TRUCKLOAD
Truckload Market Update
The anticipated surge in imports and consequently, OTR tender volumes stemming from the upcoming ILA strike renewal on January 15 and potential tariff increases in early Q1 has not materialized. As a result, the Outbound Tender Rejections Index (OTRI) has not risen as many experts expected. While OTRI remains higher than 2022 and 2023 levels, it has fallen below 2019 levels year-overyear (YoY).
Source: sonar.surf
In November, National Van Spot Linehaul RPM recorded another YoY gain, $0.07/mile or roughly 4%; however, lower fuel surcharges this year continue to keep National All-In rates down. In November, National Van Spot Linehaul RPM remained down roughly 3% YoY. Another indicator of an oversupply of capacity in the market.
Downward shifts in spot and contracted recoveries have led FTR Intel to decrease its 2025 rate forecast Currently, their projections are roughly a 4% increase in LH rates from a YoY perspective. Without a major disruptor in the market, or a mass exit of carrier capacity, FTR is projecting another stable market for shippers for 2025.
National Spot Rates
Source: ftrintel.com
Spot market enters 2024 home stretch
Source: DAT.com/trendlines
INTERMODAL
Intermodal Market Update
Intermodal Volume
Intermodal traffic has continued to set record volume levels in November and early December, and the trend is expected to continue through the end of 2024 and early 2025. Consumer spending, imports moving forward, port diversions to avoid labor issues, and tariffs have been among the driving factors that have kept the strong demand for intermodal service in place.
Parcel shippers have been setting daily intermodal volume records and will continue to consume intermodal capacity across the industry for the next month Union Pacific and CSX have been experiencing ramp congestion and constraints for equipment and gate reservations in Southern California, Salt Lake City, Chicago and the New Jersey markets while keeping up the demand from parcel and other intermodal shippers
Union Pacific plans to keep the $850 Aggregate and $600 MCP customer surcharges in place through the end of the year and early 2025 until demand decreases.
LTL Industry News
Here are links to some top stories in the industry for you to check out:
Jack Cooper LTL Unit on the Horizon
It’s been another interesting year in LTL land as we adjusted to life without Yellow, navigated through a challenging economic backdrop and freight recession and bore witness to continued consolidation amongst the carrier community We contended with cyber-attacks, tensions domestically and in the middle east and elected the 47th President of the United States. Yet, despite these, and many other challenges and distractions faced throughout 2024, we proved our resiliency and connectedness as an industry and community and have made the best out of what can simply be referred to as a “wild” year.
LTL Market Update
We end 2024 similarly to how we began the year: hopeful the next 12 months bring improved circumstances that support a stable environment where demand for LTL services is abundant, service is consistent and reliable and rates are equitable for all.
LTL Rates:
Inflationary pressures, fluctuating diesel costs and cautious consumer spending are ongoing challenges the LTL carriers are solving for still; however, they continue to exercise pricing discipline unlike anything we’ve seen before. While there are still opportunities at the carrier and lane levels to negotiate or retain attractive pricing provisions where this is a supply and demand alignment, carriers are largely seeking increases ranging from low- to mid-single digits on renewing contracts.
Furthermore, carriers are emphasizing the importance of accessorial charges and collecting on accessorial services being utilized to support operating ratios against the inflationary pressures associated with running an LTL company. Further technological adoption in 2025 and beyond will only increase this trend, as LTL carriers are now in the business of ensuring the quality of their revenues.
LTL Demand:
As the holiday season marches on, business confidence in the U.S. is still in contraction territory. Industrial production hasn’t seen any meaningful expansion since June, and we observed only a modest improvement in the ISM Manufacturing PMI to 48.4 in November 2024, reflecting a continued but softer contraction in manufacturing activity, directly influencing LTL freight volumes The rebound in new orders (50 4) may indicate short-term stabilization for LTL demand after prolonged
softness. Reduced contractions in production, employment and inventories suggest a gradual easing of capacity constraints for carriers, while easing price pressures and faster supplier deliveries may translate to improved shipping reliability and pricing flexibility.
Despite these developments, weak overall demand and sluggish backlogs signal ongoing challenges as carriers align capacity and rates for 2025 amidst slow economic growth and strategic inventory management While everyone is rubbing their proverbial “crystal ball” for guidance on 2025, it doesn’t seem likely that any meaningful changes in demand will be present before the second quarter.
Fuel:
The U.S. national average cost per gallon for on highway diesel in the month of November 2024 came in at $3.522, which is $.06 or 1.8% lower than October’s average of $3.585. The U.S. national average in November of 2023 was $4.254, which is $.985 or 23.2% more than November 2024. We start the second week of December off at $3.458 per gallon for the U.S. national average.
Source: Trading Economics & Federal Reserve
UNITED STATES ISM MANUFACTURING PMI
PARCEL
Parcel Landscape and Strategic Developments
As the parcel industry continues rapidly evolving, shaped by economic pressures, shifting consumer expectations and technological advancements, it can be difficult to keep up. Understanding the multitude of ongoing changes is critical for businesses aiming to stay competitive. Here are some key trends to stay on top of through year end and beyond.
Key Industry Trends
Rising Costs and Surcharges: FedEx and UPS have announced general rate increases of 5 9% for 2025, alongside expanded peak season surcharge windows These cost pressures disproportionately affect businesses shipping smaller parcels or managing high volumes during holiday periods
Evolving Consumer Expectations: Faster, more reliable delivery is no longer a premium offering it’s expected. As eCommerce continues to grow, customers are looking for precise delivery windows and flexible fulfillment options.
Delivery Network Challenges: Events like labor strikes and severe weather expose vulnerabilities in carrier networks, disrupting schedules and increasing costs for shippers who lack a diversified strategy.
Technology Integration: The ability to seamlessly connect supply chain systems is no longer optional. API integrations and real-time data sharing are essential for reducing errors, speeding up processes and ensuring access to the best available rates.
Holiday Season Complexity: Cyber Week and holiday promotions are driving record shipping volumes, requiring businesses to secure capacity and manage rising costs while avoiding delivery delays that can erode customer trust.
Key Trends
INTERNATIONAL
Supply: Capacity improving and blank remain relatively low moving into December
Demand: Volumes steady, not yet surging despite influence of possible ILA strike and Chinese New Year
Rates: Asia to U.S. rates continued to slide – rates now at January 2024 levels
EC/Gulf Port Labor Contract: Discussions continue ahead of the January 15 extension deadline
Capacity/Supply
The overall capacity picture in the Trans-Pacific container trade is improving significantly, and the outlook for the near future appears strong The U S West Coast is set for some solid capacity injections in December and January (see below graph) Total capacity should reach a record 1 5 million TEUs in January
The number of blank sailings is down in December, but “vessel bunching” – where more than one vessel in a service loop is at the same port at the same time – is causing some schedule delays and overlaps in coverage Analysts are predicting a December blank sailing rate of about 1-2% on the East Coast and 6-7% for the West Coast
Source: M+R Spedag Group
Volume/Demand
To this point, the market has not seen the surge in bookings normally associated with the pre-Lunar New Year period, suggesting the continued flattening of peak seasons Asia to U S East Coast demand is stronger than to the West Coast, but space is still generally available and few, if any, carriers are seeing full vessels now.
Importers at this point are at ease with another ILA strike in January, mostly because shipment departures in early December will likely arrive just before a possible strike on January 15, and those vessels are not overbooked and available today. What remains unknown moving through December is whether that confidence wanes and higher volumes are booked to hedge against potential delays.
Some analysts feel it is likely that many retailers are preparing now to frontload shipments if they haven’t already done so, especially if they have space in their warehouses to store products until needed. As inventories drop through the holidays, space will open up for the frontloading of spring merchandise, which may occur earlier than usual based on so many uncertainties.
Rates
The Asia-West Coast rate slide is now in its sixth week the second-longest such stretch of the year with average rates at their lowest levels since January. After a short-lived increase on December 1, average Asia to U.S. East Coast rates have slipped below late November levels as carriers limit blank sailings in preparation for a potential pre-Chinese New Year demand surge.
Analysts feel that with solid available vessel capacity scheduled and reduced blank sailings, they expect continued downward pressure on spot rates that have been sliding since July Moving into December, Asia to U S West Coast rates were down another 4% from November and well below the July peak of over $8,000/40’
Moving into January is far more uncertain; however, with major events upcoming on the Presidential/political front, the labor/strike potential and new carrier alliance changes, things could change rather quickly. This is also in addition to the possibility of a volume surge in late December/early January as importers push orders in advance of the Chinese New Year period starting January 29.
Operational News
East Coast/Gulf Labor Contract Discussions Continue
In the first week of December, discussions resumed between the United States Maritime Alliance (USMX) and the International Longshoremen’s Association union representing the East and Gulf Coast ports. Both sides had agreed to a media blackout when contract negotiations resumed post-strike in early October. But that ceasefire was short-lived after the ILA broke off talks on November 13, accusing employers of trying to force automation technology language into a new master contract.
The union then renewed its efforts to sway public opinion by reposting on its Facebook account an image of an ILA flag with the message, “If it’s a fight they want, it’s a WAR they’re going to get.”
Much of the remaining negotiation is related to technology within the port operations and one of the primary issues is the proposed use of semiautomated rail-mounted container gantry cranes (RMGs) on the docks The ILA feels this technology implementation jeopardizes jobs, threatens national security and puts the future of the union workforce at risk
USMX in their response stated “Port operations must evolve, and embracing modern technology is critical to this evolution. It means improving performance to move more cargo more efficiently through existing facilities – advancements that are crucial for U.S. workers, consumers, and companies.” USMX then stated that it “is not, nor has it ever been, seeking to eliminate jobs, but to simply implement and maintain the use of equipment and technology already allowed under the current contract agreements and already widely in use, including at some USMX ports.”
Both sides have until January 15 to come to an agreement and avoid further strikes or work stoppages.
Operational News Cont’d
President-elect Trump and potential tariff action – potential supply chain impacts
Political and trade experts feel that President-elect Donald Trump’s plan to hit imports from China, Canada and Mexico with tariffs could create some negative consequences for businesses in the U.S. and the overall global supply chain. Trump has said that on his first day back in office, he will impose 25% tariffs on goods from Mexico and Canada and an additional 10% tariff on Chinese imports. The motives behind these changes are related to immigration/border protection, fighting illegal drug traffic but most notably the continuation of his “America First” platform.
As seen in 2018 when Trump initially implemented China tariffs, importers shifted away from suppliers in China. Other countries in Asia have seen increases from 35% in 2018 to 47%, with India and Vietnam the largest winners. It is likely that supply chains will again see a potential shift away from China and to other Asian origins.
Trump’s proposed tariffs could also impact small- and medium-sized e-commerce importers the hardest, based on their reliance on China-supplied products. These are companies that have already been impacted by lower sales due to inflation
