Although environmental sustainability will play a significant role in the future of logistics and supply chain operations, not everyone agrees with the current pace of the regulators. In an inflation-marred economy, logistics costs continue to nose dive, although the numbers are still better than the pre-pandemic levels. This was corroborated by data from the Cass Freight Index, which shows that the freight market was under pressure throughout May.
Continue reading to learn about the top logistics and freight industry headlines across the U.S.
Owner-Operator Independent Drivers Association (OOIDA) Takes The EPA To Court
Following the Environmental Protection Agency’s (EPA) new regulation requiring zero-emission heavy-duty vehicles, the Owner-Operator Independent Drivers Association (OOIDA) has sued the organization.
Owner-independent truckers argue that the new regulation far exceeds the legal authority of the EPA. More importantly, the new rule could see most truckers regulated out of business. This is because electric trucks, though environmentally friendly, are much more expensive and could limit owner-operators’ ability to continue to operate in the trucking industry. Commenting on the court challenge, OOIDA President Todd Spencer claims that small business truckers are 96% of trucking and could be regulated out of existence if the EPA’s unworkable heavy-duty rule comes into effect. Although no one knows which way the court will side, it is less likely that legislation to block the rule will pass Congress.
However, a Trump presidency could make all the difference for these drivers.
Logistics Costs Drops As Inflation Continues To Soar
As the U.S. freight industry grapples with volatility and a downward spiral, logistics costs across the country have also been affected.
According to a report from the Council of Supply Chain Management Professionals released on Tuesday, the cost of logistics in the U.S. is down 11% in 2023 compared to the previous year. The good news is that the numbers are still higher than the pre-pandemic levels. According to the report, the cost is on a downward path because there is much more capacity now than there is demand for shipping goods. Although the current trend is terrible for trucking carriers, the ocean and air freight industry have seen their fortunes improve, as prices have gone up due to increased demand and tightening capacity.
Cass Data Indicates the Freight Market Was Under Pressure in May
According to Cass Information Systems, the struggles of the freight market continued in May.
Shipments were down 5.8% year-over-year (y/y) and flat compared to April. This is worse than expected, and the downward trend is predicted to continue throughout 2024. The primary reasons are that more companies are insourcing (using more of their own trucks rather than relying on carriers) and that more LTL shipments are consolidated, reducing the demand for LTL services. Although spending is down 9% y/y, it improved from the previous month.
However, the decline is expected to slow down in the coming months, even as Cass data suggests the freight market downturn is likely to continue for some time.
Shakeup on the India-US East Coast Trade Lane
The India-US East Coast trade lane is undergoing significant changes in ocean network services as Hapag-Lloyd exits Indamex.
Hapag-Lloyd will launch its own service (TPI), which will see the shipping line focus on West India and U.S. East Coast ports. On the other hand, another major shipping line, CMA CGM, aims to revamp Indamex by combining two existing Indamex strings into a single loop with additional US stops. Some market speculations suggest COSCO Shipping or OOCL might join CMA CGM’s revamped service.
US Logistics Solutions Files For Chapter 11
In a devastating news that would go on to cost about 2,000 jobs, US Logistics Solutions, the Texas-based trucking company, has filed for Chapter 11 and shut down operations.
Acquired from Forward Air in 2021 by Ten Oaks Group, which expressed positive growth potential for the company at the time. Unfortunately, that did not turn out as planned. The shutdown will also eliminate over 500 trucks from the struggling trucking industry. The bankruptcy filing and shutdown come amid a myriad of challenges plaguing the once-great trucking behemoth, including a lack of funding, a declining retail market, and a general slump in the trucking industry.
Retail Sales Show Gains in May
The U.S. Census Bureau and the National Retail Federation (NRF) reported positive retail sales figures for May 2024.
According to the report from Census Bureau, total sales were up 0.1% from April and 2.3% year-over-year. On the other hand, the report from the NRF showed a 0.3% month-over-month and 2.9% YoY. From the report, it is clear that consumer spending is growing, albeit fluctuating, but consumers are also being cautious and value-conscious about their purchases. Inflation may have a lot to do with it. Looking ahead, the NRF expects retail sales growth of 2.5% to 3.5% for 2024 and consumers to remain cautious but continue spending at a steady pace.
Overall, both data suggest a somewhat cautious but still healthy consumer base in the US.
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