Freight Report: Turning 40
Reporter's Notebook: Jan. 12, 2023
Welcome Please Haul My Freight: Edition 35. Here are some items in my notebook this week:
TRUCKLOAD CONTRACTS: We are beginning to see the truckload contract rates come down quite a bit. While I haven’t updated the chart below with December data, the JOC Intermodal Savings Index shows truckload contract rate on indexed lanes fell $0.08 to $2.44 per mile in December and intermodal contract rates fell $0.05 to $1.81 per mile.
The truckload contract rate last month was down 6.9% compared with December 2021. There is certainly more room for rates to fall with many shippers in the middle of RFPs right now. Most shippers tell me that trucking companies are agreeing to rate reductions in the high-single-digit to low-double-digit range from prior contracts.
INTERMODAL CONTRACTS: It looks like a foregone conclusion that this point that domestic intermodal shippers will also lock in rate reductions in 2023. While Union Pacific Railroad’s guidance for the low-volume shippers showed a 2% to 3% rate reduction, some additional data that feeds into JOC Intermodal Savings Index shows perhaps a 4% to 6% rate reduction for larger intermodal shippers.
Key lanes to watch include three areas: the triangle of Atlanta-Chicago-Elizabeth (NJ); the triangle of Denver-Los Angeles-Seattle, and Chicago-Dallas in both directions.
Even on long-haul lanes where trucking isn’t competitive, shippers tell me Hub Group, J.B. Hunt, and Schneider are jockeying for market share.
I’ve heard from a few shippers that Schneider is being very aggressive on rates.
GIVE US YOUR TAKE: Share your thoughts on the best and worst domestic intermodal providers in the industry. We’re launching a biannual survey on intermodal providers such as Hub Group, J.B. Hunt, Schneider National, STG Logistics, Swift Intermodal, and IMCs using EMP and UMAX containers. It’s a great opportunity to have your voice heard, yet individual answers will be anonymous.
Click on the picture to email me for details:
C.H. ROBINSON: The Board of Directors fired C.H. Robinson CEO Bob Biesterfeld last week. Although many were surprised by this news, I was not. The groundwork was laid in February 2022 when activist investor Ancora Advisors LLC received board seats in exchange for not launching a proxy battle.
At the same time, well-placed sources with knowledge of C.H. Robinson told me three things last February: a) Biesterfeld was on a short leash, perhaps six months (turns out he got nine months); b) Ancora was dissatisfied with the performance of the North American Surface Transportation division; c) Ancora wanted to install former C.H. Robinson CFO Andy Clarke into the top job.
Expect Clarke to get serious consideration.
NORFOLK SOUTHERN: An interesting news article in the Chicago Tribune about how eminent domain was used to acquire land to expand Norfolk Southern’s 47th Street terminal and the negative impact on residents of the neighborhood on the south side of Chicago.
UNION PACIFIC: Veteran reporter Bill Stephens has a column out this week arguing that Union Pacific Railroad has lost its way with “a long list of problems, many of them self-inflicted.”
D&D: A number of updates on the contentious issue of detention and demurrage in ocean container industry. The Federal Maritime Commission (FMC) has denied a petition from ocean carriers and terminal operators that argued that limiting the scope of who is liable for per diem charges on containers would worsen air pollution at ports by creating more congestion.
The US Department of Agriculture (USDA) has called on the FMC to make it easier for US agriculture exporters to lodge complaints about botched export bookings. The USDA also wants specific situations to be included in the rule that demonstrates when an ocean carrier is unreasonably refusing to carry an export load.
FLORIDA: JAXPORT has received full funding of $40 million for a project to raise the Fulton Cut Crossing powerlines over the St. Johns River adjacent to JAXPORT’s Blount Island Marine Terminal. A $10 million grant was awarded by the Jacksonville City Council, which also provided a $12.5 million loan and a $5 million bridge loan, which will be repaid by JAXPORT. The project will allow for an increased air draft clearance of 205 feet allowing more ships to use the newly deepened 47-foot harbor.
BAD, BAD CHINA: A Chinese state-owned shipping company's purchase of container terminals in New York and New Jersey in December, along with its growing maritime commercial logistics empire, poses a direct threat to the international order, giving it economic and political influence over other countries, according to an interesting op-ed in the Wall Street Journal. Definitely worth a read.
SCOFFLAW: A Johnstown, Pennsylvania man is facing 45 felony charges, including theft by unlawful taking, theft by deception, and being part of a corrupt organization, for allegedly working with at least two others to cheat trucking companies out of nearly $100,000 collected as deposits on truck-tractors the companies never received.
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.
You may also request the data behind JOC’s Intermodal Savings Index and JOC’s Shipper Truckload Spot Rate Index, available to JOC subscribers with the proper subscription tier.
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