Freight for Thought: Teamsters and UPS enter tentative agreement to avoid strike
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 July 2023 industry insights:
- Strike averted! As of Tuesday, July 25, the Teamsters and UPS have entered into a tentative agreement to avoid a large-scale, nationwide strike. In a prepared statement; the Teamsters called the deal ‘historic’ and ‘overwhelmingly lucrative’. Member voting on the contract will begin August 3 and conclude on August 22, 2023.
- Under pressure from Teamsters leadership, health care benefits have been extended for workers at Yellow (YRC & Holland), averting the immediate threat of strike. The Central States Health and Welfare Fund agreed to give Yellow 30 days to pay their outstanding bills. There are other contract issues to be negotiated before talks of a strike can be fully withdrawn.
- After three (3) general rate increases (GRIs), four months of rising trans-Pacific rates, and the continued use of blank sailings; carriers are achieving their goal of pushing spot rates higher than contract rates.
- Maersk will attempt to impose a 49% freight all kinds (FAK) rate increase on the Asia-North Europe trade. This charge of $1,900 per 40’(FEU) will be effective July 31.
- Inventory destocking is working, just not quickly. It is estimated that 61.5% of US businesses are still overstocked, with only 23.7% holding balanced or neutral inventories, and 11.3% understocked.
- The construction industry in the United States is expected to grow by 6.1% to reach $1.42M in 2023. Medium to long term growth in the United States remains strong and is expected to increase steadily over the next four quarters.
- Changes to existing NMFC’s will go into effect on August 5. Sunset will monitor these alterations and advise if they affect your business.
KEY LOGISTICS INDICATORS
- U.S. average cost of Diesel is $3.905 as of 7/24 – up $.099 from the week prior, and down $1.363 from a year ago.
- OPEC has announced further cuts to its output starting this month, limiting supply to 9M barrels per day. OPEC pumps about 40% of the world’s crude oil and has cut its output target by a total of 3.66M bpd, amounting to 3.6% of global demand.
- The Brent crude oil spot price currently averages $78 per barrel (b) YTD . With the most recent OPEC cuts, averages are expected to rise through the year. The expected future average is $80 per barrel by the end of Q423, and potentially a $84 per barrel average in 2024.
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.