Transportation Updates
Journal of Commerce: June 27th
- Truckload demand recovery is expected to stretch into 2025 or 2026 due to excess capacity.
- FTR forecasts a 2.1% rise in dry-van truck loadings and 2.4% in refrigerated loadings for 2024.
- Truckload rates are projected to drop in 2024 but rise gradually in 2025.
- The LTL sector sees improved profitability with a significant capacity drop after Yellow's collapse.
- Analysts predict varied timelines for truckload pricing increases, with some expecting faster recovery than others.
Transportation Topics: June 21st
- Overcapacity, weak rates, and high operating costs challenge trucking companies.
- Carriers like Mesilla Valley Transportation increase efficiency and cut costs to survive.
- Spot rates and demand for key sectors remain low, similar to 2018-2019 levels.
- Many small carriers entered during the pandemic; some exited, but significant overcapacity persists.
- Investing in technology and operational efficiency is crucial for future profitability.
- Southeastern dry van rejection rates surged past 7.5%, the highest since July 2022, breaking a two-year trend.
- Atlanta, the second-largest outbound market, saw its rejection rates double since last summer.
- Demand spikes in Ontario have not significantly influenced Southeastern rates, with volumes remaining flat.
- Capacity remains abundant but imbalanced, with regional shortfalls possibly temporary around the July Fourth peak.
- The FY 2025 funding bill blocks a potential speed limiter mandate for trucks over 26,000 pounds.
- Allocates $200 million for truck parking projects, prohibiting fees for truck drivers at these sites.
- Prohibits mandatory electronic logging devices for vehicles transporting livestock or insects.
- Supported by both the Owner-Operator Independent Drivers Association and the American Trucking Associations.
- The House Appropriations Committee will review the bill on July 8.
- Global manufacturing and freight are recovering, potentially boosting petroleum prices.
- From February to April 2024, global industrial output increased by 1.6%.
- Global freight volumes rose by 0.9% in the same period.
- In Asia, freight has surged; US internal freight shows mixed results.
- US road freight declines while container port traffic grows.
- API, OOIDA, National Corn Growers Association, and American Farm Bureau Federation filed a lawsuit against the EPA's 2027-2032 heavy-duty vehicle emissions standards.
- The rule mandates significant deployment of zero-emission vehicles by 2032.
- Critics argue that the technology is unproven and that the rule will harm small trucking businesses and the supply chain.
- Alternative solutions like ethanol are proposed as effective climate tools.
- Concerns include increased operational costs and impractical regulations for heavy-duty trucks.
Economic Updates
- Foreign direct investment in Mexico reached $38.2 billion from January through May 2024, a 35% increase year-on-year.
- The United States led investments with $20 billion (51%), followed by Germany with $5.7 billion (14%) and Argentina with $4.4 billion (11%).
- The manufacturing sector attracted the most investment, $21.8 billion (56%), followed by transportation at $5.1 billion (13%) and trade at $5 billion (13%).
- High-tech, life sciences, and medical devices sectors are increasingly investing in Mexico, diversifying from traditional industries.
- Companies should "future-proof" investments, ensuring supply chain stability, scalability, and considering geopolitical risks and tariff implications.
The Wall Street Journal: June 26th
- Biden's administration aims to keep gas prices low while imposing softer-than-expected sanctions on Russia, Iran, and Venezuela.
- Recent sanctions on Iran minimally impact oil markets; similar leniency observed with Russia.
- Treasury's selective sanctions allow oil flow to maintain low gas prices.
- Rising oil output from sanctioned countries has helped reduce crude prices.
- Tensions exist within the administration regarding the balance of foreign policy and economic stability.
The Wall Street Journal: June 30th
- Lumber prices have dropped to post-pandemic lows due to reduced residential construction and high borrowing costs.
- Lumber futures fell 27% since mid-March; cash prices are even lower, indicating oversupply.
- Sawmill closures and reduced production have not stabilized prices, with further declines expected.
- High mortgage rates have significantly slowed the housing market, reducing lumber demand.
- Forest-product executives anticipate price rebounds after more mill closures align supply with demand.
- New-home sales fell 11.3% in May to 619,000, the lowest since November.
- Sales dropped 44% in the Northeast, leading to regional declines.
- Year-over-year, new-home sales are down 16.5%.
- Median sales price slightly decreased to $417,400 in May.
- Rising inventory and high mortgage rates challenge homebuilders.
Specific Articles
Journal of Commerce: June 24th
- RXO’s $1.025 billion acquisition of Coyote Logistics from UPS makes RXO the third-largest US brokerage.
- The deal allows UPS to focus on its core small package business, shedding underperforming assets.
- Coyote’s $3.2 billion revenue boosts RXO’s combined 2023 revenue to $7.1 billion, diversifying its customer base.
- UPS sold two trucking operations, UPS Freight and Coyote, within three years, indicating challenges in integrating acquisitions.
- UPS faces declining package volumes and increased competition from private fleets like Amazon and Walmart.
- Saia acquired 28 terminals from Yellow Corp., including new locations in California and Minnesota.
- The Anaheim terminal will replace Saia's Long Beach facility, boosting service in Southern California.
- The Owatonna terminal in Minnesota enhances operations in the Upper Midwest, a new market for Saia.
- Saia's 2024 budget includes $550 million for real estate, increasing total door count by 12%-14%.
- Saia reported over 18% year-over-year shipment growth for the first two months of Q2 2024.
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