As the deadline to reach a contract approaches, the shadow of the looming ILA strike continues to lengthen. President-Elect Trump met up with ILA president Harold Daggett at Mar-a-Lago, expressing support for the ILA after the meeting. In his remarks, Trump criticized foreign companies that were eager to prioritize automation over American workers. Cargo front loading, which has experienced an astronomical rise in recent months, is declining as imports achieve balanced inventory levels.
Continue reading as we explore these and other intriguing headlines in this year’s last edition of the People First Newsletter.
President-elect Donald Trump voiced his support for the International Longshoremen's Association (ILA) in its labor standoff with port employers over automation. In a meeting with union leader Harold Daggett at Mar-a-Lago, Trump criticized foreign-owned shipping companies for prioritizing automation over American jobs and urged them to invest in workers' wages.
The U.S. Maritime Alliance (USMX), representing employers, highlighted the necessity of technology to enhance safety and efficiency at ports, stating that increased capacity benefits dockworkers financially. A potential dockworkers' strike looms as their labor contract ends on Jan. 15. Earlier this October, the first ILA strike led to a three-day port shutdown, with the Biden administration stepping in to broker a tentative wage deal.
C.H. Robinson CEO Dave Bozeman reported that the surge in ocean cargo front-loading has diminished. Many U.S. importers achieved balanced inventory levels before the potential dockworker strike on Jan. 15. Bozeman noted that shippers had been preparing for months, incorporating strategies to build resilience into supply chains.
While C.H. Robinson observed a 7% increase in ocean shipments during the third quarter of 2024, the company anticipates that remaining shipments for urgent needs will transition to air freight. Retailers like J. Jill and Costco have strategically pulled forward freight to mitigate delays and manage risks tied to labor disputes. The National Retail Federation projects an ongoing surge in imports through April despite November volumes declining from their September peak. The trend highlights a shift in logistics planning amid uncertainties in labor and shipping.
FedEx Corp. announced plans to separate its FedEx Freight unit into a standalone publicly traded company, positioning it as North America's largest less-than-truckload (LTL) carrier. The decision, endorsed by the board, aims to enhance operational focus and financial flexibility for both entities. FedEx Freight generated $9.4 billion in revenue in fiscal 2024 and has achieved significant profit growth over the past five years.
The company will continue under its current name. Pending regulatory approvals, the spinoff is expected to be tax-free for federal income tax purposes and completed within 18 months. The move is designed to allow tailored strategies for the global parcel and LTL markets while preserving collaboration between the two companies. FedEx Freight will retain its leadership position with a strong balance sheet, while FedEx Corp. will focus on parcel delivery. Both entities aim to maintain service continuity through commercial agreements.
The November ISM Manufacturing PMI rose to 48.4%, a 1.9-point improvement from October. This signaled progress but remained below the expansion threshold. The new orders index reached 50.4%, marking its first expansionary reading in seven months. Growth was reported in food, beverages, and electronic products.
In the Savannah freight market, outbound truckload activity rose 16% year-over-year, driven by robust import volumes, which, though down 4% month-over-month, remained 12% higher than the previous year. Nationally, dry van load-to-truck ratios nearly doubled compared to last year, reaching 5.74. Linehaul spot rates increased by $0.02/mile week-over-week to $1.74/mile, maintaining a $0.09/mile year-over-year premium. Rates on high-volume lanes averaged $2.08/mile, $0.35/mile above the national spot rate average.
The dry van truckload (DVTL) sector has endured a prolonged freight recession since late 2022, characterized by declining activity and economic uncertainty. Recent data suggests that freight volumes may have reached their lowest point, with the potential for improvement in 2025 driven by several factors, including interest rate cuts and demand growth in key sectors.
Lower borrowing costs are expected to stimulate residential construction, machinery investment, and motor vehicle sales, directly impacting trucking demand. Residential building activity, a significant driver of freight volumes in the past, is projected to pick up in early 2025. Machinery wholesaling and manufacturing could benefit from reduced financing costs, correcting inventory imbalances, and driving new orders.
Key indicators, such as manufacturing new orders and production in select industries, show early signs of recovery. Industrial production in machine shops and related sectors has stabilized, suggesting improving trucking conditions. Freight rates have seen moderate declines and are expected to rise modestly in the first half of 2025. Forecasts indicate a 4% rate increase by mid-year, with further gains likely as demand strengthens in 2025. However, economic policy decisions, particularly regarding tariffs, could impact the year's second half.
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