11 January - 17 January

XB Manifest Weekly

Manifest Weekly: January 11-17, 2022

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.


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.


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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.

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