With just a few days left before a potential blow to the economy due to the International Longshoremen’s Association (ILA) strike from Oct. 1, business groups and industry leaders are calling on the government to take action. In other news, the Biden-Harris administration’s crackdown on the de minimis exemption is being met with mixed reactions. Some believe it is for the better, while others believe it hurts small businesses.
Continue reading as we explore these and other intriguing headlines in this edition of our People First Newsletter.
With less than a week left until the current ILA contract with the United States Maritime Alliance (USMX) expires, stakeholders, including shippers, freight forwarders, and carriers, are gearing up for an almost unavoidable strike. The imminent strike, caused by the breakdown in negotiations between the two parties over wages, benefits, and job protection, threatens to impact peak holiday shipping and reverse recent inflation gains.
Businesses and organizations like the American Apparel & Footwear Association (AAFA) have urged President Biden to intervene as experts predict that the work stoppage could disrupt port operations across the country and exacerbate supply chain delays. The USMX has tried several times to restart talks and negotiations with the ILA, but they have failed or stalled. AAFA, along with other businesses, is now warning that if the strike goes ahead, it could lead to a shift of supply chain operations to West Coast Ports, potentially complicating the already tight and congested ports.
The much-anticipated pressure on the de minimis exemption by the U.S. government is finally happening. With proposals such as increased data requirements, focus on Section 301 tariffs, and stricter inspection protocols by the CBP; stakeholders can expect more control over the goods coming into the country, claiming de minimis exemptions.
However, experts have warned that although the U.S. government may have valid reasons to implement this level of control, it may have repercussions on demand for businesses and supply chains, especially those in the e-commerce sector. The move could lead to:
The move has also elicited mixed reactions from stakeholders across the country.
The Logistics Managers’ Index (LMI) marked the ninth consecutive growth in August, registering 56.4 on the diffusion scale. This reflects the logistics industry on a rebound, and it is only a matter of time before stakeholders start to see results. A key highlight of the report is an increase in inventory levels by 6.1 points to 55.7. The increase broke a three-month contraction trend that worried experts.
Companies are boosting inventories in preparation for Q4, and the Los Angeles freight market, a major hub for U.S. containerized imports, saw container volumes increase by 23% year-over-year. Outbound freight volumes in Phoenix, a growing distribution hub, surged by 17% month-over-month. All of these contributed to higher linehaul rates. The report clearly shows that despite some drops in national spot rates, the overall logistics landscape remains strong as carriers and markets adjust to seasonal shipping patterns.
U.S. truck and rail freight industry continues to record volume increase, albeit slowly. The growth is driven by stronger retail sales, particularly in e-commerce, which rose 7.8% in August year-over-year. The Cass Freight Shipments Index grew by 1% in August, following a 3% increase in July. Despite these volume gains, truckload rates have remained stagnant. The Cass Truckload Linehaul Index, which tracks long-haul truckload rates, fell 0.6% in August, marking the fourth consecutive month of decline.
While truckload capacity is tightening, it remains generally ample, though uncertainty surrounds the market's trajectory heading into late 2024. Industrial production, especially in durable goods manufacturing, showed signs of growth in August, which may boost freight demand.
The trucking industry is in a heated battle with rising freight fraud, which has increased cargo theft by 600%. A Transportation Intermediaries Association (TIA) report highlights how brokers now struggle to manage the various sophisticated schemes engineered by fraudsters and cargo thieves. Some of these schemes include double brokering and load board scams. Each fraud case costing an average of $40,000 affects the cost of supply chain operations, pressuring brokers to adapt to stricter processes and technologies.
Navigating the freight market doesn’t have to be complicated if you work with the right logistics provider. Yes, you can make operations a breeze. The EKA Omni-TMS™ uniquely caters to carriers and is engineered for better user experience, streamlining operations, and increasing agility. The application was designed to support carriers’ growth and competitiveness with easy yet high-powered user processes.
At EKA Solutions, we leverage experts and a robust platform to ensure you have zero friction at every step of the workflow. Our innovative, cost-effective, user-friendly ecosystem for carriers, brokers, and shippers prioritizes transparency, efficiency, and robust capabilities. Connect with us today to experience the difference.
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