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Cargo continues to shift eastward

Welcome Back to Freight Forwarding Weekly!

Welcome to the latest edition of Freight Forwarding Weekly. This humble newsletter is written by an anthropomorphic shipping container named Boxy (and Michael, our chief news analyst).

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👎Western ports are losing their role in the economy, due to shifts eastward

We wish we had better news for our friends on the west coast of the United States but things are a bit hairy out there. Descartes just released new data clearly showing a shift in container import volumes from the West Coast ports and has shifted eastward to ports on other coasts due to a variety of factors. According to Descartes, one of these factors includes the ongoing impasse between employers at the twin Ports of Los Angeles and Long Beach and the contract negotiations of the longshoremen and warehouse workers represented by the ILWU Local 13.

It is hard to determine how the volumes shifted away from Pacific ports, where that cargo ended up, and designing what were the countries of origin and commodities that moved East. Trade lane shifts are not a ‚Äútrivial activity,‚ÄĚ notes Descartes analysts. ‚ÄúThe degree of volume shift that occurred in a short time frame during the pandemic is a testament to the ingenuity of logistics professionals,‚ÄĚ writes Chris Jones, Descartes executive vice president of industry and services.

This is tough. Data shows that the West is reportedly losing 1 million TEUs per year. Evidence is clear because the ports of Los Angeles and Long Beach have reported drops in volumes for the past few months. For example, Port Houston saw container exports increase through March. On the other hand, Port Houston highlights growth in volumes and all softening imports nationwide.

Read the Descartes report here // GCaptain coverage // GCaptain coverage on Port Houston

🛤️Canada Pacific and Kansas City Southern formed to build first continental railway

In response to a historic decision handed down by the U.S. Surface Transportation Board, rail companies Canada Pacific and Kansas City Southern have merged to create the CPKC. This move paved the way for the first single-line railway network connecting Canada, the U.S., and Mexico. Before the merger, the now-defunct Canada Pacific completed a $31 billion acquisition of the KCS on December 14, 2021. Such a measure then allowed the shares of the KCS to be placed in a voting trust so that the shares are protected during the U.S. Surface Transportation Board‚Äôs long-winded regulatory review of the acquisition. Keith Creel, the chief executive of the CPKC, said that this network, ‚Äúwill give our customers new options and expanded reach to more markets as we provide reliable rail service, take trucks off public roads, and raise the bar on rail safety by expanding CP‚Äôs industry-leading safety practices.‚ÄĚ This was a slight against Norfolk Southern and the ongoing series of unfortunate events plaguing this flailing Class I rail carrier.

Read the press statement on STB’s regulatory review // CPKC press release // News report

🤺Norfolk Southern CEO questioned by Ohio state legislature¬†

Alan Shaw, chief executive officer of Norfolk Southern, appeared before the Ohio Senate Select Committee on Rail Safety. In a somber yet extremely informative debate, Shaw was open to rail safety legislative changes and was open to several amendments to existing regulations. He pushed back against a proposed rule that would require at least two crew members on board. The select committee was the legislative response to the highly publicized derailment incident that took place in the small town of East Palestine ‚Äď on the border of Ohio and Pennsylvania.

Read about the committee hearing at The Columbus Dispatch

🫣Hapag-Lloyd takes D&D fight against CSX to Federal Maritime Commission

German shipping giant Hapag-Lloyd AG has filed a complaint against rail giant CSX in the latest dispute over demurrage and detention fee. Filed with the Federal Maritime Commission (FMC), Hapag-Lloyd filed a complaint against CSX in an ongoing regulatory and legal challenge between the two companies. This brings to light the ongoing controversy with demurrage fees brought on by the controversial Ocean Shipping Reform Act of 2022. The Federal Maritime Commission is being asked to finally decide whether D&D fees levied were at all appropriate.

The Maritime Executive with the coverage

🎩Supreme Court rules NJ can withdraw from Waterfront Commission Compact

In a win for New Jersey, the U.S. Supreme Court ruled recently that the state can unilaterally withdraw from the Waterfront Commission Compact that was signed by the two states to fight corruption in the shipping industry at the containerport and waterways shared by the states. All nine of the high court‚Äôs justices dismissed arguments by counsel for New York in favor of New Jersey to leave the compact. The Waterfront Commission is a joint law enforcement agency that was trying to fight organized crime‚Äôs grip on the unions and hiring at the New York Harbor. Brett Kavanaugh, a Trump-appointed conservative judge, wrote a nine-page opinion in response to the petition. CNBC.com reports this is a legal win for the container shipping industry and the locals of the International Longshoreman‚Äôs Association. New Jersey Gov. Phil Murphy said that he was ‚Äúthrilled‚ÄĚ by the high court‚Äôs unanimous decision. ‚ÄúOver 90 percent of commerce at our ports happens on the New Jersey side, and the New Jersey State Police, one of the finest law enforcement agencies in the nation, is more than capable of taking on the Commission‚Äôs law enforcement and regulatory responsibilities,‚ÄĚ Gov. Murphy said. Across the river, New York Gov. Kathy Hochul and Attorney General Letitia James issued a joint statement expressing concern. Hochul and James said that they ‚Äúwill continue to do everything in our power to combat corruption and crime, protect the health of our economy, and ensure the safety of New Yorkers.”

CNBC news report

⚠️Other stories we‚Äôre reading‚Ķ⚠️


📈 BY THE NUMBERS: Important numbers impacting freight and logistics

⛽ Diesel: $4.116 / gal¬†(⬆️ from $4.098 last week) – Source: EIA

FYI: Diesel’s average price ended its 10-week run of declines.

✈️ Air Cargo Index (Mar ‚Äė23): 173.7 (⬇️ from 181 in Feb ‚Äė23) – Source: FRED

🚢 Global Container Index: $1,406 (⬇️ from $1,416 last week) – Source: Freightos


Thanks for reading the latest edition of Freight Forwarding Weekly. Stay tuned for more! If a colleague has forwarded you this email and you’d like to sign up to get future issues, click here.

Freight Forwarding Weekly’s chief news analyst Michael McGrady reports this awesome weekly newsletter. Do you have a tip? Feedback? Email us: michael@freightforwarderservices.com.