This week, we’re covering Flexport’s layoffs affecting 20% of their global workforce, US container imports tumbling close to pre-pandemic levels, and year over year freight costs falling for the first time in 28 months.
IN THE NEWS
Digital Freight Forwarder Flexport Will Lay Off 20% of Global Workforce
As COVID-19 hit the world in 2021, demand evolved and the industry raced to catch up. As a result, various companies were hired in droves throughout 2021 and the beginning of 2022. But thanks to events like the Russia-Ukraine conflict, weather woes, and inflationary pressures, these companies had to lay off many starting the 2nd half of 2022. According to a memo from co-CEOs Ryan Petersen and Dave Clark, supply chain software startup Flexport too is laying off 20% of its global workforce, or roughly 640 employees.
Flexport joins a long list of tech companies cutting jobs after going on a hiring binge during the COVID-19 pandemic, including recently announced layoffs from Amazon, Salesforce, and Coinbase. The company’s freight forwarding and brokerage services are in the cloud, enabling it to analyze costs, container efficiency, and greenhouse gas emissions quickly and more accurately than legacy systems.
TOP HITS THIS WEEK
From The Manifest
LOGIXBOARD INSIDER
Join us this week at our upcoming webinar: 5 Ways To Maximize Automation Capabilities in CargoWise
Find out how your organization can leverage CargoWise automation to streamline operations. Watch it this Thursday, January 19th @ 1pm EST.
WHAT’S HAPPENING AROUND THE WORLD
Featured News Stories
- US ocean imports closed in 2022 extending a monthslong slide closer to pre-pandemic levels, according to a new report, leaving the shipping sector bracing for deeper declines in container volumes this year.
- A year ago this week, a record 109 container ships carrying US imports surrounded the twin ports of Los Angeles and Long Beach, California. But thanks to the changing economic tide, as of today, the queue is gone. Here’s the story of how the port of LA went from boom to bust.
- FedEx became the first company to launch cargo operations using the Cessna 408 SkyCourier, an anticipated feeder aircraft that allows for the handling of containerized cargo. FedEx plans to receive at least 50 C408s to fuel its feeder operations and, so far, has taken delivery of five units, according to the company’s latest statistical book.
- Starvation threat to chickens prompts emergency delivery order to UP. For the second time in 7 months, the US Surface Transportation Board (STB) has issued an emergency service order to rail operator Union Pacific (UP) to deliver urgently needed feed after delays were putting the lives of millions of chickens and thousands of cattle at risk.
ON OUR RADAR
Freight Costs See a Decline for the First Time in 28 Months
Throughout 2021-22, freight rates have significantly been volatile due to COVID-19, the Russia-Ukraine conflict, and resulting supply chain disruptions. As restrictions eased in 2022, the industry expected relief from the volatility. In the last quarter of 2022, decreasing demand due to inflationary pressure contributed to changes in freight rates. In fact, according to a report from Cass Information Systems, freight costs fell year over year (y/y) in December for the first time in 28 months.
Data used in the Cass indexes are derived from freight bills paid by Cass, a provider of payment management solutions. Cass processes $37 billion in freight payables annually on behalf of customers. The Cass Freight Index report showed total expenditures on the payments platform were down 4.3% y/y and 5.5% lower than in November. The shipments component of the index recorded a 3.9% y/y decline, meaning actual transportation rates were likely 0.4% lower y/y during the month (down 2.2% sequentially and 5.3% seasonally adjusted).
While shippers may be beginning to see some savings, freight costs are still much higher than they were before the pandemic. Cass’ expenditures sub index was up 23% for the full-year 2022, which followed a 38% increase in 2021. Cass’ Truckload Linehaul index, which excludes fuel and accessorials, increased 1.7% y/y but fell 1% from November. December marked the seventh straight sequential decline for linehaul rates. Shipments were down 3.3% from November, but up 1.2% on a seasonally adjusted basis. The report also noted that the y/y comps ramp higher with December’s result sitting 5% below January 2022 levels.
The report said lower truckload contract rates were the main catalyst for the index’s decline during the month. With the fourth-quarter earnings season set to start, analysts have been dialing in expectations and picking likely winners and losers for the year. While some analysts have noted key indicators are slightly improving, the consensus is TL contract rates saw some pressure in the fourth quarter of 2022 and will likely be down y/y by mid- to high-single-digit percentages at least through the first half of 2023.
