Freight Report: The TPM23 Edition
Reporter's Notebook: March 3, 2023
Welcome Please Haul My Freight: Edition 37. Here are some items in my TPM23 notebook:
OCEAN RATES: TPM23 is the time and place where many of the ocean contract negotiations take place. Given the criticism that BCOs may use TPM23 to talk down rates, I’ll present both sides to not commit anti-trust violations.
Shippers are clearly looking for a four-digit number on contracts starting with “1” on North Asia to the US West Coast, and ocean carriers want a four-digit number starting with a “2,” depending on the origin and destination. On Asia to US East Coast, shippers want a four-digit number starting with a “2,” while ocean carriers want a “3” or “4,” depending on the origin and destination.
It’s fair to say the nature of the discussion between BCOs and ocean carriers is far different today than it was 12 months ago.
Peter Tirschwell wrote a very good column on where we stand coming out of TPM23.
PEAK SEASON: Will there be a peak season for the ports? No one really knows. The importers I spoke with in Long Beach were quite uncertain about any volume recovery in the second half. Another observation is the shortcomings of forecasting. One BCO talked about how inaccurate its forecasting can be at times. I don’t think this BCO is alone. Forecasts tend to be good in the middle of a cycle, but forecasts tend to often miss on predicting when a boom or bust will occur.
DOMESTIC INTERMODAL: I’ve also spoken to domestic intermodal shippers who’ve shared with me some jaw-dropping rates on 53-foot containers. While the top domestic intermodal providers aren’t chasing the truck market on short hauls (less than 1,200 miles), they are clawing to win business out of Los Angeles. I’m seeing numbers down 15%-20% YoY in lanes such as Los Angeles to Atlanta, Los Angeles to Chicago, and Los Angeles to Elizabeth (NJ). One top intermodal executive confirmed to me at TPM23 that intermodal providers are desperate to keep the Los Angeles outbound business on the rails, thus the jaw-dropping rates.
Detailed numbers are available for those with a Gold subscription to the Journal of Commerce, which includes unlimited access to the JOC Intermodal Savings Index. Our indexed data includes contract and spot rates for domestic intermodal and truckload (OTR).
INTERMODAL SCORECARDS: Are you an intermodal marketing company or a domestic intermodal shipper? If so, we want you for a pair of surveys we will be launching soon. Like a doctor or a contractor perform a service, we believe railroads and IMCs also provide a service. You can review the doctor or contractor via Angie’s List, Consumer Checkbook, and the Better Business Bureau, which rank service providers.
We think IMCs are in a strong position to name the best and worst Class I railroads. Intermodal shippers are also able to grade asset and non-asset intermodal providers. The results will feed into the JOC Intermodal Service Scorecards that will identify the top service providers. Is it J.B. Hunt? Hub Group? Schneider National? That’s what we want to know. All responses are anonymous.
Click the photo above or message me to learn more about how you can participate.
RUN RAIL: Blume Global announced this week that it will offer access to Run Rail 53-foot containers. Run Rail is a new wholesale container company similar to COFC Logistics providing capacity to non-asset IMCs. If you want more details about Run Rail, feel free to e-mail or message me on LinkedIn.
MISSED OUT: If you were unable to attend TPM23, we’ve got a number of stories highlighting key themes out of the conference. I wrote about how BNSF Railway, J.B. Hunt, RoadOne, and others are investing in transloading and how BCOs can determine whether transloading is the right option for them. Michael Angell wrote how after the dissolution of the 2M Alliance, the Ocean Alliance could be the next to fall. We also have a series of articles capturing talks with CMA CGM, ONE, MSC, and Canadian National.
LESS THAN TRUCKLOAD: One sign of how much demand has fallen is the commentary around LTL contracts. We spoke with a number of LTL shippers in Long Beach who said they are locking in contract rates that are down 5% to 10% below last year’s agreements. Most of the shippers I spoke with couldn’t remember the last time that LTL carriers provided such rate reductions in contracts. Expect a change in tune from the LTL providers in Q1 earnings calls in April and May.
NORFOLK SOUTHERN: The Port of Virginia will have a new IPI service to Memphis via Norfolk Southern beginning April 1. The schedule is below. Historically, the Memphis market is served by West Coast ports, and the Port of Savannah and Port of Charleston on the East Coast. The Port of New York and New Jersey and the Port of Virginia serve Chicago, the Ohio Valley, Kansas City, and St. Louis.
A Port of Virginia official told me at TPM23 that it has secured enough Memphis business to get this service off the ground.
The primary beneficiaries are BCOs who use trans-Atlantic services in which the Port of Virginia is visited before Charleston and Savannah.
DEEPER CHANNELS: The Port of Virginia also released an update on its dredging project to deepen the harbor to 55 feet and widen the channels to allow for bidirectional traffic of ultra-large container vessels. Here is a part of that press release:
The biggest section of the 55-foot project is the Thimble Shoal West Channel and the deepening work there is 99 percent finished with full completion this fall; the Thimble Shoal East Channel is 90 percent complete with full completion coming this spring. When the work on Thimble Shoal East is complete, the first section of the two-way channel will be ready for use. At that time, the port will work with the Virginia Pilots Association, the US Coast Guard, and NOAA to update the region’s navigation charts, rules, and buoys to reflect the improved channel.
CHASSIS: In one of my sessions, we talked about when will we reach equilibrium when marine chassis will no longer be a story. Our panelists — Trevor Ash of CIE Manufacturing, Mike Burton of C&K Trucking, Doug Hoehn of Milestone Equipment Holdings, and Dan Walsh of TRAC Intermodal — said we are very close to the equilibrium as new chassis are coming off the line (more supply) amid a decline in port volume (less demand). We could reach equilibrium by June.
In my next Substack, I highlight some points in the transloading and chassis panels that didn’t make it into print.
DCLI: Direct ChassisLink Inc. announced two new outside members to its Board of Directors: Michael Moore and Jim Vena. Moore is CEO of Greywings Group and also previously had senior roles with Fenix Marine Services, GCT Terminals, Maersk, and Tradepoint Atlantic.
Vena is a name people are familiar with. He spent 40 years with Canadian National and is a PSR veteran. He spent two years with Union Pacific Railroad between January 2019 and December 2020, and an activist investor who has forced Lance Fritz to retire wants Vena to return to become UP’s CEO.
Any opinions in this blog represent the author’s views, not the Journal of Commerce or S&P Global. Any rumors in this notebook are just that: rumors. Unconfirmed. Not news stories.
Do you have an opinion or a subject you’d like me to cover? Email me ari.ashe@spglobal.com to send your thoughts.
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