This week:
- LTL carriers defy decline in US freight demand, raise contract pricing for 2025
- A frenzy of merger and acquisition activity as smaller LTL carriers try to compete
- Port of Vancouver, Canada’s busiest port, set to shut down amid labor dispute
- Peak season rolls on as trade on eastbound Trans-Pacific lane remains strong
- EPA delivers $2.8 billion in grants to US ports to replace diesel-powered equipment
LTL Carriers Buck Freight Slump, Raise Prices for 2025
Despite a long-running decline in US freight demand, less-than-truckload (LTL) carriers are defying the trend and increasing contract pricing for 2025. Several publicly-owned LTL providers have reported significant hikes in contract rates, even as overall LTL shipments have dropped and excess capacity has risen.
The collapse of Yellow Corporation in July 2023 can be seen as a key factor driving the unexpected price surge. When Yellow ceased operations, it was the third-largest US LTL provider. Its abrupt withdrawal from the market initially led to a loss of capacity that tightened the market. Today, LTL carriers continue to invest in terminals, opening facilities they bought from Yellow as they plan for expansion.
As capacity rose over the past 16 months, shippers have become more selective about the freight they ship. Market analysts note a focus on higher-margin shipments and a trend of working closely with carriers to optimize supply chains.
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Smaller LTL Carriers Merge to Compete in Highly Competitive Market
Meanwhile, smaller LTL carriers face a highly competitive market, which has led to a flurry of merger and acquisition activity.
While industry giants like TFI International and Knight-Swift explore large-scale deals, rapid consolidation is taking place in the smaller end of the market. This trend is primarily fueled by the need to scale up, expand service networks, and acquire precious resources like terminals, technology, and skilled labor.
Chicago-based Moran Transportation announced on October 29 that it was buying fellow small LTL provider RMX Freight Systems to expand its coverage area, terminals, and workforce.
Mike Moran, president of Moran Transportation, told the Journal of Commerce (JoC) last week, “I think if you’re not growing, you’re sinking. If you don’t maintain a certain size and a certain growth rate, you’ll have a hard time competing in this market.”
The Moran-RMX merger is just the latest in a string of recent acquisitions, reshaping the smaller end of the LTL market. DC Logistics recently acquired the US freight business of Netherlands-based GLS, and Jack Cooper seems poised to purchase Standard Forwarding from DHL.
Canada’s Busiest Port May Shut Down in Response to Strike Vote
A looming labor dispute threatens to cripple the Port of Vancouver, Canada’s busiest port. Last Friday, the British Columbia Maritime Employers Association (BCMEA) announced plans to lock out longshore foremen represented by the International Longshore and Warehouse Union 514 by Monday of this week. This follows the union providing BCMEA a notice to strike.
In a statement released Friday, the BCMEA said it had received a 72-hour strike notice from the union, representing approximately 730 longshore foremen throughout British Columbia. In response to the strike vote, the BCMEA said in the statement that it would “take defensive action in the form of a coast-wide lockout” of Local 514. Weekend talks to avert the strike were not scheduled.
The lockout or a strike could shut down all cargo operations in Vancouver, including container, cruise, and grain shipments. Local 514 has been without a contract since March 2023, with the BCMEA accusing the union of negotiating in bad faith. The BCMEA has offered a 19.2% wage increase over four years, but Local 514 rejected the proposal.
The dispute comes as Canada is already facing capacity constraints on its East Coast due to labor disruptions at the Port of Montreal. Industry observers warn that a shutdown in Vancouver could disrupt the global supply chain, as it would increase pressure on other North American ports like Seattle and Tacoma.
Peak Season Continues on Eastbound Trans-Pac Amid Strong Import Volumes
The eastbound trans-Pacific trade lane continues to defy seasonal trends as import volumes from Asia remain strong well into the peak season. Import demand from Asia typically tapers off in the weeks leading up to Black Friday sales. However, resilient retail sales, tariff concerns, and the mid-January expiration of the tentative labor deal at US East and Gulf Coast ports have all led to an extended trans-Pac peak season.
To capitalize on the unexpected demand, carriers are reducing the number of blank sailings in November. This strategy aims to optimize vessel utilization and to drive freight rates higher. According to maritime intelligence firm eeSea, blanks on the East Coast are down from 21% in October to around 8% in November.
US Ports Receive EPA Funding for Clean Energy Upgrades
US ports are prepared for major upgrades to container handling equipment following the federal government’s announcement of $2.8 billion in Environmental Protection Agency (EPA) grants. The funds will be used to replace diesel-powered yard equipment with electric equivalents. The upgrade projects will allow ports near residential areas to increase cargo volumes while reducing carbon emissions.
On October 29, the EPA announced that its Clean Ports Program, funded by the Biden administration’s Inflation Reduction Act, will fund 21 projects across multiple US ports.
The Port of New York and New Jersey will receive a substantial portion of the funding, totaling $344 million. The ports of Los Angeles and Virginia are also set to receive significant funding for their clean energy initiatives.
