Thinking Outside The Box
Reporter's Notebook: October 6, 2021
Welcome to Edition 5 of the Please Haul My Freight newsletter. If you enjoy this newsletter, please sign up to attend JOC’s Inland Distribution webinar next week. Here are some of the items in my reporter’s notebook this week:
CP-KCS DEAL: CP will file an application with the US Surface Transportation Board to acquire Kansas City Southern this month. So what deals can the Canadian railroad do to cozy up to other US Class I railroads? This from Braden Kayganich:
NS already provides a friendly trackage rights agreement with CP from Detroit-Butler-Chicago. CPKC could sell its stake in the Meridian Speedway to NS giving them 100% control. NS can make Dallas its new western terminating point and interchange with UP and BNSF. In exchange, NS can grant CPKC extended rights from Springfield, IL up the Wabash. There may be a possibility of giving CPKC rights to Louisville, KY via East St. Louis which originates a sizable amount of auto parts for Mexican auto assembly plants.
For UP, CPKC can commit to upgrades at the Laredo gateway along with reduced interchange friction. CPKC can throw some dollars at expanded capacity in the Rosenberg-Houston- Beaumont corridor. In exchange, UP can grant CPKC rights from Shreveport up the old Cotton Belt/MP via Thebes on the eastern shore of the Mississippi connecting at East St. Louis with CPKC trackage.”
I agree there are deals that would benefit shippers while also currying favor with other US railroads. What deals do you think CP could strike to benefit shippers? I also recommend a LinkedIn thread from Ted Prince on CP-CN-KCS.
VANCOUVER CONGESTION: CP is charging $1,500 for its guaranteed 53-foot equipment program. The guaranteed program offers 100% certainty of a container and a slot on a train. Three months ago, CP charged $300-$500 per container. One industry insider with knowledge of the situation said transloading in Vancouver is through the roof. The term “transloading” came up 21 times and “Vancouver” 25 times in my conversation with him. CP is also charging a $150 street turn fee because it wants empties to reposition to Vancouver. CP’s intermodal volume — domestic and international — since Aug. 1 is +14% versus 2020, +5.9% versus 2019, and +8.9% versus 2018, according to the Association of American Railroads. Keep an eye on Vancouver.
UMAX/EMP: Elise Gosch, AVP of intermodal sales for Union Pacific, wrote a great article entitled Supply Chain Challenges: We’re All in This Together. One part especially caught my attention:
“We’re also investing in the future by bringing on new chassis in 2022 for the domestic pools which we manage and equipping our rail-owned containers with GPS units.”
This is an important development. J.B. Hunt, Schneider, Hub Group, XPO Logistics, Swift Intermodal have GPS units on their containers, holding a distinct advantage with shippers who consider tracking and tracing important. If this puts non-asset IMCs on equal footing, then it’s a positive development, especially since truckload carriers already provide this service to shippers.
CHICAGO TURN TIMES: The Illinois Trucking Association contracts with Geostamp to measure turn times at Chicagoland rail ramps. Geostamp’s September data came out Oct. 5. Here 3Q21 vs. 3Q20:
What’s interesting is the domestic terminals — Global I, Global II, 47th Street, and 63rd Street — are quicker than a year ago, and even Bedford Park is slower by a slim margin. All the international container terminals are deep in the red.
TRUCKLOAD RATES: Our preliminary JOC’s Dry-Van Shipper Truckload Spot Rate Index1 is out of September 2021. Our data tracks broker-to-shipper rates, or what is billed to the customer. This is different than the broker-to-driver wholesale spot rate. Rates were up 10 cents nationally, but we saw the most significant rate increases of 20 cent-plus increases sequentially out of New Jersey and Illinois. Rates fell for the second straight month in Georgia as produce season is largely over.
More from DAT’s analysis of wholesale rates Sept. 25-Oct. 1:
— From Los Angeles to Chicago the average dry-van rate was up 5% and number of loads moved rose 19% compared with the previous week. Number of van loads moved from Los Angeles to Chicago were up 52.4% compared with the week ending Sept. 10.
IMPORT VOLUME: Jim Newsome of the South Carolina Ports Authority uses 2 million TEU as a benchmark. If laden imports are greater than 2 million consistently, then the US supply chain struggles. After being below 2 million between February and June 2020 because of the pandemic, US laden imports have been greater than 2 million TEU for the 15 consecutive months, according to PIERS, a sister product of the Journal of Commerce. Fifteen straight months: Wow!
FMC CASE: I first discussed the Mohawk Global Logistics v. MSC USA in last week’s newsletter. My co-worker Eric Johnson has a good follow-up story about how an e-mail address kickstarted this whole thing.
“The arrival notice was instead sent to an email address Mohawk uses for inbound sales inquiries that Mohawk says was never conveyed to MSC in any of the documents related to the shipment.”
Bill Freeto, who worked for OOCL, “K” Line, Maersk, and Hanjin, wrote on my LinkedIn page: Whatever happened to the telephone?
ECONOMIC OUTLOOK: Dr. Thomas Kevin Swift, a retired economist formerly of the American Chemistry Council, put out his latest US Specialty Chemical Market Report. Here were some noteworthy parts:
"Light vehicles have been affected by supply chain constraints which have restricted production, further limiting inventories at dealer lots, and leading to higher prices.
That housing units permitted, but not yet started, are up nearly 50% Y/Y is indicative of the supply chain constraints homebuilders are facing.
While peak growth is probably now over, we expect momentum to continue into 2022. Hiring issues continue to plague firms and are a major factor holding back growth.”
Do you have an opinion on anything I wrote? Or do you have a subject you’d like me to include in my next newsletter? Email me ari.ashe@ihsmarkit.com to send your thoughts, and if you enjoy this notebook, then please sign up to attend our JOC Inland Distribution webinar series Oct. 12-14 when we will probe deeper into many items discussed here.
I thank Cargo Chief, and digital freight broker Loadsmart, which are our intra-month data sources. Our final September rates due will integrate additional data from DAT and a survey of multiple brokers who supply transactional data under a non-disclosure agreement.