North American Freight Market Insights

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Immediate and delayed impacts from Red Sea and Panama Canal challenges

With recent alarming headlines, many global shippers are asking "Should I be preparing for supply chain chaos like I experienced in 2021-2022 again?" Many shippers based in North America are monitoring situations in the Red Sea and Panama Canal and wondering when and how this could affect their North America supply chain and 2024 transportation strategy. As a global transportation provider, C.H. Robinson can help navigate complex situations with the full picture. Our global teams have outlined short-term and long-term affects that shippers should be aware of when making decisions.

Short-term impacts (Q1) 
Ocean shipping

The situations in the Suez Canal and Panama Canal are having an impact on available capacity (supply), but low North America market demand is preventing a significant increase in overall ocean container prices. After an initial surge in spot pricing and additional surcharges based on original uncertainty with the Red Sea and Panama Canal crossings, ocean rates are showing signs of steadying and in some lanes slowly decreasing. Ocean carriers are increasing the chartering of vessels to help supplement the number of vessels needed to support the diversions. Carriers also seem to be managing rates in a manner to prevent a mass shift in volume to the West Coast, keeping existing capacity and networks intact. The daily number of vessels passing through the Panama Canal has decreased by one-third, from 36 historically down to 24 in mid-January. Recent rains allowed for a brief reprieve, but February bookings will be reduced to 18 per day. In response, some steamship lines are beginning to route freight across Central America via train where it is reloaded on vessels heading north to the Gulf and East Coasts of the U.S. to maintain an East Coast port strategy.

Outside of ocean container price fluctuations, the largest impact currently seems to be with transit times and delays in product arrival. These longer transit times have led to delays in repositioning empty containers in Asia, leading to an increase of new container equipment costs by over 20% in January. C.H. Robinson recommends creating contingency plans to ensure you have enough product on hand to allow for the additional transit time for ocean deliveries and considering if temporarily switching to air for critical deliveries is a need. Many U.S. shippers have inquired about international air conversion. Despite seeing some shift from ocean freight to air, pricing has not increased significantly for air freight, making it a viable option for time sensitive deliveries. C.H. Robinson offers service solutions for international modal conversions to meet customer demands.

U.S. ports and drayage

Some shippers are considering rerouting freight and building modal conversion contingency plans, should the impacts to their supply chain continue to be felt. There are several situations C.H. Robinson would like to make shippers aware of related to ports and drayage.

  • Overall port volumes by TEU are similar to the 2018-2019 pre-pandemic period
  • U.S. East Coast ports are seeing a downturn in volume due to rerouting vessels to the US West Coast and will result in ongoing blank sailings through Q1, if not longer.
  • Delays and transit time increases could result in vessel bunching which causes congestion at the ports and added constraints on both equipment and driver capacity to meet demand
  • While U.S. West Coast ports are seeing slight increases, there was no inbound spike leading into the Lunar New Year, which means demand is still slow to return into the U.S. from the ocean side
  • Fewer vessels arriving into U.S. ports due to lower demand, delayed arrivals and blank sailings is causing an increase of empty containers dwelling in port and rail terminals
  • The equipment imbalance also affects Marine Drayage as more empty containers dwelling in port and rail terminals increases shipper risk of Detention and Demurrage fees. The congestion and lack of efficiency negatively affects Marine Drayage driver efficiency and increases both rates and accessorial charges.
  • Some terminals in L.A./Long Beach are already limiting the number of available return drayage appointments in a given day, which causes increased chassis charges and storage. As empty container volumes at the ports increase, more restrictions will be enforced to prevent overcrowding at the terminals.
Domestic U.S. surface transportation

At this point, C.H. Robinson does not anticipate domestic surface transportation disruptions in Q1 due to the Red Sea and Panama Canal situations. Overall, the truckload marketplace remains over-supplied without any near-term increase in demand that would create pressure on the market. The largest challenge could be on localised drayage levels in the West Coast as mentioned above. Intermodal capacity also remains in a state of over-supply with units available to return to service to adjust to market dynamics when needed.

Long-term (Q2 and beyond)

The situations in the Red Sea and Panama Canal are very fluid, changing by the week. Should challenges persist throughout the year with both the Red Sea and Panama Canal, we anticipate changes and roll outs will be slow. With economic forecasts anticipating muted growth in 2024, we do not anticipate the level of disruption experienced during the pandemic period.

However, there are factors that we would encourage shippers to consider in their scenario planning and strategy creation.

  • A wave of new ocean vessel capacity that began entering the market in Q4 2023 will continue into 2024. The vessels are mainly expected to be added to the Asia trades, which will further widen the gap between capacity and demand. However, if this capacity is fully absorbed by the vessel diversions through the Cape of Good Hope, the impact of this new infusion of capacity could be fully neutralised. 
  • The domestic U.S. surface transportation market, particularly in truckload, is anticipated to begin tightening in the second half of 2024 as the market finds balance primarily driven by capacity exits, see our truckload trends and forecast section for more details. This capacity tightening will be experienced differently across various regions, but particularly in California as produce season begins in late spring and summer. Shippers should keep this in mind as they consider changing from East Coast ports to West Coast ports.
  • Shippers should make decisions based on the total cost and total transit of a global order before adjusting a transportation plan. Switching from an U.S. East Coast port to an U.S. West Coast port after Q2 may improve the ocean transit time but could increase the total transit time and associated costs due to inland drayage and over the road trucking. As truckload delivery rates are expected to increase in the second half of 2024, shippers should not anticipate that the rate out of California they can procure in Q1 will be the same rate they will procure in Q3.
  • Intermodal market dynamics historically follow truckload. Therefore, including intermodal as a strategy integrated into your supply chain creates the ability to secure capacity that can lead to a smoothing of predictability as the market transitions into the next cycle. 
  • From a Marine Drayage lens, the threat of equipment shortages and vessel bunching could bring back concerns about container dwell and detention/chassis accruals at elevated levels.

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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U.S. Truckload Trends and Forecasts

Capacity trends

Dry van LTR (load:truck ratio)

The winter weather storms inflated the LTR for a few weeks in January, but the market has loosened in recent weeks since the storms have passed. Week 6 shows a LTR of 1.4:1 as compared to the 5-year average of 3.5:1.


Refrigerated van LTR

The refrigerated spot market TL shows a similar pattern and softness as dry van. Similarly, winter weather storms temporarily caused tightness in January, but that has since subsided. Week 6 shows a LTR of 2.3:1 as compared to the 5-year average of 7.1:1.


Flatbed LTR

The flatbed LTR continues to be historically low, with very little change to that narrative. The weekly ratio has been softening each week this year, despite the winter storm disruptions in January. Week 6 shows a LTR of 6.7 as compared to the 5-year average of 31.1:1.


U.S. spot market forecasts

Our 2024 Dry Van linehaul forecast is being slightly altered from the previously stated 3% y/y to 4% y/y growth. The adjustment here does not reflect any change in our view of the future, but rather, reflects the temporarily elevated costs in January due to the disruption caused by the winter storms. We still predict that most of the first half of the year costs will return back to the low levels experienced in 2H 2023, excluding the last couple weeks of the year, which was inflated due to expected holiday constraints. We don't expect the market to see lasting increases until the back half of 2024, 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 that we have noted in the past, primarily 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 ATRI (American Transportation Research Institute) 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 for the back half of the year, although adjusted to account for the previous winter storm pressures, at 3% y/y growth. We expect the pattern to follow that of the dry van forecast as well, as the dynamics surrounding the temperature-controlled truckload marketplace are the same as those in the dry truckload space.

Contract truckload environment

The contractual landscape has remained relatively unchanged since last month. The contract environment tends to follow the spot environment, so given our forecast above for spot pricing, we don’t see too much change within this space holistically for several months. Although one thing to keep in mind is the duration of said contracts, as longer-term commitments may see different pricing than shorter-term commitments.

Generally speaking, 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 to utilise this segmentation logic to make the best decisions for your procurement process and avoid costly tender rejections that inevitably will move in the spot market.

Route guide performance

The majority of shippers' freight portfolio are managed through contracted capacity and pricing arrangements. These truckload agreements are most often managed as committed pricing for six or twelve 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 are lower than they were 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.

RGD by U.S. region

The regional view of route guide performance displays a pattern of high performance in all regions. The January North America average RGD average of 1.18 (1 would be perfect performance and 2 would be very poor) is the lowest/best RGD for January in the last seven years. The North American average RGD has shown little variance recently even during the winter storms mid-January, decreasing (improving) 1% m/m and 2% y/y.

Week 6 posts a decreasing national average RGD of 1.20. 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.

The chart above from TMC, a division of C.H. Robinson, reflects weekly routeing guide depth regionally across North America.


January FTA for North America increased from 89% to 90% y/y

FTA of 90% in January 2024 was better than January 2023 posting of 89% and flat from December 2023, reinforcing that today's market continues to be oversupplied.

January RGD across distance bands 

A stable RGD performance for each of the three delivery distance bands continues. Route guide depth is largely around 1.2 depending on the distance band, with short haul doing the best and medium distance loads showing the most first tender rejection and deepest route guide performance. That said, even the mid and long-haul segments are performing close to the short haul distance band.

January distance band performance (“improved” means better route guide performance and “declined” refers to more backup carrier use):

  • Short haul (less than 400 miles) posted a 1% improvement in performance m/m and improved 2% y/y.
  • Middle distance (400-600 miles) posted a 1% improvement in performance m/m and improved 2% y/y. At 1.21, this is the lowest RGD for January in the last seven years.
  • Long distance (over 600 miles) RGD performance improved 1% m/m and 1% y/y. At 1.2 it is the lowest/best RGD performance for the month of January in the past seven years.

Voice of the carrier from C.H. Robinson

C.H. Robinson has two customer communities, shipper customers and carrier customers. 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 reoccurring themes and a display of some 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
  • Operating ratios have been sub-par due to increased inefficiencies within the market as well as low awarded volumes not materialising
  • Operating a decent amount of unprofitable business out of necessity currently, but will be looking to give back that business once possible

Equipment
  • Speed and quality of maintenance is still a concern
  • Equipment is readily available in the marketplace

Drivers
  • Carriers spending less on driver recruiting and marketing, as these funds are being reallocated to alleviate operating cost increases
  • A growing consensus that carriers will not add drivers or equipment once the market conditions improve

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 in and able to offer consistent capacity and market pricing with high performance.

Refrigerated Truckload

Winter weather and holidays may cause temporary disruptions, but capacity should remain plentiful

During January we experienced a relative and brief tightening in capacity due to the disruptions caused by the winter storms. We also saw some expected tightening regionally out of Florida due to the outbound floral rush for Valentine’s Day. The impacts from both of these events have subsided and we are now back to observing standard seasonal trends. The DAT U.S. LTR for week 6 is at the lowest point of the year at 2.3:1. The expectation is for this to remain relatively flat over the next several weeks nationally, although there will likely be some regional variance. Costs are expected to remain depressed during this time as capacity remains ample. There does still remain the risk of winter weather impacts in the coming weeks, but likely less so than the past few weeks. Work with your C.H. Robinson team to stay informed on regionalised opportunities and how to best schedule freight to capitalise on the best price and service.

Flatbed truckload

Markets remain soft but seasonal tightening looms

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 the Mid-South and Southeast have recently shown some signs of stress.

Unlike dry van and refrigerated truckload, flatbed capacity was rather unaffected by the winter storms in January. The DAT LTR has decreased/softened w/w this year, including the weeks of the winter storms. Following the standard seasonal trends, we expect some tightening to occur in the back half of February and into March. This nationwide tightening will be driven by increased demand out of the southern states. The tightening of capacity will lead to an increase in costs as well, although due to the state of the market cycle overall, the decreases in capacity and increases in costs are likely to be somewhat muted in comparison to prior years. For perspective, the DAT LTR 5-year average is 31:1 whereas current year in week 6 it is at 6.7:1.

Winter weather considerations
  • Weather is still a risk at present of the year and can cause significant issues in the flatbed market. Weather can affect driving conditions for all modes but load securement and protection for flatbed can affect capacity.
  • Carriers often favour warmer locations to minimise tarping in the cold 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 of tarps on typically "no tarp" loads, as well as on equipment like Conestogas and curtain side vans, which can be loaded faster and protected easier. 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 your book of business as we approach this period of seasonal tightening.

Voice of the carrier from C.H. Robinson

C.H. Robinson has two customer communities, shipper customers and carrier customers. 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 utilised
  • 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.

Temperature controlled shipping

Muted seasonal trends continue as Q4 progresses
Expect refrigerated spot market pricing to slowly increase into week 47 as perishable consumption peaks for the Thanksgiving holiday. Followed by a lull and rising again to close out the year. This follows typical seasonality for the Temp Control marketplace to the calendar year. We do expect a “muted” holiday season across all geographies. An area of the country that is picking up steam is the Pacific Northwest with commodities such as potatoes, apples, onions, cherries and holiday trees. We expect relief from these seasonal inflection points very early in January 2024. We will continue to provide guidance throughout the remainder of the year as things develop.

Contract refrigerated services RFP's continue to include drop trailer components as shippers are increasingly seeking capacity strategies that will lessen the impact of the eventual upcycle in 2024.


Flatbed

Flatbed markets displaying some balance

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 some balance between loads and trucks in the Pacific Northwest and Gulf Coast regions of the USA.

  • Broadly, the USA flatbed market offers plentiful capacity for spot market and contract capacity strategies.
  • Small fleets are struggling to compete with large flatbed fleets who are taking more freight in the spot market at pricing levels that challenge profitability.
  • Small fleets tend to have securement equipment (set tarp size, special dunnage, coil racks etc.) for very specific verticals. Today's market is not offering the loads that create the cashflow needed to continue investing in and updating this special securement equipment, thus potentially affecting available capacity.
  • Medium-sized fleets (10-200) are looking for any dedicated business they can find to plan out deadhead and avoid the long wait times between loads. Carriers are currently more receptive to project freight in their service areas creating new capacity to project freight shippers.

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 affect capacity.
  • Carriers will typically start to move south or west as the cold weather moves in, to minimise 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.
  • Increase use for tarps on typically "no tarp" loads as well as equipment like Conestogas and curtain side vans, which can be loaded faster and protected easier. 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 sunrise to sunset so these loads travel fewer hours per day versus the summer months due to shorter days.

To prepare for weather, you can collaborate with our C.H. Robinson team and talk about the proactive approach we can offer to navigating conditions this time of year.

Cross-border: U.S. - Canada

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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Intermodal Shipping

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.

Ports and inland transportation

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.
 
 
Southeast
  • (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.
Northeast
  • 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.
Central/Ohio Valley
  • 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.
West/Gulf
  • 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.

Less than Truckload (LTL) Shipping

Electronic bill of lading (eBOL)

As the first third-party logistics provider to adopt a new electronic version of an essential delivery document, C.H. Robinson has advanced the digitisation of the LTL industry by implementing an eBOL with 10 of the top LTL carriers and is in progress with four more. Standards for the eBOL were developed by the NMFTA’s Digital LTL Council, creating greater efficiency and real-time visibility for LTL shippers.

Today, when a driver arrives at a shipper for pickup, the shipper provides the driver with a paper bill of lading (BOL) that is manually labelled with a tracking number (PRO) by the shipper or driver. The BOL is then brought back to the terminal for the carrier to enter all delivery details manually. With eBOL, the need for manual data processing is removed and the potential for exceptions is drastically reduced. Data flows between C.H. Robinson and LTL carriers electronically, allowing for PRO numbers to be assigned within seconds.

This elimination of manual entry reduces errors that could lead to delivery delays, invoicing delays, bill-to corrections or secondary invoices. The automated process provides faster visibility to the tracking of your freight, as a tracking number is generated within seconds of the delivery being tendered to the carrier. This also enables time savings on the dock since shippers will not have to locate carrier PRO books, add PRO stickers to the BOL or wait for the driver to arrive before being able to PRO the freight.

More information on eBOL can be found in this Electronic bill of lading guide. Ask your account team how you can implement eBOL today.

LTL carrier sentiment

The SMC3 Jump Start 2024 conference took place in Atlanta, GA on 22-24 Jan. During this three-day supply chain event, we met with 42 LTL carriers to discuss their expectations of the market that lies ahead of us this year. Numerous carriers shared similarity in their forecasts of 2024 for muted volume growth, with most expecting tonnage the first half of the year to be flat to slightly down on a year over year basis. They also shared similar beliefs that the back half of the year would lead to modest volume growths, noting positive expectation in economic factors and consumer demand. In these conversations, nine carriers commented on their acquisitions of terminals from the Yellow auctions, stating that none of them had any hard timelines on when these newly acquired terminals would be operational. This bolsters our previous assumption that without any near-term expansion in available terminals in the market, there will continue to be pricing pressures due to this supply constraint. Although due to the low tonnage and no demand increase in sight in the short term, these pricing pressures will remain moderate, similar to what we are experiencing in today’s market.

Please contact your C.H. Robinson representative to discuss capacity strategies and customer specific pricing that outperforms today's GRIs.

Parcel Delivery

Navigating the 2023 FedEx and UPS rate hikes

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.

The impact of distance on rates:
  • 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
Weight matters more than ever:
  • 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.
Service used:
  • 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
Delivery area surcharges: A hidden cost:
  • 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.
Faster service equals higher prices:
Strategic responses to rate changes:
  • 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
Recommendations:
  • 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

Government and Regulations

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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