1 February - 7 February
Manifest Weekly: February 1-7, 2023
What we’re covering 📲
West Coast port labor talks showing no signs of progress, leaving retailers on edge
This week’s featured news stories, including Amazon’s focus on productivity after reporting a $2.7 billion loss for 2022
Spot markets flatlining due to sliding freight rates, among other factors
Logixboard’s featured content & an exciting announcement 🎉
IN THE NEWS
West Coast Port Labor Contract Talks At An Impasse, Leaving Stakeholders On Edge
Labor woes have consistently hounded the logistics industry as of mid-2022. Workers across ports have been demanding revisions of contracts, better rates, more holidays, and improved working conditions. These labor negotiations can mean significant delays and concerns about the market reaching a standstill for retailers, manufacturers, suppliers, and shippers. In December 2022, it was the rail union workers. Now in February 2023, it’s the West Coast port workers. In fact, long-stalled West Coast port labor talks are showing no signs of progress, extending uncertainty for US retailers who rely on the coast to import goods from Asia.
Shipping industry and Biden administration officials had hoped the talks, which began in May, would conclude last fall. But, people familiar with the negotiations say the parties haven’t made progress since the summer on regional issues that are delaying discussion of major contract provisions, including wages and automation.
TOP HITS THIS WEEK
From The Manifest
5 Key Performance Metrics for Freight Forwarders
An important benefit that digitization offers the logistics industry is the ability to easily analyze data, resulting in the successful identification and monitoring of important
How to Use Shipping Data to Improve Logistics Management
In an industry filled with data, being data driven as a logistics service provider should be a no brainer. Analyzing shipping data can be used
LOGIXBOARD INSIDER
We’re excited to announce… 🥁 Logixboard is going to Singapore for the WCAworld conference!
While we’re there, we’re working to spread awareness and gather support for two impactful charities: Water.org 💧 and Direct Relief 🏥
Follow Logixboard on LinkedIn to stay updated on our journey!
WHAT’S HAPPENING AROUND THE WORLD
Featured News Stories
- Amazon is focused on increasing productivity within its operations after the e-commerce giant reported a $2.7 billion loss for 2022. The company is now looking to increase productivity in the links between its sprawling fulfillment and transportation networks.
- Spread between East, and West coast ports, ocean spot rates return to pre-pandemic levels. The strength of the economy and US imports in the second half of 2023 is still cloudy, according to forwarders and industry analysts.
- Pressure on carriers drives cut-throat freight market for China’s exports. Asia-North Europe ocean carriers are quoting small- and medium-volume shippers ‘special’ FAK rates below $1,000 per 40ft from China to the UK, as they scramble to fill their ships in the dismal market that has followed the Chinese New Year holiday.
- C.H. Robinson Worldwide Inc. is standing its ground against an activist investor pushing for a quick and wide-ranging overhaul of the country’s biggest freight broker as the company battles declining freight demand and growing competition.
ON OUR RADAR
Spot Markets Flatlining Among Sliding Freight Demand
Throughout the pandemic, thanks to lockdowns, remote work, and other factors, demand has been volatile. As a result, shipping rates too had been fluctuating throughout 2020-21. Finally, in the second half of 2022, we saw declining demand as a result of inflationary pressure. This essentially ensured that shipping rates dipped down as well. Now in February 2023, spot markets seem to be flatlining according to the FreightWaves Supply Chain Pricing Power Index.
The FreightWaves Supply Chain Pricing Power Index uses the analytics and data in FreightWaves SONAR to analyze the market and estimate the negotiating power for rates between shippers and carriers.
Freight demand is sliding, with few sources of upward pressure bearing on volumes for the near future. Consumers’ appetite for discretionary spending has been usurped in favor of squirreling away income into personal savings. Given the record-high interest rates on credit cards, many consumers simply cannot afford to buy big-ticket items.
The Outbound Tender Volume Index (OTVI), which measures national freight demand by shippers’ request for capacity, fell 2.1% on a week-over-week (w/w) basis. On a year-over-year (y/y) basis, OTVI is down 30.1%. Looking at accepted tender volumes, we see a dip of 2% w/w as well as a fall of 17.5% y/y. This y/y difference confirms that actual cracks in freight demand — and not merely OTRI’s y/y decline — are driving OTVI lower.
Of the 135 markets, 49 reported higher rejection rates over the past week, though 37 of those saw increases of only 100 or fewer bps. The big story this week is Dallas, which was just rocked by freezing temperatures and ice storms that effectively shut down the region’s freight activity. Dallas’ local OTRI is only up 88 bps w/w at 2.94% but is coming down off Wednesday’s peak of 3.27%. Thankfully, the lasting impact of this weather appears to be minimal. However, freight demand in Dallas is down a considerable 15.3% w/w.
The FreightWaves TRAC spot rate from Los Angeles to Dallas, arguably one of the densest freight lanes in the country, is quickly reaching new lows. Over the past week, the TRAC rate fell 5 cents per mile to $2.22. The daily NTI (NTID), which has risen to $2.62, continues to outpace rates from Los Angeles to Dallas. Clearly, demand is down right now after the holiday period. It remains to be seen if it will pick up again in the summer.
