This week:

• Dropping intermodal cargo volumes is leading providers to stack containers as there is not enough freight to fill boxes 
• The ILWU and PMA release a joint statement regarding contract negotiations 
• Southeast and Gulf Coast ports expect to see increased container volumes thanks to a growing EV supply chain 
• Tampa Bay Port approves the planning and construction of a new 500,000-square-foot transloading facility 
• The ATA For-Hire Truck Tonnage Index sits higher for January than previously projected

Intermodal Providers Are Stacking Idle Domestic Containers as Volumes Drop 

Intermodal providers are forced to stack containers as they struggle to find adequate quantities of cargo to fill boxes as intermodal cargo volumes continue to fall through eight of the last ten months. The continued drop in intermodal cargo volumes results from shippers and retailers still having too much inventory, insufficient sales, and low trucking prices, meaning freight traveling short distances is more likely to travel on the road. 

January’s figures for intermodal container movement in North America dropped 4.2% year-over-year to 627,052 containers, the lowest January figure since 2020, according to the Intermodal Association of North America, while the US box return ratio fell to just 1.47, 13% lower year-over-year. In the period from November last year to January, North American intermodal volumes totaled 1.92 million containers, 5.4% lower than the previous year. 

At the same time as the drop in volume, various intermodal transport providers have also increased their container fleets as equipment orders placed in the last year are fulfilled, adding to the imbalance between volume and equipment. 

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ILWU and PMA are Hopeful that Contract Negotiations will End Soon

Negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) marine terminals are approaching their tenth month. However, a joint statement from the two parties released on February 23 states that they are hopeful a deal will be reached soon. The statement is rare and promising since neither side has previously provided many joint communications in this manner. 

The statement regarding the ILWU and PMA contract negotiations comes right before the TPM23 Journal of Commerce conference in Long Beach and amid worsening US importer and West Coast port frustration regarding the length of the negotiations. Due to the ongoing talks and fears among shippers of port and supply chain disruptions, many cargo shipments have been rerouted to the East Coast. According to data from PIERS, the West Coast’s market share for imports from Asia fell to 58.8% in 2022 from 61.5% in 2021. 

When a new collective bargaining agreement is reached, it will cover 22,000 workers in 29 West Coast ports. 

EV-Related Freight to Boost Container Volumes in Southeast and Gulf Coast Ports

Ports in the Southeast and Gulf Coast are working to become a part of the US’s improved EV (electric vehicle) supply chain, with many ports in these regions within intermodal reach of EV manufacturing centers which are receiving significant investments. Investments in new EV manufacturing plants over 2021 and 2022 totaled $90 billion, with the Southeast receiving the most significant amount of this investment at $44 billion. 

Hyundai Motor Group has announced a $5 billion project to build an EV factory near Savannah, along with an additional $5 billion EV battery plant in partnership with battery maker SK near Atlanta, both of which are expected to be finished in 2025. Rivian, an EV start-up, will also begin constructing a $4.4 billion EV factory in Georgia, which will be finished in 2024. The Georgia Ports Authority estimates that import volumes relating to the new EV activity in the area could amount to 30,000-40,000 import containers annually. 

The Port of Savannah will likely be a valuable entry point and intermodal stage for EV freight to Tennessee, Alabama, Kentucky, and Ohio, which have also received similar investments totaling $30 billion combined. The Port of Charleston and the Port of Mobile will likely play a large part in processing incoming EV cargo after each received upgrades under the 2023 US federal budget. 

Tradepoint Atlantic to Build new Transloading Facility Next to Tampa Bay Port 

Multimodal logistics company Tradepoint Atlantic has received approval from the Port of Tampa Bay to design, build, and run a 500,000-square-foot transloading facility next to the port’s container terminal at Hooker’s Point. The facility will help to improve cargo flow in the fastest-growing area in Florida, the Tampa Bay/i-4 corridor region, in the fastest growing US state.

US Truck Tonnage Remains Higher than Expected for January 

Despite a freight recession and the US for-hire truck tonnage falling slightly month-over-month, the American Trucking Association (ATA) For-Hire Truck Tonnage Index remains higher than previously projected. Non-seasonally adjusted index data shows a 0.4% drop from December to January, with January still 3.5 points higher than January 2021’s 109.2 at 112.7. 

With seasonal adjustment, the index shows a 0.7% gain, which challenges ATA predictions of a deeper fall between December and January. Potential causes for the unexpected gain could be equipment leaving the market among carriers who operate on the spot market, pushing more freight to contract carriers who dominate the ATA For-Hire Truck Tonnage Index. Some contract carriers are already operating with lower rates for 2023, driving more freight toward trucking. 

However, freight volumes are not likely rising as markets such as furniture and appliances still have overstocked inventories and as US manufacturing contracts for the third month in a row for January.