Since the collapse of the Francis Scott Key Bridge, the City of Baltimore and supply chains operating in the region are making great efforts to ensure the disaster does not entirely disrupt business. In other news, competitors of the recently bankrupted trucking firm Yellow have begun operating its assets acquired during a court-supervised auction in late 2023.
Meanwhile, the nearshoring trade transition continues in Mexico, even as it strains relations between the U.S. and China. For Mexico, recent manufacturing investments within its borders do not seem to hurt.
This issue of our newsletter explores the latest news and updates surrounding these situations and how the logistics and supply chain industry is responding to them.
In 2023, the port of Baltimore handled over $80 billion worth of cargo. Assuming the port was on track to do the same this year, the recent collapse of the Francis Scott Bridge will cost supply chains and the Baltimore Port millions of dollars. The collapsed bridge has disrupted the shipping process for cargo worth billions of dollars, with this disruption going strong for three weeks and costing the port about $4.5 billion in cargo.
Companies invest millions to ensure their supply chain operations run smoothly. Now, many are spending more to divert their cargo to surrounding areas, avoiding Baltimore. Others have cargo stranded at the port and are awaiting an opportunity to reroute it.
There is no clear picture yet of the preferred choice of cargo diversion or rerouting across the regions. However, the largest diversion has been through the Fort McHenry Tunnel on Interstate 95, which travels under the more northern part of the Port of Baltimore. Analysts are waiting to see the traffic surrounding ports to better grasp how businesses and supply chains are rerouting their products.
Good news for shippers and carriers, though. The government is not holding back in clearing the wreckage so that ships can reach the Baltimore Port. However, the process may still take at least a few weeks. For now, ships are rerouted to other ports around the Eastern region.
Following Yellow’s cessation of operations in late July 2023 and bankruptcy declaration a week later, its trucking competitors swooped in to buy off many of its assets. The carrier's collapse was/is one of the biggest in U.S. history. Putting it into context, the company was the third-largest LTL carrier in the country and had revenue exceeding $5 billion in 2022. So far, 75% of the company’s assets, including terminals, have been auctioned off to its competitors under a court-supervised process in December 2023. About 130 properties were sold for $1.9 billion.
Fighting back, the company recently took Teamsters to court. According to the company, one of the primary reasons for the collapse was because Teamstar refused to approve the second phase of operational changes. However, a ruling on March 25 saw the court side with the defendant.
The court found that Yellow failed to exhaust the grievance process established under its collective bargaining agreement with the union as the reason for closing the case.
Earlier this month, Saia and XPO announced that they had opened up some of the facilities they acquired from the auction of Yellow assets.
Saia, one of the major LTL carriers in the country, has announced the opening of two new terminals, in Texas and Montana. The terminal in Montana is one of Saia’s first in the state and was acquired as part of the 28 service centers from Yellow, valued at $244 million. XPO also announced earlier in April that it has begun operating some of the facilities it acquired from the Yellow auction. The company purchased 26 owned terminals and two leased locations from Yellow. It had the largest allocation of Yellow's properties following a bid of $870 million.
In the wake of continued trade tensions between the U.S. and China, coupled with massive operational inefficiencies and labor losses for U.S. supply chains operating in China, Mexico is increasingly looking like an appropriate option for replacing the Asian giant with many businesses.
As a result, Mexico is tapping into that dissatisfaction and tension to enjoy a nearshoring boom it was not expecting. Many of these businesses are bringing their supply chain operations closer to the end users to reduce friction in their supply chains. And Mexico is increasingly looking attractive, primarily because of the combination of proximity and pricing factors.
Many businesses have established factories in the country and transport cargo across the border into the United States, leveraging trucking companies from both countries. To put this context, cargo worth over $120 billion was hauled across the border, representing a 9% increase over Dec ‘23.
However, a few challenges threaten to derail seamless operations across these supply chains. They include increased border scrutiny, rigorous inspection, and the forthcoming elections for both countries.
All of these have required increased security, which translates to delays and disruption for these supply chains, especially during the trucking process. Because of the increased economic activities, Mexican trucking companies are expecting an investment in infrastructure, which has put them in a state of limbo.
Taking advantage of the nearshoring boom, one of the major LTL carriers in the U.S. is partnering with one of Mexico’s largest LTL providers — Fletes Mexico. The partnership will link Saia’s U.S. LTL network with Fletes Mexico’s Carga Express division. This will expand their collective network density and strengthen trucking access across the country. Both companies have announced that Carga Express will handle Saia’s southbound cross-border freight and Saia's northbound traffic at US border crossings.
The trucking industry is experiencing growth. Naturally, that comes with its ups and downs. The processes and operations within the trucking world can be challenging to manage properly, making it much more interesting to have the right solution to help make sense of your trucking operations.
EKA Solutions is a people-first TMS platform designed with simplicity and effective control in mind. Despite the many moving parts and parties (shippers, carriers, and 3PL) in the trucking process, we know people are at the center of it all. Our platform’s plug-and-play integrations and easy-to-use workflows are designed to save time, enabling people to focus on activities that add significant value to operations.
EKA’s freight broker TMS is affordable, enterprise-ready, and guarantees high-performance operations from the start.
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