Make sure your drivers are meeting the service metrics demanded in today’s transportation market. Evaluate your assets and their ability to handle varying demand and market volatility. Stay focused on the right investments and right partners to position yourself for success long-term.

Truckload Spot & Contract Curve (% YoY Change by Quarter)

What is the Beon Band?

The Beon™ Band rolls up YoY quarterly averages of this data to create trend lines. This band is the outcome of the relationship between freight supply and freight demand, with freight demand being driven by the macroeconomic demand indicators. When we overlay the Beon™ Band with the demand curve in a single chart, we can see demand’s influence on the to-the-truck costs.

Truckload Spot & Contract Cost Curve: %YOY Change by Quarter

Truckload Spot & Contract Cost Curve: %YOY Change by Quarter

Source: Beon Band – Transportation Insight Holdings


Analysis 360 | Checking the Record

What we got right in the previous outlook.

  • Rates are on the climb upward towards the abscissa. With an oversupplied market in a declining demand economy, capacity continues to exit the freight market. We expect Q3 2023 to average out to a -10% YoY change in spot rates when compared to 2022.
    • From our analysis we were nearly right on the mark with the YoY change in Q3 2023 spot rates ending at –12%.
  • We expect that Q3 2023 contract rates will continue to stay at the bottom around -12.5% YoY and start heading upward with Q4 2023 rates projected at -5% YoY.
    • We were close to the mark with our contractual rate forecast with YoY change in Q3 2023 contract rates ending at -11.2%.

Rate Forecast

With freight volume continuing to decline every quarter and capacity not exiting at the pace needed to correct an oversupplied market, we are revising our Q4 2023 and Q1 2024 forecast.

Spot: We expect Q4 2023 to stay deflationary at around –2.5% on a YoY basis. The Spot Band is expected to cross the abscissa in Q1 2024 (delayed by a quarter as opposed to our previous forecast) and turn inflationary at +5% YoY. Moving into Q2 2024, this number is expected to jump in the range +15% to +20% with produce initiating the capacity dislocation.

Contract: Contract rates hit bottom in Q2 2023 at 13.9% and inflected upward in Q3 2023. The Contract Band generally lags the Spot Band by two quarters, but this time the trough of the current deflationary cycle was only a quarter behind. We expect the Contract Band to continue its journey towards abscissa moving from –11.2% in Q3 2023 to –7.5% at the end of Q4 2023.

Source: Bureau of Economic Analysis (BEA), Federal Reserve, Census Bureau, Bureau of Labor Statistics, Beon Band – Transportation Insight Holdings

BeonBandvsEDI

Source: Bureau of Economic Analysis (BEA), Federal Reserve, Census Bureau, Bureau of Labor Statistics, Beon Band – Transportation Insight Holdings

Source: Cass Freight Index, Beon Band – Transportation Insight Holdings

BeonBandvsCass

Source: Cass Freight Index, Beon Band – Transportation Insight Holdings

Robust consumer spending and depleting inventory levels will likely trigger restock manufacturing activity and growth in freight demand in the coming months. This trigger, along with weak truck orders and carriers continuing to exit, will set the stage for an inflationary market in 2024 where spot rates will accelerate upwards and contract rates will follow suit. Shippers should take the opportunity to build resilience in their capacity networks by honoring, or adding, stable and reliable providers that hold strong on rates and service once tested with inflationary market conditions.”

Amit Prasad

Chief Data Science Officer at TI & NTG

Port to Porch Market Forecast

Drayage | The landscape for drayage and import conditions is undergoing a noticeable shift.

Retailers proactively restocked inventories earlier this year, which contributed to lower peak volume in the drayage market, and they currently express confidence in their inventory levels. With uncertainties linked to inflation and higher interest rates, consumers are slower to spend discretionary income and we see a steady decline in projected import volume for the remainder of 2023. As a result, container rates are declining, and ocean carriers have slowed down ships to reduce capacity with the reasoning being present market conditions. We have even seen some of the largest steamship lines make headcount reductions due to confidence levels in ocean demand for the rest of the year and into 2024.

Tip: While the market may potentially “return” in late 2025, the focus for now is to develop a strategy enabling you to navigate shifting import conditions and maintain competitiveness in pricing through the remainder of 2023 and into 2024.

Less-Than-Truckload | The LTL industry remained resilient through volatility this year, but many are contingency planning for further disruption.

With lower demand, the LTL freight market has been able to adapt and stay resilient amidst turbulence this year. Shippers have transitioned Yellow’s business to other providers over several months and most LTL carriers have absorbed the added volume well within their network. Next up, the National Motor Freight Classification changes occur in Dec. 2023, so be mindful of and have a strategy for any impacts to your business.

In preparation for 2024, shippers are assessing the vetting criteria for LTL partners with the events that occurred in 2023 top of mind.

Tip: Ensure that service and rates continue to be a focus but try to dive deeper into carriers’ operational strategies, financial state and cybersecurity practices like you would with your FTL providers. The more information that you get up front, and annually, the better.

Parcel | Carrier Diversification remains a priority, UPS and FedEx maintaining their annual General Rate Increases (GRI), but demand remains soft.

The biggest news in the parcel industry currently relates to 2024 General Rate Increases (GRI) and peak surcharges. The rate increases announced as of this publication are primarily across national options –  UPS, FedEx, USPS, and DHL – but some regional players have also come to the table. UPS’s 2024 GRI AnnouncementFedEx’s 2024 GRI Announcement, and DHL each came in with a 5.9% rate increase but shippers need to be detailed in their impact review as the carriers continue to focus on large, bulky freight and less than optimal delivery regions with substantial YoY increases. U.S. Postal Service (USPS) will also be implementing a 2% rate increase and some regional carriers have recently matched the nationals.

Postal final mile has gathered quite a bit of support recently, with many shippers leveraging USPS’s new service Ground Advantage for improved cost and an opportunity for similar service. To compete UPS rolled out UPS Ground Saver last month.

Tip: Ensure that as you analyze and report on the cost impact of annual price increases focus on accessorial and surcharge increases with zone adjustments.

Recent Posts

dry van shipping
STAY INFORMED AND UP TO DATE WITH THE LATEST DRAYAGE NEWS
WHAT IS BILL OF LADING?
Q1 2024 TRANSPORTATION OUTLOOK