Freight for Thought: NMFTA to discuss changes to existing NMFCs in July
The following insights are provided by Sunset’s Strategic Account Management team.
Trends and discussions range from seasonal manufacturing and agriculture trends that affect available capacity to general insight into outside factors affecting freight volumes.
Below is a summary of the June 2023 industry insights:
- On June 16, with 97% agreement, the Teamsters authorized a strike at UPS if they fail to reach a contract agreement by July 31. The union has been in negotiations with the company since mid-April. UPS’s workforce is about 70% unionized. If no agreement is made and the Teamsters are moved to strike, it would be the largest single-employer strike in US history.
- The Ton-Mile index shows April gained .6% tonnage from the month prior and DAT shows minute upticks in spot rates in each of the last 4 weeks. Although total TL revenues fell 6.6% YoY in Q1, they remained 40.6% higher than 2019. This explains why capacity continues to exceed current demand rather than exiting the market.
- The number of trucks entering the US from Mexico through Laredo rose 5% YoY in April as more freight is funneled through the border city in lieu of shipping from Asia. This is also inflating spot rates in the South & Southwest in comparison to other regions.
- The National Motor Freight Traffic Association (NMFTA) will be meeting on July 6 to discuss changes to existing NMFC’s; changes to go into effect on August 5. View the proposed changes here. Sunset will monitor these changes and advise accordingly.
- The ILWU and West Coast Ports have reached a tentative contract agreement after a long negotiation period, still to be ratified.
KEY LOGISTICS INDICATORS
- U.S. average cost of Diesel is $3.801 as of 6/26 – down $.014 from the week prior, and down $1.982 from a year ago.
- OPEC has announced further cuts to its output starting in July, limiting supply to 9 million barrels per day. OPEC pumps about 40% of the world’s crude and has cut its output target by a total of 3.66 million bpd, amounting to 3.6% of global demand.
- The Brent crude oil spot price averages $80 per barrel (b) YTD – up 1.1% from last month’s forecast. With the most recent OPEC cuts announced last month, averages have risen slightly and are expected to continue to rise.
Sunset expects fuel prices will rise into summer and should level out by fall. With supply being recently restricted, however, pricing could be adversely affected.
Industry data is pulled and summarized weekly from key proprietors and industry experts using multiple publications and sources. Sources include, but not limited to: FreightWaves, U.S. Energy Information Administration (EIA), DAT, Journal of Commerce (JOC), Reuters, PYMNTS, NRF, Bloomberg. The information is discussed with Sunset Directors and validated prior to publication of summary data in this posting.