Freight Market Update | Week 34
US Domestic Trucking
In June, the U.S. Supreme Court declined to hear the California Trucking Association’s case against Assembly Bill 5, which affects driver classification. Absent Supreme Court consideration of the case, the state of California may proceed with implementing AB 5, which reclassifies independent drivers as motor carrier employees. This classification law, which was upheld by an earlier ruling from the U.S. Court of Appeals for the Ninth Circuit, impacts brokers as well as motor carriers, and the potential impacts throughout the supply chain could be devastating.
The Commercial Vehicle Safety Alliance’s (CVSA) annual Brake Safety Week is in full swing throughout the United States, Mexico and Canada, so taking care of any brake-related issue now should be a top priority or else it could cost you. The CVSA’s roadside inspections are targeting brake-related violations, as they comprise the largest percentage of all out-of-service vehicle roadside inspection infractions. In fact, the organization states that 38.9% of all out-of-service vehicle violations accounted for during last year’s International Roadcheck were brake systems and brake adjustment-related, the most of any other category.
Air Freight
DHL reports airfreight demand low but capacity increasing. Air cargo demand remains low but capacity is increasing, according to DHL’s latest Airfreight State of the Industry report. The report, published this month, concludes inflation and reduced purchasing power are among the reasons why demand is low. Although volumes “remain softened” they are stable following the peak drop seen in July. E-commerce is making a “soft but steady” contribution to air cargo volumes. DHL added: “The upcoming peak season is unlikely to witness a volume surge as export orders remain low and inventories high.”
A partial recovery in air cargo volumes in the second half of July faded in August as Asia outbound demand began to weaken. Statistics from data provider WorldACD show that in the two weeks ending August 14, worldwide cargo volumes in chargeable weight decreased by 5% compared with the final two weeks of July and were down 11% on last year.
Ocean Freight
After a brief reversal of the trend, spot rates for container traffic continue to fall. The decline in demand in Europe resulting from the war in Ukraine, inflation risks and rising energy costs is currently dampening sea freight traffic from Asia westbound. The situation is different in transpacific traffic: demand in the USA has recently picked up again somewhat, and capacity utilization is at a high level. Nevertheless, spot rates from Asia to the US West Coast continue to fall. It remains to be seen which direction this development will take during Q3 (source: theloadstar.com).
For exports from Europe to North America and Mexico, there has also been little change in recent weeks. In some cases, there are delays in departures. Free seats continue to be scarce. At the same time, almost all major U.S. ports are reporting noticeable congestion with corresponding waiting times. U.S. East Coast ports are feeling a shift from congested West Coast ports. Currently, four of the top ten container terminals on the East Coast are experiencing extended wait times.
