The Top 6 Stories in Freight
Here’s what’s happening this week:
- CP-KCS rail merger to benefit shippers… but they have to be patient
- U.S. manufacturing expands at the fastest pace since 1983
- Safety Blitz to focus on lighting and hours of service May 4-6th
- Second California court ruling states federal law doesn’t preempt AB5
- Western brands choose between Chinese sales and moral obligation
- Reefer capacity is shot going into produce season
The hottest stories in freight can be found here, in the Weekly Freight Report:
1. CP-KCS rail merger to benefit shippers… but they have to be patient
$800 million. That’s the estimated amount of synergies that will be realized within three years of the Kansas City Southern and Canadian Pacific merger if approved by both sides of the border. And shippers are feeling optimistic about the massive consolidation even though it will reduce the number of Class 1 railroads in North America to six. The truth is, it will give shippers another outlet in times of tight capacity. But experts say shippers should be patient as ‘this won’t be something that happens in 90 or 120 days. Most likely it will take 18-24 months.” Get the full story here.
2. U.S. manufacturing expands at the fastest pace since 1983
It’s a great sign of the growing U.S. economy. Manufacturing production readings are up to highs not seen since the ’80s. The ISM Index measures factory activity and levels above 50 indicate growth… and they’re hovering just around 65 right now. And growing order backlogs increased production, and faster order growth have led to manufacturers beefing up their headcount. It all signals the U.S. economy is experiencing growth. And demand is only expected to pick up in the summer. Get the full story here.
3. Safety Blitz to focus on lighting and hours of service May 4-6th
It’s about that time of the year again… the annual CVSA safety blitz is to take place May 4-6th. Inspectors throughout North America will be ensuring truck drivers are following regulations- and with volumes at peak highs and capacity constraints among every outlet, this is not a year shippers can afford to have drivers go out of service. This year’s focus? Lighting and HOS. It should come as no surprise HOS is on there considering these violations made up 34.7% of last year’s out-of-service conditions. Drivers and fleets have less than a month to be prepared. Here’s everything you need to know here.
4. Second California court ruling states federal law doesn’t preempt AB5
AB5 has been a controversial topic for owner-operators hauling freight in California… and the battle isn’t going in their favor. After seven months of court cases, a second state court decision ruled that the federal law known as F4A would not prevent the state’s AB5 law from setting the definition of independent contractors. While the ruling has no immediate impact, truckers continue to wait for the federal appellate court to rule on keeping its injunction. But if it goes… state precedents won’t block the law on independent contractors. Get the full update here.
5. Western brands choose between Chinese sales and moral obligation
“Western companies are being firmly squeezed between an irresistible force and an immovable object.” These words were said by the former president of the American Apparel & Footwear association after China eliminated any traces of H&M from the country after the organization made statements about China having human rights violations. H&M said it would be distancing its sourcing from the Xinjiang region. And now, China residents cannot find H&M brand e-commerce sites online, its mobile apps have been removed and locations have been whipped from GPS and ridesharing apps. Here’s the big issue for Western Brands. 1 and 5 cotton garments sold contain cotton from this Chinese region. Not to mention, China is the fastest growing and soon-to-be #1 consumer market. And after this attack on H&M many western brands are stuck making a tough decision… stand their ground and lose funds from the world’s second-largest market… or fold. Get the full story here.
6. Reefer capacity shot going into produce season
Roaring consumer economy… blossoming industrial recovery, the white-hot housing market, and historically depleted inventories… there’s very little that could derail the trucking industry. And as the produce season kicks off, it’s going to be tough for shippers to find reefer capacity. Reefer tender rejections are at 46% and there are no signs of immediate capacity relief. Get the full market update here.
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