This week:
- ILA, USMX reach tentative agreement, avoiding second dockworker strike in three months
- US retail industry groups express their approval of ILA-USMX deal, breathe a sigh of relief
- Truckload spot rates exceed seasonal expectations, but contract pricing yet to see any gains
- Congestion, high rail dwell times at Port of Vancouver to continue through rest of January
ILA, USMX Reach Agreement on 6-Year Deal to Avoid Dockworker Strike
A potential strike by 45,000 dockworkers at US East and Gulf Coast ports has been averted with a tentative agreement between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX). The parties finalized the deal just one week before the January 15 deadline for a new master contract, avoiding a repeat of October’s ILA strike. Negotiations for a long-term pact had previously broken down in mid-November, with automated technologies as the key point of contention.
The agreement still requires ratification by ILA locals and USMX members. Assuming the deal clears all hurdles, the two sides will sign a six-year contract, providing shippers peace of mind until at least 2031. While specific details remain under wraps pending approval, multiple sources report the ILA and the USMX found middle ground on port automation.
ILA representatives made several public statements in the past few months linking port automation to job losses. However, the new deal reportedly allows East and Gulf Coast terminals some flexibility in adopting new technologies while aiming to create more longshore jobs.
As a potential second strike at East and Gulf Coast ports looked more likely in the last few weeks, numerous supply chain stakeholders and US politicians urged the ILA and the USMX to hammer out their differences. The breakthrough in negotiations came after four days of discussion in Teaneck, New Jersey.
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US Retailers Breathe Sigh of Relief Over ILA-USMX Avoiding Strike
Multiple US retail leaders and trade groups have made public statements over the past few days in support of the tentative agreement between ILA and the USMX. Even though the October ILA strike only lasted three days, its impact on retailers was felt for months afterward. Therefore, it’s no surprise that industry stakeholders are now breathing a sigh of relief that a second work stoppage has been avoided.
Jonathan Gold, VP of supply chain and customs policy for the National Retail Foundation, praised the stability the deal brings. “Providing certainty with a new contract and avoiding further disruptions is paramount to ensure retail goods arrive in a timely manner for consumers,” Gold said in a public statement.
The Retail Industry Leaders Association issued a press release emphasizing the importance of the US ports covered by the agreement. “US East and Gulf Coast ports are crucial links in the retail supply chain. Operating at full capacity and without the stress of potential disruption looming, retailers can continue delivering for consumers without delay or added costs, and the US economy can push forward on the right track for growth,” the statement said.
Truckload Spot Rates Rise at Year-End, Contract Prices Flat So Far in ‘25
US truckload spot rates for dry vans climbed at the end of 2024, exceeding seasonal expectations. Data from multiple industry sources indicate the increase was likely due to holiday demand and higher capacity. However, these gains haven’t yet translated into higher contract rates in the new year.
Data from DAT Freight & Analytics shows a negative 0.7% difference between new dry-van contract rates and the pricing they replace for the week ending January 6. Dean Croke, a principal analyst for DAT, told the Journal of Commerce (JoC) last week that the rate differential has been hovering around 1% for several months now.
“We haven’t seen a significant shift in shipper pricing power,” Croke said. “Replacement contract rates aren’t increasing, but they’re getting closer to parity. We’re at this point of equilibrium.”
While spot rates are currently up, Croke expects them to decrease by February. However, he notes that the recent winter storms that affected much of the US could delay this decline, especially in the I-40 trucking corridor.
Port of Vancouver Facing Weeks of Congestion, High Rail Dwell Times
Air cargo growth is expected to slow in 2025, but the year should still be positive for carriers, according to the International Air Transport Association (IATA). The airline trade association forecasts cargo volumes will reach 80 million tons, a 5.8% increase from 2024. This follows strong growth in 2024, with year-over-year increases of around 13%
The IATA’s projection aligns with other industry forecasts. Xeneta predicts 4% to 6% demand growth with capacity increases between 4% and 5%, while consultancy group Rotate estimates around 4% demand growth. IATA economist Ghislaine Lang noted that the strong 2024 growth is measured against a weak 2023, making it harder to maintain such high rates.
More than 50% of air cargo volumes from Asia to the US in 2024 were due to strong eCommerce sales. Large online marketplaces using direct-to-consumer fulfillment from China have become increasingly popular in the US.
FedEx CEO Predicts “Seamless” Transition in LTL Business Spinoff
Following FedEx’s recently announced plans to spin off its less-than-truckload (LTL) division, FedEx Freight, as a separate public company, CEO Raj Subramaniam said in an earnings call that the separation will be “seamless” for all involved.
Following the spinoff, FedEx Freight will retain its current name and maintain operational, commercial, and technological ties with FedEx, Subramaniam said. FedEx will continue to provide linehaul support to the new company, especially during peak shipping periods, since existing intercompany agreements already facilitate this cooperation.
To help ensure a smooth transition, FedEx Freight will begin expanding its sales force in January by recruiting more than 300 LTL specialists. The new hires will supplement 75 sales representatives who currently manage large accounts for the freight division.