Good day,
The national tender rejection index (SONAR code: otri.usa) is slightly off its June 27 high at 26.78%, falling to 25.7% (but still 350 basis points above where we began the month). Freight volumes remained elevated as we closed out the second quarter last week—transportation companies want to recognize as much of those loads as possible and rush to move them before the end of the reporting period.
There may be some disruptions to capacity this week because July 4 falls on Wednesday, but a more telling signal will emerge next week as trucks return to the market and the third quarter begins. Volumes tend to contract at the beginning of quarters versus the end of quarters, so the market’s relative performance next week give us clues as to whether we’ll remain in an elevated demand environment.
Did you know?
According to SONAR data, in the past five years, warehouse employment is up 46%, while trucking employment grew by 7% and retail jobs grew 6%.
Quotable:
“There’s no bright line level of the stock market that’s going to change policy. The president is trying to fix long-term problems that should have been fixed a long time ago.”
-Commerce Secretary Wilbur Ross, when asked if there was a downside level in the stock market that would cause the White House to reconsider tariffs
In other news:
CSX revives plan for North Carolina intermodal hub
Known as the Carolina Connector or CCX, the new “traditional intermodal site” will be built on the CSX mainline in Edgecombe County, North Carolina Department of Transportation (NCDOT) announced yesterday. CSX will run the facility. (Progressive Railroading)
China approval brings COSCO shipping—OOCL deal closer
China’s regulatory approval of Cosco Shipping Holdings Co. Ltd.’s $6.3 billion takeover of Orient Overseas (International) Ltd. brings the latest step in shipping consolidation a step closer to completion. (Wall Street Journal)
Airfreight rates slip in May but bounceback expected for June
Airfreight rates declined in May compared with April levels, but are expected to pick up again in June. The latest figures from consultant Drewry’s monthly Sea and Air Shipper Insight report show that all-in buy rates across 28 east-west routes decreased by 1% compared with April to $2.70 per kg. (Air Cargo News)
EU warns U.S. of major hit if car tariffs imposed
The European Union has warned the United States that imposing import tariffs on cars and car parts would harm its own automotive industry and likely lead to counter-measures by its trading partners on $294 billion of U.S. exports. (Reuters)
What Elon Musk wrote to Tesla employees after hitting Model 3 goal
Tesla Inc. reached a milestone critical to Elon Musk’s goal to bring electric cars to the masses — and earn some profit in the process — by finally exceeding a long-sought production target with the Model 3. (Bloomberg)
Final Thoughts:
Surging freight markets, while great for transportation and logistics companies, are still proving to be a challenge for shippers to navigate. Maria Baker reported this morning on General Mills’ announcement that the company was cutting 625 jobs by year’s end, citing freight costs and suppressed Yoplait sales. General Mills has consistently mentioned the cost of transportation in its last few earnings reports and has struggled to stay ahead of the market—the company seems to have not been able to lock down contract capacity and said it had to quadruple the amount of spot capacity it uses.
Hammer down everyone!
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