AIR

Airfreight is stable with no major disruptions.

Rates are trending downward. Fuel surcharges remain stable. Capacity is available on most shipping lanes. 

OCEAN

Less-than-container-load (LCL) shipments are on the rise despite the downturn in container export volumes from Asia. With abundant space available, shippers review their product needs and ship smaller quantities at competitive rates to mitigate excess inventories. These factors lower overall demand due to economic insecurity by necessitating smaller and less frequent orders to meet market demands. The increased reliability of ocean schedules is another incentive for less urgent shipments to be transported via ocean. 

Market experts are not anticipating a strong peak season this year and will likely see some spike in volumes around September or October. Carriers are still struggling to balance capacity with low demand by slow steaming and voiding sailings. While vessel schedules have been improving month over month, it is due mainly to the congestion improvement at ports, terminals, and container yards.   

Ocean freight rates are at pre-pandemic levels despite carriers’ efforts to implement general rate increases (GRIs), as space exceeds demand. A spot rate increase comes despite the worsening supply and demand balance.  

During the last four years, the overall container fleet has grown 16.9% in size to 26.2 million twenty- foot equivalent unit (TEU), coming to 3.8 million TEUs larger than in April 2019. Meanwhile, Far East export volumes were only 2.1% higher than during the first quarter of 2019. 

U.S. DOMESTIC TRUCKING

As we enter the summer season, there is significant uncertainty surrounding the labor situation in the U.S. port and domestic transportation markets.

One key factor impacting this is the ongoing labor unrest in the Ports of Los Angeles and Long Beach. Due to walkouts that have occurred over the past 60 days, many shippers are diverting their cargo to East Coast ports. While these walkouts have been relatively short, lasting no more than 24 hours each, they have prevented importers from returning inbound shipments to pre-Covid volumes.

If this situation persists without resolution, the ports risk permanently losing some of their volume. Negotiations are ongoing, but there appears to be a significant gap between the parties involved. 

A development to note is that the national less-than-truckload (LTL) carrier ABF Freight System is facing the possibility of a strike. The union representing ABF's 8,000 members has authorized a strike if a new contract is not reached by June 30th. The union's demands include wage and pension benefits improvements, protection against contract carriers, cab cameras and internal monitoring, and automated vehicles. The Teamsters, who represent ABF employees, are also considering job actions against Yellow and TForce Freight, as their labor contracts will expire next year. 

UPS, one of the largest employers of International Brotherhood of Teamsters union members, is also facing labor uncertainty. Unionized UPS employees began voting on June 6th to authorize a strike, with the results to be announced on June 16th. If the vote is in favor of a strike, the countdown will begin until the contract expires on August 1st. The Teamsters represent approximately 340,000 UPS employees, accounting for 50% of the workforce. In 1997, a Teamsters strike against UPS lasted 15 days, resulting in significant financial losses for the company and disruptions for shippers that lasted for months. Key negotiation points for the UPS contract include wage and pension benefits, in-vehicle monitoring, the use of contract employees, weekend drivers, overtime, and driver safety. 

Given these developments, it is crucial to engage in discussions about the labor market with your vendors. If you have any additional questions or require further information, please reach out to your NNR Account Executive.