eShipping’s Monthly Industry Update – November 2022

Everybody’s got a lot on their plate right now, so here’s a way for you to stay up-to-date on the latest news without the extra hassle. Introducing…the eShipping Industry Update Report. Each month, our team sits down to comb through the metrics, trends, and key takeaways on the state of the logistics industry to help your business plan for the coming months.

Less Than Truckload:
LTL carriers explore alternative pricing structures in coming year.

  • Old Dominion Freight Line Inc. has begun a trial program in which it offers one all-in rate to LTL shippers before their freight is picked up, a step the carrier said represents a major advancement in the backwater processes of costing, pricing and paying for LTL transportation.
  • Less-than-truckload carrier FedEx Freight said Tuesday it has launched a program, called space and pace, to price freight tendered by select customers based exclusively on the shipment’s weight and dimensions, how much space it occupies aboard a trailer and when it needs to arrive. Some softness in LTL pricing but not wholesale changes
  • Carriers will strategically price freight they want to handle versus previous stance of targeting freight they wanted off their trucks. FedEx Freight to begin furlough of drivers
  • FedEx Freight, the nation’s largest LTL carrier, said Saturday it will furlough an undetermined number of drivers starting in early December.
  • The furloughs are expected to affect a small number of drivers, and not all facilities will be targeted, said Miranda Yarbro, a FedEx Freight spokesperson. The furloughs will be voluntary, Yarbroadded.
  • The action was taken in response to slowing macroeconomic conditions that have impacted LTL demand in recent weeks, the unit said. (FreightWaves)

Full Truckload:
FTL contract market rates continue to be elevated above spot market.

  • As we enter November, we are clearly not seeing a typical 4Q seasonal peak where capacity tightens, and freight demand (and pricing) rises. This “muted” peak season is the result of shippers having high inventory positions, earlier than normal imports to support 4Q business, and decreasing overall demand.
  • Diesel fuel supplies have been recently reported at substantially lower than normal levels (lowest since 2008). The East Coast is more impacted that other areas of the US, but it is important to note that this is a global issue.
  • At this point, we do not anticipate any issues with being able to move freight within the US due to these lower levels of diesel, however –most opinions on the matter state that it is very likely that we will see diesel pricing continue to increase over the coming winter months.

ILWU negotiations continue and work stoppages remain low.

  • The IAM rail labor union ratified the tentative U.S. rail labor agreement. 7 unions have now ratified the tentative agreement, 2 unions have rejected the deal, and 3 unions have yet to vote, including the 2 largest unions who are scheduled to vote on November 21. The labor situation remains an overhang until all unions have ratified, although we continue to believe that the risk of a work stoppage remains low. Ocean Carrier are cancelling sailings at an accelerated clip
  • Sea-Intelligence said carriers in just the past two weeks announced an additional 50 blank sailings covering the last 10 weeks of 2022 and predicted that more blanks would be announced through the end of the year. (JOC)
  • Trans-pacific carriers have blanked 17.1% of total capacity to USWC and USEC in November. (Sea-Intelligence) Railways continue to struggle with containers
  • NSF had the longest truck turn times of the year in October at its LP Chicago terminal, according to the Illinois Trucking Association, as the western US railroad struggles amid a lack of marine chassis. (JOC)
  • While a slowdown in import volumes into LALB has eased congestion at BNSF Alliance outside Dallas-Ft. Worth, railroads are still struggling to handle ocean containers at terminals in Chicago, Memphis, and Kansas City. (JOC)
  • BNSF Railway has cleared more than 80% of the ocean containers that had been stacked at its Dallas-area terminal and believes normal operating conditions could resume there within weeks. (JOC)

Air cargo volumes continue to decline year over year.

  • Air cargo volumes declined 8% year over year in October –the eighth consecutive month of decline –and the outlook is equally downbeat. (aircargonews)
  • The drop in demand, measured in chargeable weight, was also 3% below the pre-pandemic level in 2019. (Freightos)
  • Air cargo airline and logistics executives have written off the traditional peak season bump in shipping business as the global economy decelerates, leaving them to speculate whether prospects will improve sometime in 2023. (FreightWaves)
  • Some of the largest carriers in the world, not including express carriers, have cut back as many as 100 flights per month coming out of Asia to the U.S. (FreightWaves)

UPS and FedEx peak season charges for customers with 20k packages / week.

  • All Peak Season charges now in effect for both carriers. The last charge to be implemented started on 10/30 for UPS and 10/31 for FedEx. These ground residential surcharges only apply to shippers with 20k + shipments a week. All peak season additional handling surcharges will remain in effect until January 14 for UPS and January 15 for FedEx. Large-Scale departures for FedEx Ground delivery contractors appears unlikely.
  • FedEx Ground announced lower payouts for their holiday incentive program, paid to delivery contractors every year as volume increases. The announcement brought fear that many contractors would walk away from their routes. This fear has subsided with 96% of contractors signed on to the incentive program. UPS and FedEx holiday schedules
  • As the holidays approach, it is important to know the schedules for your carriers. Access the UPS and FedEx holiday shipping schedules.

Surge in import & US Manufacturing in 2021 & 2022 leading to record inventories.

  • Federal Reserve Economic Data (FRED), that tracks inventory levels, is showing the highest level on record, which matches what EDS is seeing.
  • Due to uncertainties that were caused by manufacture backlogs and steamship line/port congestion, caused companies to over-purchase products. This is leading to skyrocketing inventories and the need for overflow warehouse space.
  • Most recently (in the past 30-60 days) we have seen order volume taper off and, in some cases, go down. Companies are deciding how to sell off these inventories to lower inventory carrying costs. Some also need to make way for their new products they expect to sell in 2023. As outbound order volumes drop, we expect to see inventory drops as well.
  • We expect markets where warehousing construction has been strong to appear somewhat “overbuilt”. We are already seeing this softening in some key markets.

Click Here To Download The Full November Industry Update Report.


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