April 30 2024

Freight for Thought: Ex-Yellow LTL terminals reopen amid capacity boost

The following insights are provided by Sunset Transportation’s Strategic Account Management team for April 2024.

Trends and discussions range from seasonal manufacturing and agriculture trends that affect available capacity to general insight into outside factors affecting freight volumes.

MARITIME

  • Workers, represented by the Teamsters Canadian Rail Conference (TCRC), have voted overwhelmingly to authorize a strike against Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) as soon as May 22. A strike could halt intermodal service to and from all containerized marine terminals in Canada, affecting about 50,000 TEUs per week. 
  • Green fuels for shipping were included in the list of clean energy technologies adopted by the approved European Parliament’s Net-Zero Industry Act in a move aimed at scaling up production capacity to meet 40% of demand by 2030.  The United States are expected to follow suit.
  • Containerized imports are on the rise in Southern California, but so are warehouse vacancy rates.  A pronounced period of correction for warehousing is underway in the area, with vacancy rates rising despite the surge of imports in Q1.  This is likely a result of overstocked inventories finally being cleared out combined with shifting import volume to the east and gulf coasts
  • Ocean carriers in March blanked sailings equal to 11.7% of total vessel capacity from Asia to the US West and East coasts, down from 21.5% in the same month last year and 29% in March 2022.
  • Growing US import volumes from India, a rising share of inbound containers coming from the country, coupled with the surge of investment from major big box retailers and manufacturers, suggest India is finally becoming a manufacturing power and sourcing alternative to China.
  • Several of the largest US retailers have recently signed 2024-25 service contracts for the eastbound trans-Pacific at rates that are approximately 12% to 17% higher – ranging from $1,400 to $1,450 per FEU to the West Coast for the very largest retailers. New East Coast contract rates are about $800 to $1,000 higher.
  • The National Retail Federation (NRF) said it now expects US imports for the first six months of the year to increase 11% over the same period last year. That’s up from the forecast of a 7.8% increase made in the March.

INLAND

  • In the truckload sector, the exodus of small trucking companies is slowing as freight demand and pricing slowly rise.  Meanwhile, LTL is normalizing at elevated pricing due to the bankruptcy of Yellow in 2023 from lack of available and affordable capacity.  
  • LTL Terminals which were purchased from the Yellow bankruptcy are starting to reopen; Estes Express Line, XPO, and SAIA, all of which purchased large numbers of terminals from Yellow, are resurrecting sites this month with plans to open more in Q3. With the growing demand for LTL capacity, this move is expected to slow or flatten the LTL pricing increase seen over the last nine months.
  • Less-than-truckload (LTL) provider SAIA is extending its reach across the US-Mexican border by partnering with one of Mexico’s largest LTL providers, Fletes, in the latest sign of growing LTL volume thanks to increased Mexico sourcing for North American trade partners.
  • The US Postal Service (USPS) named UPS its primary air cargo provider, effective immediately, ending a long-term relationship with FedEx.
  • FedEx and UPS extended Delivery Area Surcharges (including Extended and Remote) to 82 ZIP codes effective this month.
  • Grant funds from the 2021 Infrastructure Law are beginning to be distributed to US Seaports to lower truck pollution at ports.  US DOT has approved 16 projects across 11 states and Puerto Rico.  The largest assigned to The Long Beach Container Terminal ($34.8M) – which it will use to replace 149 diesel and gas-powered vehicles and install 155 electric charging stations.  Similar actions will be used at seaports around the country.
  • The Journal of Commerce For-Hire Trucking Employment Index moved from 100.1 in February to a preliminary reading of 100.5 in March, as trucking firms made headway in hiring.

RECENT MERGERS AND ACQUISITIONS

  • Mediterranean Shipping Co. is set to return to the booming vehicle carrier market with a friendly $698M bid for Oslo-headquartered tonnage provider Gram Car Carriers in a takeover that is expected to be completed by the year’s end. Gram has openly said this is a fair market value for their company and is in support of the buyout.  Gram is focused on green alternatives for ocean carriers. 
  • Radiant Logistics acquired Viking Worldwide (Service by Air), a Minnesota-based company that specializes in high-tech, brand management, life sciences, and trade show logistics.  The company, though switching parents, will continue to operate as ‘Service by Air’.
  • Jayud Global Logistics, based in Shenzhen China, announced its entry into the North American market with the acquisition of HYTX Warehouse Inc.  HYTX is a prominent logistics company headquartered in Azusa CA with 27 locations across the US and Canada.
  • Greenwich CT based warehouse operator GXO announced the acquisition of UK logistics firm Wincanton for almost $1B.  The company employs more than 20K employees across the UK and Ireland and has more than 16M square feet of warehouse space across 160+ locations.
  • Private Equity Firm, Aurora Capital Partners, has recapitalized PSC Group with TJC, a company that offers rail, truck, and marine logistics, railcar repair, and sustainability services to petrochemical infrastructure companies.  
FRANCIS SCOTT KEY BRIDGE UPDATEs
  • Norfolk Southern Railway will begin running trains between the Port of New York and New Jersey and Baltimore.
  • Engineers are aiming to restore Port of Baltimore access to normal capacity by the end of May.
  • Trucking squeezed, but not crushed, by Baltimore port closure.
  • Chassis providers say they’re ready for Baltimore port diversions. 
  • Flatbed spot rates from Baltimore rising after port closure.
  • East Coast ports expand hours to handle Baltimore diversions.
  • The Port of Virginia will offer Saturday hours at Virginia International Gateway until further notice to serve truckers.

KEY LOGISTICS INDICATORS

EMERGENCY WEATHER ALERTS

Please expect delays in transit for shipments going through the affected areas listed below:

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.