Welcome back, readers, to another edition of our weekly newsletter on maritime and rail logistics, trade, and transit. This week, we have a myriad of stories to unpack. U.S. ports are signaling a hopeful resurgence reminiscent of pre-pandemic days. Meanwhile, North American rails are sounding a cautionary note. Bed Bath & Beyond battles with the shipping industry, and Flexport undergoes a leadership shake-up. Gulf & Atlantic Railways also makes headlines with a strategic acquisition. Let’s dive into these stories and more — after all, commerce never sleeps.
U.S. Ports Witness Import Surge as Peak Season Looms
As the U.S. prepares for the peak season, import numbers showcase a trend mirroring pre-COVID patterns. This uptick, backed by hard data, hints at an optimistic outlook for the retail industry and shipping economy.
Demand-Driven Rise in Imports
U.S. ports have been booming since March, with August witnessing a remarkable import increase. According to Descartes, a whopping 2,196,268 twenty-foot equivalent units (TEUs) were imported in August, showcasing a 2.5% growth compared to the same month in 2019. Chris Jones of Descartes Systems Group commented that this growth is consistent with the typical surge seen in non-pandemic years. As Jones pointed out, the figures maintain a “continued consistency with 2019 results."
Strong Projections and Stable Shipping Rates
Global Port Tracker reports a promising 5% import increase in August compared to July across 12 major U.S. ports. Forecasting over 2 million TEUs monthly from August to October, Jonathan Gold of NRF interprets this as a sign of retailers' enthusiasm for the upcoming holiday season. Furthermore, Trans-Pacific spot rates have found stability, indicating continued demand. Significantly, the Drewry World Container Index for the Shanghai-Los Angeles route has jumped 43% since June. Additionally, despite the Panama Canal's congestion, container ship transits remain consistent without notable delays.
North American Rail Traffic: Some Concerning Numbers
Railways paint a less optimistic picture. As we approach Q4 2023, North American rail data reveals a 3% drop in volume for the week ending September 9. Despite steady carloads, intermodal units faced a significant 6.0% decline. Let's explore this concerning trend further country by country.
United States: Rails & Routes
Is the rail industry in trouble? For the first 36 weeks of 2023, U.S. rail volume dipped by 4.8%, totaling 16,620,897 units. Moreover, the week ending September 9 also marked a 1.7% fall from 2022. However, on the positive side, six of the top ten commodity groups, including motor vehicles, grew. In total, carloads ticked up slightly by 0.1%, while intermodal units declined 9.0% year-over-year.
Canada & Mexico: Neighboring Rail Narratives
In the initial 36 weeks of 2023, Canada and Mexico provided contrasting views on the North American rail scenario. Canada's rail volume decreased by 3.4% to 5,674,192 units; however, by September 9, carloads rose slightly by 0.5%, even as intermodal units declined by 13.2%. On the other hand, Mexico experienced a 4.7% growth in rail volume, totaling 1,009,231 units. But, the week ending September 9 revealed hurdles: a 9.4% fall in carloads and a 4.3% reduction in intermodal units.
Bed Bath & Beyond's Legal Fights with the Shipping Industry
In the wake of its bankruptcy, Bed Bath & Beyond is embroiled in another conflict, blaming the shipping industry for its operational downturn during the pandemic.
Bed Bath & Beyond's Allegations and Counteractions
Bed Bath & Beyond recently sought over $15 million in claims against shipping giant Yang Ming, alleging denial of service, exorbitant fees, and unjustified detention and demurrage charges from 2021 to 2022. Earlier in April, the retailer made similar accusations against OOCL, citing roughly $31.4 million in added costs over two years. However, Yang Ming initiated legal action in April 2023 to nullify the retailer's claims, leading to a temporary halt following the retailer's bankruptcy declaration.
The Root of the Dispute
The root of the dispute centers on a service contract that began on May 1, 2021. Bed Bath & Beyond alleges a significant under-delivery by Yang Ming, asserting that the carrier managed only 149 out of an agreed 1,000 FEUs. This shortfall purportedly led to damages exceeding $6.6 million for the retailer. Additionally, the retailer claims Yang Ming levied unfair fees nearing $1.05 million, spotlighting wider industry issues: carriers reneging on service contracts to capitalize on the spot market's higher prices.
Flexport's Leadership Transition and Future Vision
Flexport, a globally recognized end-to-end logistics provider, recently experienced a significant leadership change that could impact its broader vision. What prompted these changes, and what direction is the company heading?
The Leadership Change
Dave Clark, the mastermind behind Amazon's logistics, initially became Flexport's CEO with visions of monumental growth. However, strategic clashes soon surfaced, leading to his exit. Flexport's founder, Ryan Petersen, reclaimed the role of CEO and quickly voiced concerns over the company drifting from its customer-centric focus and fiscal prudence. Although he acknowledged the importance of technology, Petersen emphasized that genuine leadership lies in truly understanding customers. His return as CEO earned widespread accolades from Flexport's loyal clientele.
Future Direction of Flexport
Flexport's new self-service portal promises independent sellers a simplified global freight experience, potentially slashing shipping costs by 15%. Yet, despite Petersen's ambitions for global expansion, issues remain. Even after amassing $2.5 billion in investments and raking in $5 billion in 2022 revenue, doubts linger about Flexport's valuation. Critics question its distinctiveness, and the 2022 layoffs of 20% of its staff raise eyebrows amidst such financial highs.
Gulf & Atlantic Railways Expands Portfolio with Pinsly Acquisition
Gulf & Atlantic Railways (G&AR) continues to exhibit its strategic growth. The company recently acquired the Pinsly Railroad Company's assets in Massachusetts, positioning itself to offer more diversified and advanced rail solutions.
Key Acquisition Details
On August 29, G&AR announced its intent to acquire Pinsly's Massachusetts short line and warehousing business. This package encompasses the 18-mile Pioneer Valley Railroad (PVRR), which stretches from Westfield to Holyoke, and the Railroad Distribution Services, Inc. (RDS). The latter, a rail-served warehousing and distribution entity, caters to over 30 varied customers and flaunts impressive logistics capacities with 140,000 square feet of indoor and 3.5 acres of outdoor storage.
The Bigger Picture
G&AR's addition of PVRR marks its fourth recent railway acquisition, expanding its oversight to six small roads. G&AR CEO Ryan Ratledge lauds PVRR for its safety, committed team, and diverse revenues. Pinsly's CEO, John Levine, trusts G&AR's leadership with the new assets. However, the Surface Transportation Board mandates the deal's finalization to only begin after September 27, 2023, adhering to industry regulations.
Vizion: Bringing Clarity to a Sea of Complexity
Amid the ebb and flow of shipping patterns, regulatory challenges, and leadership shifts, the demand for timely and accurate insights is paramount. Vizion stands out, offering specialized services that bring transparency to your supply chain. While its Port Performance Monitoring feature empowers businesses to anticipate delays and strategize shipping schedules confidently, it only scratches the surface. Vizion offers:
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- High-Quality Data: Stay updated with comprehensive data sources refreshed daily for the latest insights.
- Port Performance Monitoring: Gain a competitive edge with in-depth metrics on port activities, ensuring proactive planning and decision-making.
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