This week:
- US truckload and LTL rates up, but analysts predict a period of “extended stagnation” coming
- Vessel explosion at Ningbo Beilun’s Phase III Terminal brings more Asian trade lane disruptions
- CrowdStrike outage hits airlines hard, but air cargo demand holds steady as rates reach peak
- Hapag-Lloyd CEO says ILA strike only becoming more likely; ILA-USMX still at odds in talks
- Blue Ridge Connector nearing completion in Georgia, will expand rail access
US Truckload and LTL Rates Up, But Analysts Warn of Pending Stagnation
According to data from several sources compiled last week by the Journal of Commerce (JoC), both truckload and less-than-truckload costs increased in July. While truckload prices lagged in comparison to July 2023 rates, LTL prices saw healthy growth last month.
According to data from the US Bureau of Labor Statistics (BLS), the producer price index (PPI) for long-distance truckloads rose by 0.5% in June, while LTL service increased by 2.2%. The slight increase in truckload rates is a sign of a slow recovery after prices bottomed out earlier this year. Rising freight volumes and tight capacity amongst truckload carriers are responsible for the slight uptick, according to data provided by the Cass Freight Index. Still, the truckload PPI is down 1.9% year-over-year.
Meanwhile, the spike in LTL rates represents a 7.1% year-over-year gain. Rather than celebrating this news, some industry observers predict a period of “extended stagnation” for both truckload and LTL rates for the rest of 2024. AFS Logistics said last week that its truckload rate per mile index will drop slightly at 4.7%, compared to the previous quarter’s 5%.
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Vessel Explosion at Ningbo Further Complicates Trans-Pac Trade Schedules
An explosion aboard a Yang Ming vessel on Friday, August 9, led to the closure of the Ningbo Beilun’s Phase III Terminal, a major Chinese export hub. The closure is another complication to the major Trans-Pacific trade lanes, following a year full of schedule disruptions.
Yang Ming released a statement suggesting an explosion occurred in a container loaded with dangerous goods on board the 6,589-TEU vessel YM Mobility. The ship is part of CGX, a joint service between Yang Ming, Asia Gulf Express 2, Hapag-Lloyd, and Ocean Network Express. According to the shipper declaration, the container in question was a refrigerated unit being used as a substitute for a dry container.
The Ningbo closure is expected to impact not only Asian trade lanes but also trade routes to Europe and the US. Carriers are already facing extended waiting times at other Asian ports, leading to schedule changes and re-routing at a time of peak import demand in Europe and the US. A spokesperson for FIBS Logistics in Hong Kong told the JoC that the average waiting time for export shipments at China’s major ports now averages three to seven days.
CrowdStrike IT Outage Can’t Stop Soaring Air Cargo Demand
July’s global IT outage, caused by a failed update to CrowdStrike security software, caused more than a week of flight delays and cancellations. However, according to a Xeneta report released on August 1, air cargo demand held firm throughout the incident.
July air cargo demand increased 13% year over year. This is despite rates spiking to the highest level this year, thanks to the CrowdStrike disruptions.
Xeneta Chief Airfreight Officer Niall van de Wouw said the outcome would have likely been different if the outage had taken longer to fix. “However, once again, air cargo showed resilience after seeming to have dodged another major disruption. Going into the peak time of the year, airlines might just be starting to think their tailwinds will hold out,” van de Wouw said.
CEO: ILA Strike at US East and Golf Coast Ports Becoming More Likely
Hapag-Lloyd CEO Rolf Habben Jansen told the JoC last week that the probability of an International Longshoremen’s Association (ILA) strike closing ports at US East and Gulf Coast ports has only risen since spring. In reaction, shippers have been frontloading seasonal cargo.
“In terms of [the US] East Coast, if you’d asked me in January, I would’ve said I’m not so worried about that,” Habben Jansen said in the JoC on August 14. “Right now, when you look at the rhetoric that’s out there, I think that, unfortunately, the chance that there will be some disruption has definitely gone up.”
The ILA and the United States Maritime Alliance (USMX) remain at odds over a new contract, with the union demanding significant wage increases and the USMX offering what they consider an industry-leading package. The current contract expires September 30, making the potential first day of strike October 1. If the strike does occur, it could pose a significant threat to global supply chains.
Georgia’s Blue Ridge Connector Nearing Completion, Will Expand Rail Access
The Georgia Ports Authority’s Blue Ridge Connector (BRC) is on track for a 2026 opening. Once completed, the 104-acre facility will host six rail tracks totaling 18,000 feet of capacity for intermodal trains. It is expected to handle 200,000 containers annually.
In addition, the BRC will connect northeast Georgia’s manufacturing and logistics hub to Savannah’s global shipping network. It will also feature a new Foreign Trade Zone for flexible import processing and offer a large supply of empty containers for exports.
The Port of Virginia officially opened a larger intermodal yard at Norfolk International Terminals (NIT) on Tuesday, August 6. The expansion will provide resiliency against weather disruptions in the port or rail network congestion.
The increased capacity is expected to benefit Midwest cargo owners most, thanks to more efficient rail transport to cities like Chicago, Cincinnati, and Detroit. The intermodal yard is part of a broad modernization project, including harbor deepening and terminal expansions to accommodate larger vessels.
