The Top 5 Stories in Freight
Here’s what’s happening this week:
- Truckload rates expected to decrease as capacity constraints ease
- Canada imposes wildfire rules on the two largest railroad companies
- West Coast ports prepare for late July backlogs
- More than 6K manufacturing jobs announced in Mexico
- Spot rates climb as the cost of fuel increases
The hottest stories in freight can be found here, in the Weekly Freight Report:
1. Truckload rates expected to decrease as capacity constraints ease
Cass data saw continued year-over-year increases in June. The report’s shipment reading saw a 26.8% annual gain, expenditures up 56.4%, and a TL Linehaul Index increase of 14.5%. And while those numbers are being compared to 2020 numbers where the economy was just starting to see life again, growth rates driven by both shipment volumes and freight rates aren’t expected to slow down. The good news is, researchers expect truckload rates to dwindle as carriers respond to higher pay and parts constraints begin to ease. Take a look at the latest report here.
2. Canada imposes wildfire rules on the two largest railroad companies
As wildfires take over British Columbia, Canada’s transportation authority has imposed new rules on its two largest railroad companies Canadian National Railway Co and Canadian Pacific Railway Co. The companies will have to ensure they can respond within 60 minutes to any fire detected along rail lines in the most affected areas of British Columbia among other requirements. These rules will be in place until October and will affect train speeds. If you’re shipping intermodal in this region, keep an eye on this developing story here.
3. West Coast ports prepare for late July backlogs
The port jams continue. Carriers are alerting West Coast ports to expect a spike in imports from China later this month as a backlog of US-bound cargo from May and June arrives at the ports. This backlog comes just in time for peak, and right June saw volumes hit an all-time high. In short? Second-half volumes are unlikely to let up and shippers will continue to struggle to replenish inventories through the year. Get the full details here.
4. More than 6K manufacturing jobs announced in Mexico
Mexico expansion is a hot ticket item right now and 8 foreign companies just announced they will be expanding or building export factories in the country. This adds 6.500 new manufacturing jobs and $400M in foreign direct investment projects. And it comes at a time when trucking is extremely tight for cross-border freight. As one broker executive explains, “Cross-border is booming, booming.” With Mexico’s expansion only expected to continue, it’s suggested that shippers plan as far ahead as possible to get rates locked in with carriers, but also look to reward carriers beyond that. If you’re shipping cross-border, you’ll want to read up on the full details here.
5. Spot rates climb as the cost of fuel increases
Since November, the retail price of diesel fuel has risen nearly 40%… which has made the freight market appear to be tightening faster than it is. And the increase in fuel cost is a big factor in the rising spot market costs for freight. Unlike contracted loads, spot market loads do not show fuel surcharges as a portion of the cost. Fuel costs account for 5-15% of the cost of transportation on average and carriers have to make this a variable cost to ensure they aren’t over-exposed to fluctuation. So, how much has fuel moved the perceived market over the past 6 months? Find out here.
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