The market continues to experience ups and downs in demand, and stakeholders are reacting in different ways to stay afloat. Just when the trucking industry thought it could increase rates after a long time of significant decreases, the shippers resisted,, especially as concerns about the economy percolated into their order decisions.
With industrial real estate slowing down in Q2, businesses, including manufacturers, retailers, and logistics providers, wish to deliberate on their reading of the economy and consumer demand before committing.
We have these and other intriguing headlines to explore in this edition of our People First Newsletter. Read on.
U.S. shippers are resisting truckload rate hikes despite a slight increase in spot rates since May.
This is largely due to a softer freight market and concerns about a potential economic slowdown. While some carriers have managed to increase rates selectively, the overall contract market remains sluggish. Shippers hold the pricing power, aiming to keep rates flat or negotiate minimal increases. The truckload market is experiencing overcapacity and weak demand, leading to a slow and supply-driven recovery.
The decline in long-distance truckload employment and the departure of smaller carriers have not yet significantly impacted capacity to shift pricing power back to carriers.
The U.S. industrial real estate market slowed down in the second quarter of 2024 due to economic uncertainty and fluctuating consumer spending nationwide.
The slowdown has led to decreased capacity absorption, increased vacancy rates, delayed new deliveries, and subleasing activities. However, the average rental rate increased to $10.03 per square foot, prompting stakeholders to be cautious in their search for warehousing space. JLL reports some positive signs, such as a leveling off in transaction declines and increased interest in land sites for development. The report also noted that access to power capacity is a major concern for tenants.
Due to stagnant industrial demand, LTL carriers are currently handling a larger share of retail freight than industrial freight.
Old Dominion Freight Line, Saia, and TForce Freight are all eager for an industrial demand rebound for the same reason. Considering LTL trucking firms are paid by weight, a higher portion of retail freight would mean a different revenue profile than the average industrial freight. Following the increased volume of goods handled, carriers remain optimistic about the future and see this as an opportunity to diversify their services and expand their networks. They are actively working to increase their share of industrial freight while maintaining pricing discipline and prioritizing profitability.
The Port of Los Angeles faces power supply challenges, with frequent power surges and outages affecting container terminals' operations.
As of the last count, the issue has occurred nine times already in 2024. This significantly hinders the port's goal of transitioning to zero-emission technologies by 2030. Terminal operators are concerned about the unreliable power supply and its impact on their equipment, such as cranes and automated gates. While the Los Angeles Department of Water and Power (LADWP) is working on a $500 million project to improve reliability, the project isn't expected to be completed until 2029. In contrast, the neighboring Port of Long Beach, which receives power from a different utility, experiences fewer disruptions.
Both ports are committed to phasing out diesel-powered equipment, but the power supply issues at the Port of Los Angeles highlight the complexities of transitioning to green technology.
The freight market may have some challenges, but navigating it doesn’t have to be complicated. With the right platform, you can read the market quickly enough. EKA Solutions will help you enhance security, streamline your transportation process, and improve throughout.
At EKA Solutions, we leverage experts to build and run our robust platform, ensuring 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 see the difference.
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