Freight Market Update: January 2024

Global events can have significant impacts on U.S. transportation in various ways. Here are some key factors to consider:

Climate change and natural disasters: We’ve seen how badly forces of nature directly over the U.S., like Hurricane Harvey, can impact U.S. transportation. But global events can have significant impacts downstream as well. The drought occurring today in the Panama Canal is severely limiting the flow of container ships on a daily basis. This bottlenecking is causing container-shipping vessels to wait days or weeks before passing, to pay large fees to potentially move up in the queue if possible, to reroute through a different global channel, and/or consider modal conversion. All of these scenarios cause increased costs and/or delays for goods destined for U.S. ports.

International regulations: Changes in international regulations, such as environmental standards or trade agreements, can influence U.S. transportation policies. Adherence to new standards may require adjustments in the design and operation of vehicles and infrastructure. This was evident when the International Maritime Organization regulations (IMO 2020) went into effect limiting sulfur emissions from shipping vessels globally.

Political relations and trade policies: Shifts in diplomatic relations and trade policies between the U.S. and other countries can impact the movement of goods. Trade agreements or disputes can affect the volume and nature of imports and exports, influencing transportation demand. We’ve seen this recently as various policies were put in place for U.S.-China trade.

Technological advances: Global developments in technology, such as advancements in autonomous vehicles, alternative fuels, or transportation infrastructure, can have a cascading effect on the U.S. transportation system as it adapts to new innovations.

Security concerns, wars, conflicts, or terrorism: Such incidents may have an impact on the involved countries’ ability to export or import goods to/from the United States. This may force the U.S. to source those goods from more costly or less timely locations. A recent example of this is the Russian-Ukraine war, but the current example is the Red Sea disruption where Iran-backed Houthi militants have been attacking container ship vessels traversing the Red Sea. In response, most vessels have diverted traffic around the Cape of Good Hope which adds an average of two weeks to the transit time.

There are many potential results from these global events, but regarding U.S. transportation, the most common impacts are the following:

Oil prices: Global events can influence oil production or supply, limiting the amount of resources available despite stable demand. These events can also lead to additional usage (increased demand) of oil, such as adding several weeks onto container ship vessel transit. And it is also possible that both can occur at the same time. Either way, an increase in demand and/or a decrease in supply typically results in increased oil prices, which translates into increased fuel prices. Since the transportation sector heavily relies on fossil fuels, fluctuations in oil prices can directly affect the cost of transportation in the U.S.

Supply chain disruptions: These global events can easily disrupt global supply chains, meaning delayed transit, rescheduling appointments, inefficient routing, re-sourcing of goods or materials, etc. For example, a container ship from China to Greece having to be rerouted around the Cape of Good Hope adds a couple of weeks of transit time. And if the vessel was initially scheduled to then transport goods from Greece to Spain, this is not a viable source because the new route will be passing by Spain before getting the goods in Greece. The extra couple of weeks added to this transit not only delay the initial shipment, but it also prevents the following vessel sailing from leaving on the original schedule date by a couple weeks. And if the next sailing routes around Africa, that will create further delays. This could create exponential delays and challenges by the time a vessel can make its way to a U.S. port.

Price increases: Procuring goods and materials is a process done, in part, to optimize either time and/or money. A disruption to that initial plan means a failure to optimize for either or both of those. A disruption in the equilibrium between supply and demand can lead to significantly elevated pricing. And all delays come at a price. For example, if a container vessel is delayed by two weeks, then that means that the ship has to use two more weeks’ worth of fuel, sailors need to be paid for two more weeks of labor, more logistics and rescheduling need to occur, etc. Those costs incurred are passed along downstream. In summary, the interconnectedness of the global economy and the reliance on international trade mean that events happening outside the U.S. can have profound effects on transportation within the country. These impacts are compounding and can manifest in terms of costs, logistics, delays, and the overall efficiency of transportation networks. To learn more about the direct or indirect impacts to your supply chain, please connect with your C.H. Robinson representative. You can also sign up to receive timely updates via our Client Advisories.

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Dry van is the largest segment of the truck market. It is often the primary reference for the U.S. truckload market’s performance. The market of late has displayed seasonal changes in tension, as can be seen below in the red line. Over the past several weeks, the DAT load to truck ratio has increased similarly to those of the previous 5 years due to holiday pressures but has continued to normalize back into the pre-holiday softness. Winter weather storms are inflating the LTR temporarily. Week 2 shows a LTR of 2.3:1as compared to the 5-year average of 5.1:1.

 

The refrigerated spot market TL shows a similar pattern and softness as dry van. Similarly, winter storms are inflating the LTR temporarily. Week 2 shows a LTR ratio of 3.5:1 as compared to the 5-year average of 10.5:1.

 

This year's flatbed LTR has been historically low, with very little change to that narrative. The weekly ratio has been around 5.1:1 before the holiday weeks, and recent shifts suggest a normalization back to those levels. As with the other equipment types, winter weather storms are inflating the LTR temporarily. Week 2 shows a LTR of 8.2:1 as compared to the 5-year average of 33.1:1.

 

Regional Truckload Capacity Trends

National averages are helpful for aggregate perspectives of the market. Trucking, however, is a very regional business. Each week displays the varying experiences of the trucking market. Shown below is week 2, January 7-13, 2024.

Some markets are in balance, while others may be over or undersupplied, and other markets may have little trade and freight. The freight experience in each market influences truckload capacity strategy and that experience will vary with annual cycles. 

Sponsored research by C.H. Robinson, with MIT's Center for Transportation and Logistics, has shown that there are four primary market segments: 'balanced' trade corridors, 'headhaul' corridors, 'backhaul' corridors, and 'sparse' corridors. Shipper freight attributes combined with the market segment capabilities shape capacity strategies from committed to spot market. Connect with your C.H. Robinson representative to learn more about our Procure IQ^TM experience and our research insights that can help develop a more capable truckload strategy.

Dry van displays a low level of tension across the United States, as depicted by blue colored regions. Yellow colored regions display relative balance, and regions with warmer colors represent markets with some tension for the week, most reflective of the winter storm.

 

Refrigerated trucking displays a similarly low level of tension as dry van, as depicted by blue colored regions. Yellow colored regions display relative balance, and regions with warmer colors represent markets with some tension for the week.

 

Today’s flatbed spot market LTR continues to show prolonged regional tension from Houston to Georgia, but broadly the flatbed market offers plentiful capacity for spot and contract services nationwide.

 

Contract Truckload Environment

Contract trucking strategies and agreements are characterized by freight and lanes with reasonably predictable demand patterns, whereas spot truckload services are typically utilized for lanes with low volume or irregular demand patterns or poor economic trade corridors. Transportation budgets are shaped by modeling the plannable and unplannable freight baskets in a shipper's portfolio, as well as accounting for some level of under performance in the strategy.

Most (75%–85%) of the U.S. for-hire truck market is moved through commitments most often managed via hierarchical route guides and dedicated truckloads. Today's market offers shippers the opportunity to place lanes with less predictable demand patterns into contract awarded route guides, moving closer to or at the 85% of freight in contract. 

The contractual landscape has remained relatively unchanged since last month. Q4 and Q1 are when the majority of RFP activity happens, as shippers are preparing for the new year. During this time, it is important that shippers segment their freight. Freight characteristics, attributes, and geographies make lanes very different from each other and thus a strategic, data-driven approach is essential to determine which lanes should go out to bid in the RFP versus which are better off in the spot market. Talk to your C.H. Robinson account team about how they can help you utilize this segmentation logic to make the best decisions for your procurement process and avoid costly tender rejections that will inevitably move in the spot market.

Route guide performance

The majority of shippers' freight portfolio is managed through contracted capacity and pricing arrangements. These truckload agreements are most often managed as committed pricing for six or 12 months at defined load volume awards. Most successful executions of these agreements are in transportation management systems (TMS) where loads are tendered to transportation providers. Those tenders are accepted or rejected. Two key metrics are used to discern the success of the truckload award plan. First tender acceptance (FTA) is the percentage of tenders awarded to transportation providers that are accepted. Route Guide Depth (RGD) is an indicator of how the back-up transportation provider strategy works if the awarded provider rejects the tender. A robust trucking budget should plan for less than 100% tender acceptance due to the reality of forecasting by the shipper and capacity communities. In today's market, that variance to performance is small and incremental costs for back up strategies have lower penalties than in tight years like 2021 and 2018.

The following insights are derived from TMC, a division of C.H. Robinson, which offers a large portfolio of customers across diverse industries throughout the United States. These insights are from the week of January 3-13, and also reflect on RGD from the month of December 2023.

The regional view of route guide performance displays a pattern of high performance in all regions. The December North America RGD average of 1.19 (1 would be perfect performance and 2 would be very poor performance) is the lowest/best RGD for the month of December in the last six years. The North American average RGD has been consistent for some months, hovering near 1.15, with December's 1.19 reflecting holiday seasonal trends increasing 3% m/m but improving 5% y/y.

Week 2 posts a decreasing (improving) national average RGD of 1.17. All regions of the USA experienced similar route guide performance. This view of contract truckload route guides performing exceptionally well is yet another evidentiary point that the truckload market continues its pattern of oversupply.

Overall, route guides are performing very well, with primary service providers accepting loads at pre-pandemic levels, and the first backup provider accepting rejected tenders most of the time.     

U.S. spot market dry and refrigerated truckload rate per mile insights

Our 2024 dry van linehaul forecast remains unchanged, at 3% y/y growth. Most of the first half of the year we expect to see costs return back to the low levels experienced in the back half of 2023, excluding the last couple weeks of the year, which was inflated due to expected holiday constraints. Winter weather may factor into increased costs regionally, but increases will likely be temporary. We don't expect the market to see lasting increases until closer to the back half of the year, after more carrier supply has exited.

We are estimating the average 2023 linehaul carrier breakeven at $1.65/mile. This breakeven estimate has proven less useful in this down-cycle due to many of the dynamics we have noted in the past. Primarily this is due to increased cumulative profits amassed by many owner operators during the up cycle shortly after the pandemic, when spot pricing increased significantly. However, it is still important to estimate this breakeven level, even if it differs significantly for different carrier segments, as it does ultimately set the floor for how low rates can go over the medium to long term. While we do not yet know where this breakeven estimate goes in 2024, if we assume it remains flat with 2023 at $1.65/mile, this represents an almost two-fold increase in the annual rate of truckload operating cost inflation from a low 2% CAGR in the 10-year pre-pandemic period to a 4% CAGR from 2020-2024. (The breakeven estimate is a product of American Transportation Research Institute (ATRI) 2022 cost per mile operations cost and our analysis of the first three quarters of 2023 operations costs of public trucklines.)

Our 2024 refrigerated linehaul forecast similarly remains unchanged, at 2% y/y growth. We expect the pattern to follow that of the dry van forecast as well, as the dynamics accounting surrounding the temperature controlled truckload marketplace are the same as those in the dry truckload space.

 

Refrigerated Truckload

Winter weather and holidays may cause temporary disruptions, but capacity should remain plentiful
Seasonal tightening occurred over the holiday timeframe as expected and has started to normalize as we enter the new year. The DAT U.S. LTR finished at an approximate 3.6:1 average annually, much softer than the prior year of 7.9:1 and 12.4:1 from 2021. 2024 will likely continue to experience a similar environment to 2023 to start the year and won't see much change until the second half of the year. Q1 will likely continue to experience seasonal trends as capacity softens and rates bottom out. Regional exceptions will occur especially within areas battered by winter weather storms, although these constraints will likely be temporary. Towards the end of January and into February, outbound FL will see a surge in demand as flowers begin to ship in high quantities and within a scheduled timeframe in preparation for Valentine's Day. In order to best navigate the volatility in the regional markets caused by extreme weather and holiday events, work with your C.H. Robinson team to stay informed on where these pressures exist and how to best schedule freight to capitalize on the best price and service.

Flatbed Truckload

Markets remain soft and experience a seasonal geographic shift of supply
All of trucking's service segments have regional variance in capacity and pricing, as displayed earlier in this report through the spot market maps from DAT. Today's flatbed market is displaying balance between loads and trucks in most regions of the USA, but as demand increases out of the mid-South, capacity is beginning to migrate there.

• Projections on the Fed cutting rates in 2024 are leading to more optimistic volume projections, trending closer to flat y/y
• Greenfield and Brownfield capital investments that are in motion are likely to continue, industrial demand remains a positive in the space
• Residential construction will likely be softer the next couple months but as interest rates drop, that market will experience volatility
• Flatbed rates seem to be more sustainable. We're now closer to 5-year averages than previous months/quarters. There was some volatility around the holidays due to supply and weather, but rates are stabilizing

Winter weather considerations

• Weather becomes a significant issue in the flatbed market this time of year. Weather can affect driving conditions for all modes, but load securement and protection for flatbed can impact capacity.
• Carriers will typically start to move south or west as the cold weather moves in, to minimize tarping and reduce the risk of exposure when securing loads
• Properly securing loads can take additional time to thaw dunnage or tarps, moving straps on rails
• There is more risk of slip and fall and driver injury while securing or climbing on top of loads to tarp/strap
• There is increased use for tarps on typically "no tarp" loads, as well as on equipment like Conestogas and curtain side vans, which can be loaded faster and protected more easily. These are in more limited supply or often in regional carriers.
• Carriers prefer shippers with indoor loading facilities, heated waiting areas, etc.
• Most permitted loads (over dimensional/heavy haul) can only move from sunrise to sunset, so these loads travel fewer hours per day than in the summer months due to the shorter days

Collaborate with your C.H. Robinson team and talk about the proactive approach we can offer to navigate weather conditions this time of year.

Diesel Fuel Retail Pricing

Retail diesel's national USA average price per gallon has decreased from a monthly average of $4.56 in September 2023 to $3.98 in December 2023. This decrease in fuel has resulted in the U.S. Energy Information Administration (EIA) adjusting its 2024 U.S. average retail diesel price forecast within their Short-Term Energy Outlook to average "more than $3.90 per gallon". This is a decrease down from the $4.25 that they forecasted in November. As depicted in the visual below, created based on the data provided by the EIA, you can see that fuel is recently near the lowest levels of 2023. The EIA also report crude oil prices to be relatively flat in 2024.

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TOP STORY: Yellow Freight Market Insights

Operations have been suspended and on Sunday August 6th, Yellow Freight filed Chapter 11 bankruptcy. Yellow discontinued accepting freight before shutting down, in an effort to deliver the freight within its network. A small percentage of their daily volume was not delivered before the final day of operations and terminals are offering some operations to allow for rescuing the final shipments in their network. We recommend making appointments with terminals before sending in a truck to pick up shipments.

Many of Yellow's terminals were owned by other carriers and leased back to Yellow. In some of these situations, the terminal owners may work quickly to convert the terminal into their operations to help address the influx of freight that was formerly Yellow.

LTL carriers offering national services were able to absorb much of the Yellow volume. These initial carrier selections are not necessarily proving to serve as the permanent routing, as regional carriers are likely to see additional volumes awarded.

Freight volume embargos
The shift of Yellow freight to other carriers taxed some carriers and regions more than others. As such, some carriers have issued embargos on additional freight for certain terminals due to lack of capacity. The longevity of the embargos is uncertain, but we might advise our clients to expect them to last through September.

Mergers and Acquisitions
Consolidation continues in this trucking segment with following most recent changes:

• Clear Lane will be operating under Frontline this month. Both Frontline and Clear Lane are owned by STG logistics.
• Express 2000 was acquired by Cross Country last week
• We can expect at least one more M&A in 2023 from a larger regional carrier working towards nationwide presence

Pricing insights
General Rate Increases (GRI) increases

• August offered six out of cycle GRI's with 10 of the top 20 carriers issuing General Participation GRI’s, some were out of cycle and some their yearly adjustments.
• Increases range from 4%-31% overall increase
• Average increase for all carriers is 10% overall increase
• These increases are a reminder of what transpired during the pandemic
• Pricing discipline continues to be a major factor. Carriers are advising shippers that large quantities of additional new/unfamiliar freight may not move under existing general pricing. Proposals and negotiations are common as freight continues to search for its best next alternative to Yellow

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The 2023 FedEx and UPS 5.9% average rate hike masks a complex reality where actual delivery costs vary significantly based on distance, package weight and service speed.

• Distance plays a major role in determining delivery costs, with FedEx and UPS categorising deliveries into zones
• FedEx’s rate increases range from 5.91% for closer zones (2-4) to 6.39% for further ones (5-8)
• UPS shows a similar pattern, with longer distances attracting higher rate hikes

• Heavier packages will see a more considerable increase in delivering rates
• Shipware’s analysis indicates that while packages weighing 1 to 5 pounds incur a 5.5% rate increase, those over 11 pounds experience a jump of at least 6% at both FedEx and UPS
• This trend underscores the additional costs associated with transporting heavier items.

• Packages delivered by faster delivery services will generally see price increases above the 5.9% average
• A Shipware analysis shows rates for minimum charges that FedEx and UPS levy for their air cargo services versus slower ground transportation offerings

• Beyond the headline rate increases, delivery area surcharges (DAS) are seeing hikes of 5% to 10%
• Carriers reclassify postcodes into different segments annually which, at first glance, may seem favourable as more postcodes are removed than added
• However, a deeper look suggests that these changes will adversely effect all shippers
• With more packages now falling under the DAS umbrella, shippers will face additional charges ranging from $3.95 to $14.215 per package, not accounting for any incentives. This reclassification will likely extend the reach of these surcharges to a broader set of deliveries.

• Expedited delivery costs are rising above the average rate increases

• Businesses must adapt to these rate changes by re-evaluating their delivery strategies
• This could involve exploring regional distribution, optimising packaging or renegotiating carrier contracts

• Renegotiating carrier contracts to manage delivering costs is a critical strategy to optimise logistics expenses
• With C.H Robinson’s Parcel Intelligence platform, shippers can turn their data into actionable insights
• Contract and RFP management solutions have different options to help customers create and distribute RFP’s while providing tools to analyse the results

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What follows are insights from conversations with carriers of all sizes to offer perspective into their top concerns over the past month. Below is a summary of the recurring themes and a display of some of the variety of market experiences.

Market insights

• Freight volumes remained constrained, but the high levels of RFPs due to peak bid season provide optimism for later in 2024
• Carriers are looking to maintain driver headcount and tractors at current levels, retaining the scarce commodity that is truck drivers, but not hiring more until signs of volume growth occur
• Cutting costs to operate business more efficiently has become an increasing trend as well as finding other streams of revenue where possible i.e. selling off older equipment
• Carriers feel that we will continue to see capacity exit the marketplace in 2024 which should help to even supply and demand

Equipment

• Maintenance costs continue to be an issue, due to low profitability
• New equipment ordered may differ from expectations, which requires times waiting on parts and in the shop before they can be utilized
• The price for new trucks has increased, but used truck prices continue to drop

Drivers

• Continued sentiment is that drivers are leaving the industry because of the difficulty of being a driver. Drivers also leaving traditional long-haul fleets to pursue more local truck driver positions.
• Driver sign on bonuses have largely gone away and driver wages have remained flat
• Carriers attempt to retain their best drivers as attrition occurs

A key value proposition of C.H. Robinson to our contract carriers is aggregating lane volume and demand pattern variability to a more predictable experience. Our carriers have more predictable volume from C.H. Robinson and as a result are interested and able to offer consistent capacity and market pricing with high performance.

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TOP STORY: Intermodal up swing

Volume growth holds
Intermodal volume is sustaining the upswing that started last year. The four-week moving average for volume across all of North America is up 9.5%. It is highly unusual for peak to occur in November, but that is what occurred when y/y domestic volumes moved ahead of 2023 in the weeks leading up to Thanksgiving. Most analysts expect this volume to continue to grow slowly through 2024. The West Coast import volumes are returning and they appear to be benefiting from the issues with the Panama and Suez canals.

While volumes slowly recover, there are no capacity-constrained domestic container markets. Drayage and rail capacity is still abundant. As the rail and drayage providers see the volumes grow, the deep discounts we have been seeing are expected to temper throughout the first half of the year.

Pricing prospects
The all in IMDL spot rate continues to be negative y/y. IMDL spot rates are 10% lower than at this point last year. Spot rates are rising slowly with the increased volume, but most analysts don’t expect them to turn positive until the second half of 2024. Contractual rates are normalising and are expected to be flat for 2024.

FTR's pricing pressure index projects 0.2% increases for contractual rates in 2024. The rails are still offering capacity in historically capacity deficit markets. Making commitments before the second half of 2024 is critical in markets like southern California and outbound Mexico before the market shifts back to historic norms.

Competing service to truckload
Rail transits continue at or above five-year averages. Watch for winter weather, especially in southern markets. This will slow rail transits but should be transitory. Additionally, expedited service options provide savings with similar speeds to over the road in many lanes. The railroads continue to look for unique solutions to get more containers on their networks. Set your strategy for 2024 now because railroads historically don't take on new clients or even additional lanes with existing clients when the market is tight.

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Places where the global supply chain meets North American supply chains—like ports and airports—are also affected by the cyclical market and other disruptors. Below we offer some of the notable current situations.

General Update

• Suez Canal - Due to the low water levels and lack of available appts in the Panama Canal, followed by the heightened risk of transiting through the Suez Canal due to repeated attacks from Houthi rebels along the coast of Yemen, ocean carriers have had to re-route their vessels multiple times over the past several weeks. Here is a quick summary of the current planned schedules:
  • THE Alliance (Hapag/ONE/YML/HMM) USEC/USGC to Asia/ISC/Persian Gulf services are now re-routed from the Suez to the Cape of Good Hope, adding an additional 14 days of transit time
  • ZIM USEC/USGC to Asia/ISC services continue to be routed through the Cape of Good Hope, adding an additional 14 days of transit time
  • MSC services ex USEC/USGC to Asia/ISC are now re-routed from the Suez to the Cape of Good Hope, adding an additional 14 days transit time
  • The Ocean Alliance (CMA/OOCL/COSCO/Evergreen) are continuing to route their North Asia services from USEC/USGC via the Panama Canal. Services ex USEC/USGC to SE Asia and ISC destinations are being routed via the Suez Canal.
  • Due to limited appointments through the canal, COSCO advised that some sailings on USEC services to North Asia will be delivered via Cape of Good Hope (GOGH).
• Panama Canal - Due to low water levels at the reservoir which feeds the Panama Canal, draught restrictions have been in place since April 2023. Typical daily transits are 34-38 vessels per day. There have been incremental decreases since July 30th and further decreases were announced in November. Some recent good news is that the region received some welcome rainfall in December which has allowed the Panama Canal Authority to announce plans to increase the number of daily transits eff 16 Jan 2024:
  • From 1 January 2024, to 31 January 2024, the number of booking slots will be reduced to 20
  • From 16 January 2024, to 1 February 2024, the number of booking slots will be increased to 24
  • Beginning 1 February 2024 and until further notice, the number of booking slots will be reduced to 18 per day (this could be further reviewed in light of the upcoming increase)
• Blank sailings/Capacity shortage: the diversion of vessels from the Panama Canal to the Suez Canal and then with the attacks from the Houthi rebels, the further diversion of vessels from the Suez Canal to the Cape of Good Hope, means that transit times and vessel schedules are in serious flux. This will lead to a large number of blank sailing weeks on the trades between North America east coast and Asia/ME/ISC markets during Q1 2024. Carriers will also have to contribute more vessels to the services routeing via the Cape of Good Hope in order to maintain a weekly service. This will result in a potential shortage of vessel capacity that will lead to rates trending higher in these markets during Q1 2024. These rate increases will be over and above the special surcharges entering the market due to the issues with the Suez and Panama canals.

• (EVs) One of our large transload warehouses has partnered with North Carolina’s Port of Wilmington and are entering the market this quarter, ahead of schedule. They will be providing an on-dock warehouse and transload solution within the Wilmington port’s container gates.
• A Trucker Safety Committee has been established in Savannah to address driver concerns and help new and existing drivers become more familiar with safety operations at the Savannah port. With More than 13,200 motor carriers registered as active users’ direct communication has been challenging. The Trucker Safety Committee aims to bring representatives from all groups to the table to listen to the communities’ needs and respond in actionable ways.
• South Carolina Ports in Charleston is investing in its rail capabilities to further support growth in the Southeast. Construction is well underway on the near-dock, rail-served cargo yard that will help speed goods to market and enhance port capacity and service when it opens in July 2025. The facility will have 78,000 linear feet of railroad track. Six rail-mounted gantry cranes will move containers on and off CSX and Norfolk Southern trains. A one-mile dedicated drayage road will be used to truck cargo to and from Leatherman Terminal and a future barge will transport containers between the Leatherman and Wando Welch terminals.

• While there have not been many issues with port congestion in Norfolk our carriers are having issues with congestion and getting containers returned at the Pinners Point Empty Container Yard (PPCY). They are also still being challenged with scheduling and appointments due to vessels slipping out.
• NY/NJ - Looking into 2024, some concerns highlighted by our contracted carriers are that the ports of NY/NJ are congested but volumes are low. Volumes are down YoY and chassis capacity remains worrisome. Shopping for lower rates may prove fruitless, as the cost of goods is still high, for example replacing a tyre with road service is running over $800 to $1000 dollars depending on tyres.

• Our contracted carriers in the Ohio Valley are seeing major pressure from Beneficial Cargo Owners (BCOs) to reduce rates, even to the point of moving freight at a loss. It is clear this is not sustainable especially once the market shifts again, rates will have to increase. Volumes within this region have increased in 2023 even with the downturn in other markets. While our carriers have seen a decline with larger high-volume customers, they are seeing a tremendous increase with smaller historically lower volume customers. Some of their major concerns going into 2024 is rate sustainability and potential bankruptcies with retailers who do not do well through holiday sales. They are eager to see more diversity in their customer portfolios and the focus on productivity and innovation over the past year has allowed them to stay competitive in the ever-increasing tech market.
• Columbus - is experiencing very high volumes coming back from the holidays and that is being compounded by chassis deficits. The expectations are that things go back to normal over the next few weeks.
• Memphis/Nashville - The UP Marion rail and BNSF Memphis rails are enforcing box rules, limiting motor carrier choice in chassis, especially with CMA, OOCL, APL, Cosco. Hapag Lloyd is the only SSL currently still in the MCCP allowing choice. TRAC Intermodal is expected to pull out completely from the Mid-South Consolidated Chassis Pool (MCCP) by 1 February 2024, which covers for C.H. Robinson Memphis/Marion,AR/Rossville,TN/Nashville/Huntsville ramps. We will encourage our motor carriers to follow box rules where needed, but also to begin utilising the MPOC pool which allows carriers choice no matter the SSL box. Right now, the only specific alignment to MPOC are ONE containers out of the UP Marion rail. Note, the UP Marion is a wheeled facility. There are currently 4 pools operating in Memphis: DCLI (Private Pool), TRAC, MCCP and MPOC.
• Chicago - Temperatures have hit -4 degrees the last couple days in Chicago. This requires extra maintenance from our carriers to keep batteries alive and engines warm. Capacity is still wide open. A reminder in this market from December is that the former division DNJ Intermodal Services is now operating under IMC Companies. They also updated chassis rental to $37 per day, up $2 from their former rate. According to the Illinois Trucking Index, 30% of carriers said they do not need more workers. 38% of carriers surveyed said it is only somewhat difficult to find workers. This is logical considering 47% of the carriers said their load count last week was lower than the prior week.
• Minneapolis/St Louis/Kansas City - Winter weather is causing delays across the region. Freezing temperatures and wind chill advisories blanket these markets. When temperatures are this cold (below zero with wind chills knocking down that even further), trucks are difficult to start, fuel lines freeze causing trucks & rail lifts to not operate, icy road conditions slow travel and product temperatures inside containers naturally fall.

• Port of Los Angeles: Container volumes are down by 8.81% compared to previous week but up by 62.57% compared to 2023, there is currently 16 vessels scheduled to be offloaded this week. We will see an increase in volumes by 20.35% next week with over 113K TEUs to be processed through this port. Despite the lower volumes, truckers are still reporting problems with securing appointment slots for container moves.
• Port of Houston shut down Jan. 15th - Jan. 16th due to inclement weather conditions. This creates further bottlenecking leading to reschedules and delays. As winter storms and freezing temperatures occur, the risk for closures exists in all port locations, even southern ports like Houston as evident here.

For a full market report on global forwarding, visit the C.H. Robinson Global Freight Market Insights.

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Proposed regulation change:
To improve safety and bring Canadian rules into alignment with international codes, Transport Canada is proposing a change to the Transportation of Dangerous goods regulation (TDGR). Though still under review, the proposed change could lead to increased cost for companies as it affects how they handle importation of DGs, invest in new equipment or train employees to comply with the new regulations.

Volume pattern update:
Last November, the spot freight market saw an improvement in cross-border delivery leading to a 10% gain in volume growth m/m yet a 19% decrease y/y.

Freight move breakdown:

• Southbound loads: down 18 y/y and up 12% m/m
• Northbound loads: down 15% y/y and up 16% m/m
• Intra Canada: down 23% y/y and up 4% m/m

Though yet to be published, December volume followed a similar pattern with lower freight volume than the previous year.

To begin the new year, there was a slight surge in volume due to the holidays, mostly on northbound freight moves. The backlogues are being worked through and are slowly clearing off. Freight activities are almost back at their pre-holiday low levels and with an abundance of capacity, especially for intra-Canada and southbound freight.

While the volumes and prices are forecasted to be low until the middle of the year, more customers are starting to lean towards a long-term pricing strategy to attempt to lock in lower rates before the anticipated market shift.

C.H. Robinson is the largest cross-border provider of truckload transportation. Please seek out your account representative for capacity planning strategies designed to bring the most capacity possible to your supply chain with the greatest price stability.

Cross-border: U.S. - Mexico

In the projected landscape of 2024, the surge in nearshoring activities in Mexico is anticipated to persist, fuelled further by emerging global risk factors. This trend has prompted carriers to proactively enhance and modernise their fleets throughout 2023, positioning themselves for the anticipated uptick in business. Presently, this proactive stance has resulted in a temporary oversupply in the market, as the fruition of nearshoring investments may take some time to materialise and translate into tangible gains for the freight market.

Carriers, recognising the impending demand, are now offering competitive pricing in exchange for dedicated commitments, creating an advantageous scenario for shippers seeking cost-effective solutions for their 2024 deliveries. However, this dynamic landscape is not without its challenges, particularly with the introduction of the Carta Porte—a mandatory fiscal document in Mexico functioning akin to a Bill of Lading. This legal requirement for cross-border transactions has introduced complications for both shippers and carriers unprepared for this additional regulatory hurdle imposed by Mexican federal authorities.

Some of the best practices we have seen to produce the best results to comply with Carta Porte have come from shippers that are using version 3.0 during this optional period, instead of version 2.0 and send the delivery information in advance to make agile the process.

Carriers who have invested in infrastructure to generate the documents automatically, which speeds up the process and avoids errors, are having less hassle converting to Carta Porte and minimising risk of penalties or seizures.

Within the realm of intra-Mexico deliveries, capacity constraints are evident, as carriers show a preference for cross-border business. The allure of more favourable rates, coupled with less-than-ideal loading and unloading conditions, has shifted their focus. Safety concerns in specific states, such as Puebla, Tlaxcala and Mexico State in the central area of Mexico, further contribute to this inclination.

For those grappling with the complexities of the Carta Porte or seeking strategies to mitigate risks in their cross-border supply chain, our team stands ready to assist. Boasting an extensive footprint in Mexico and over 30 years of invaluable experience, we offer expertise and guidance to navigate the evolving landscape of the Mexican logistics industry.

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Important freight related legislation passed as part of the National Defence Re-authorisation Act in December that has got little notice from freight industry press. This provision streamlines a unique presidential permitting process that is intended to accelerate the completion of planned bridge and border crossing capacity expansions at Brownsville, Laredo and Eagle Pass, TX. This was a bi-partisan effort by Senator Ted Cruz and Representative Henry Cuellar, both from Texas.

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