Freight Market Update: August 2024

Looking to forecast rates?

Look at underlying components making up carrier costs

In a study conducted by the American Transportation Research Institute (ATRI), the operational costs of trucking were identified and divided by key factors. Using this data helps visualize the total makeup of carrier costs, excluding fuel.

As depicted in the visual above, the largest expenses (at 56% and 21% respectively), are driver wages/benefits and equipment costs such as truck and trailer purchases, leases, and payments.

These are fixed costs that are very “sticky,” meaning they don’t often decrease and are required payments each month. Even though the third largest costs—maintenance and repairs—are not fixed, it is a critical cost that must be incurred by carriers to remain operational.

Fuel, which is largely considered a pass-through charge, so not included in the visual above, can also be impactful during loose markets as carriers often have longer deadhead distances to drive between loads.

ATRI has been conducting this analysis for several years, which helps compare operational costs of 2023 to those in the pre-pandemic market of 2019. The percentage breakdown allocation of costs changed negligibly, but the actual dollar figure changes were significant.

Driver wages and benefits, the largest component of costs that carriers pay, increased 30% over those four years while equipment costs increased 41%. Maintenance and insurance costs increased 36% and 39% respectfully.

Collectively, all costs (excluding fuel, which is largely considered a pass-through charge) increased 31% from 2019 to 2023. While much of this significant increase can be attributed to inflation, not all of it can. In fact, this percentage change is approximately 50% more of an increase than U.S. inflation during this same time.

Rising costs are something all companies experience at one time or another. The typical answer is to offset these costs, partially or completely, by increasing rates. But the carrier community has not done this. In fact, from the beginning of January 2019 to the end of December 2023, DAT's broker-to-carrier rate per mile went down approximately 13%.

What does this mean for shippers?

This dynamic of operational costs quickly rising in an environment of decreasing revenue showcases the imbalance of supply and demand that has persisted in the marketplace over the past few years, up to and including today.

As we established in October 2023, the combination of pandemic-cycle profits and government stimulus has allowed carriers to sustain operations below their break-even operating costs for some time, but those savings have been, or are being, depleted.

This is true for smaller carriers as well as the largest, as evident in recent public-carrier earnings releases where several have reported significant decreases, or even negative results, in operating margin. Carrier attrition will continue to occur as these high costs with low rates remain unsustainable. The 2023 break-even cost to operate a truck averaged nearly $1.75/mile (excluding fuel). This essentially establishes a new expectation for a rate floor, as carriers will need to charge rates that promote long-term profitability.

Once supply and demand normalizes, or even as the market eventually moves to under-supplied, expect carrier rates to increase. Rates are likely to increase quickly, enabling carriers to keep pace with inflation by aligning with the substantial rise in their costs.

Rates may even increase beyond that too, as carriers attempt to capitalize on the loss of revenue incurred over the years to fund things that have been put off, like upgrading equipment, investing in technology, growing their business, etc.

For more information on the current and future outlook of carrier costs and how they influence cost per mile forecasting, see the North America Truckload Trends and Forecasts section below.

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U.S. Spot Market Forecast

The C.H. Robinson 2024 dry van linehaul cost forecast remains unchanged at -5% year over year (y/y). Recent cost per mile trends have been unfolding largely as expected. Upstream factors such as Class-8 production/sales, carrier attrition, and overall market demand trends have not indicated any recent changes that warrant an adjustment to the longer-term forecast either, which now extends into the first half of 2025.

Since the traditional produce season surge is now over, there is a shifting of capacity tension from the southern part of the United States to the north as commodities available for harvest in the south slow to a crawl and more commodities move from northern states. Look for more details within the temperature-controlled section below.

Near-term, expect less overall demand and slightly decreased costs compared to what is typical this time of the year since there is still an oversupplied number of carriers in the industry. Any cost changes will roughly flatten for the remainder of the quarter.

After the start of the fourth quarter, expect the typical increases associated with holiday and end-of-year builds combined with modest carrier attrition that will take carriers out of the market.

Early in 2025, there will likely be the standard decrease from holiday surge pricing, but not a complete alleviation to prior levels. Toward the end of the first half of 2025, expect an increase in the cost per mile. This will be caused by next year’s annual produce season.

Similarly, the 2024 refrigerated annual linehaul forecast has not changed. The 2024 temperature controlled forecast is at -3% y/y.

Contract truckload environment 

The contractual landscape has remained relatively unchanged in 2024. Because the contract environment tends to follow the spot environment, monitoring the spot market over the next few months will be important. Keep the duration of contracts in mind, as longer-term commitments may see different pricing than shorter-term commitments. The following insights are derived from TMC, a division of C.H. Robinson, which offers a large portfolio of customers across diverse industries.

Route guide depth (RGD) is an indicator of how the backup transportation provider strategy works if the awarded provider rejects the tender.

As displayed in the following chart, the RGD has remained fairly flat for approximately a year and a half. For long hauls more than 600 miles, the RGD in June 2024 was 1.21 (1 would be perfect performance and 2 would be very poor), which is slightly worse (2.5%) than the month of May at 1.18, but about even with June 2023’s RGD.

Voice of the carrier from C.H. Robinson

C.H. Robinson has two customer communities, shipper customers and carrier customers. What follows are aggregated insights from conversations with carriers of all sizes to offer perspective into their top concerns over the past month.

Market insights

• RFP/bid activity has been decreasing recently, which is seasonally expected, although it remains slightly elevated compared to normal.
• While some factors such as end of quarter, holidays, and weather have increased demand at times, these all seem to be temporary surges with no long-lasting impact.
• With low rates, increased costs create an often-insurmountable challenge. High insurance and maintenance costs have proven to be especially painful.
• The expectation is for an increased number of carrier exits from the industry in the coming months.

Equipment 

• Used equipment remains plentiful.
• Ample and cheap used equipment combined with a tough market means new equipment purchases are costly, but they are still easily accessible and delivered on time.
• Some carriers are waiting to see what equipment pricing looks like for next year before finalizing plans and orders.
• Truck parts and maintenance continue to be expensive.

Drivers 

• Drivers remain plentiful, but the turnover rate is high. It is challenging to keep drivers moving and at full capacity.
• Summer brings vacations and extended weekends for drivers, creating logistical challenges for carriers to manage.

A key value proposition of C.H. Robinson to our contract carriers is aggregating lane volume and demand pattern variability from our vast shipper network. This provides our contracted carriers with more predictable volume from C.H. Robinson and as a result, they are interested in and able to offer more consistent capacity and market pricing with high performance. Engage your account teams for more information on how to leverage our scale.

Refrigerated truckload

Produce season is largely past its peak, especially in the most southern states. There have been some minor interruptions from Hurricane Beryl that have proven to be temporary in nature.

There is now a shift in capacity across the nation. As the southern states loosen, tightening begins in the Midwest, Great Lakes, and Northeast regions. The extent of this tightening is still subtle, and the market is still oversupplied, comparatively, but there will likely be more seasonal tightening and rate increases through the third quarter.

East

• Southeast: Now that the significant produce push from the Southeast, specifically Georgia and Florida, is lessening, the markets in those regions are softening quickly. Volumes from the Carolinas have increased, so expect that market to feel pressured over the next month.
• Northeast: This region has experienced unusual tightening after the Fourth of July holiday, with some heavy shipping areas such as New Jersey and Pennsylvania experiencing short-term tension above what is typically expected.

Central

• South: The South-central U.S. experienced normal seasonal tightening heading into the Fourth of July holiday. Hurricane Beryl caused minor, short-lived disruptions. This market has already begun to soften and rates return to normal, which is a slight seasonal downturn. States such as Arkansas, Missouri, and southern Illinois and Indiana will feel some seasonal produce pressures from late July through Labor Day.
• West: Normal seasonal pressures were felt through June and costs have started to fall through July. As California begins to come off their seasonal peak, there will be tighter capacity and increased rates out of the Pacific Northwest due to the impending cherry and fall harvest season.

Work with your C.H. Robinson team to stay informed on regionalized opportunities and how to best schedule freight to capitalize on the best price and service.

Flatbed truckload

The flatbed network is not immune to changing conditions, but there are other factors that directly impact flatbed and other open-deck trailer transportation that don’t influence other modes in the same way.

Factors that add costs to flatbed shipping

• Geography plays a significant role in the accessibility of shippers and receivers, particularly for job site deliveries. These locations, often rural areas or inaccessible from paved roads, can increase costs due to a limited pool of carriers willing to make these deliveries because of the extra time and deadhead mileage involved.
• Another key factor is tarping. Tarps vary in type and size. Securing them can be challenging based on the commodity's shape and the season. For example, winter conditions in the north make tarping dangerous and difficult due to slippery surfaces, while high summer temperatures in the south can make the task uncomfortable and arduous, as well as hazardous due to heat fatigue.
• Securing freight on flatbed trailers requires chains, binders, and dunnage (pieces of lumber used to prevent movement during transit). As lumber prices rise, so do the costs associated with dunnage, potentially impacting the overall cost of the load.
• Lumber prices can help shippers understand long-term market indicators since a significant portion of flatbed demand comes from construction and manufacturing materials. Consequently, factors like steel imports, interest rates, and infrastructure planning are also crucial to determine flatbed demand.

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Over the past few months, LTL pricing has been relatively flat, primarily due to some stabilization in carrier networks. Carriers still maintain pricing pressure compared to last year due to the reduced number of terminals in the industry, while easing diesel fuel prices and a soft truckload market has eased the pressure. One growing concern for shippers are the accessorial charges that accompany linehaul rates.

Accessorial charges have been increasing over the past several years in frequency, variety, and the percentage of total LTL costs. Understanding accessorials and how LTL carriers utilize them will help shippers make informed decisions about effectively managing these charges.

The image below perfectly illustrates the expansion of accessorials over the past decade. It shows the makeup of LTL invoices, highlighting the top 20 accessorials, excluding fuel, and the percentage of time an accessorial is itemized.

In 2014, approximately 10% of invoices had an accessorial charge of some kind on it. More recently, this number has increased to nearly 40% of invoices. Beyond just the frequency of time an accessorial is added, the total cost impact has increased greatly as well. In 2014, accessorials represented an additional 3% on top of linehaul costs. Today that number has grown nearly 5-fold to 14%.

Use these best practices to mitigate accessorial costs wherever possible:

1. Implement with a strategy

Work with experts that can provide clear visibility to the accessorial charges in a way that empowers action.

2. Negotiate accessorials up front

Make discussing accessorial charges an important part of any RFP. Have a plan for which items are customer specific and how it is shown on billing.

3. Select carriers strategically

Maintain the right mix of carriers based on shifting needs. If selecting a carrier based on cost, make sure to account for all plannable accessorial charges.

4. Maintain accurate records

Keep detailed records of shipments, including BOLs, weight receipts, and delivery confirmations to validate accessorial charges.

5. Stay informed

Watch industry trends and regulations closely to stay aware of potential changes that may impact accessorial charges.

6. Establish continuous improvement cadences

Review metrics and create action plans regularly. Set aside time every six months to one year to review costs and work with your providers to implement improvement strategies.

C.H. Robinson goes further to provide the insights and resources needed to effectively manage accessorial charges in LTL shipments. For any questions or assistance related to LTL shipping and accessorial charges, please reach out to a C.H. Robinson representative.

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In our top story of this report, we discuss how U.S. truckload carriers have been experiencing a squeeze in profits due to increased operational costs. Carriers are not the only ones fighting increased operational costs. Despite truckload freight rates generally being down, there are some modes, services and regions where pricing isn’t as advantageous for shippers due to various global disruptions causing rates to increase beyond seasonal trends.

It is widely expected that much of this volatility will not disappear in the short term. Whether looking at the direct increases associated with freight rates, the added costs associated with rerouting around the Cape of Good Hope, or origin/destination port congestion, many factors are impacting KPIs today. So, what can you do to mitigate costs?

1. Work backward from your economic ordering quantity (EOC)

Little charges can add up quickly in the aggregate, so break down your bill of materials to their core parts, or bundles of components whenever possible. Doing so can help ensure weight/dimensions are not inadvertently bearing "minimum quantity" charges.

2. Forecast periods (slushy/frozen periods)

While sales is focused on closing business, that can cause production problems when it’s impossible find capacity to deliver the goods. Ensuring that business forecasting is accurate and halting excess orders based on lane demand can prevent costly expedited freight charges.

3. Book early

Advance booking is an absolute best practice to secure the best outcome at the best cost. For global shipments, five weeks in advance is strongly encouraged for today’s market.

4. Stress test current practices

Updated general systems of preferences (GSPs), changes to product composition or dimensions, and trade policy updates can significantly impact margins and open new business lines. Engaging in a discussion about sourcing strategies, reasons for current practices, and competitor actions will help boost confidence in decisions and their value in the broader market. 

General updates

2M and THE alliances dissolving, new Gemini cooperation is coming

MSC and Maersk are dissolving the 2M alliance effective in 2025. The reason for the dissolution is that MSC is acquiring sufficient vessel capacity to run their own independent service by 2025. Maersk will form an alliance with Hapag.

THE Alliance also breaks up at the end of January 2025 as Hapag and Maersk have announced plans to form a new vessel-sharing agreement on main east-west trade lanes. This will go into effect in February 2025 and be called the Gemini Cooperation. THE Alliance members Hapag/ONE/HMM/YML reassure the market that business will continue as usual for 2024, but this will mean significant changes and disruption to vessel services in early 2025.

The Gemini Cooperation is designed to be a hub and spoke network with relatively few direct port calls, and a predominance of feeder connections from the central port hubs to offer a full scope of global services. The goal is to offer best-in-class schedule reliability that is higher than 90% on average. How successful the carriers will be with their on-time performance will depend on the success of their transshipment program. The FMC has requested more information from Maersk and Hapag concerning this new alliance, to determine potential competitive impacts.

Ocean alliance extending their agreement

Originally set to expire in 2027, the Ocean Alliance (OOCL, CMA, Cosco, and Evergreen) announced they would extend their agreement for an additional five years through 2032. This may be one way to reassure the market of the stability of this alliance after the upheaval of the other two major east-west alliances scheduled for early next year.

Reroutings

The repeated attacks from Houthi rebels along the coast of Yemen on the Suez Canal means ocean carriers have rerouted their vessels via the Cape of Good Hope, adding an additional 14 days of transit time. While this situation has existed for over six months, it continues to have a large influence on the ocean shipping market, consuming capacity and impacting timing.

Canal updates

Panama Canal

Due to low water levels at the reservoir that feeds the Panama Canal, draft restrictions have been in place since April 2023.

Typically, daily transits through the canal are 34–38 vessels per day. There have been incremental increases in vessel allowance this year, and starting in August the number of daily transits will increase to 35 per day, up from 34, returning to an expected range.

By early 2025, the Panama Canal authority expects to return to full capacity for daily transits, which would be 38–40 per day (as long as the rainy season continues to deliver the needed rainfall).

* Temporary slot reduction due to scheduled dry chamber maintenance.

Thanks to more slots becoming available, steamship lines are beginning to resume their normal service routings via the Canal, though some exceptions remain. The alternatives remain to route via the Cape of Good Hope or the Suez Canal, yet both extend transit time by about 14 days.

Suez Canal

Since December 2023, most maritime carriers have temporarily paused or rerouted vessel traffic through the Red Sea and Suez Canal due to attacks on container vessels launched from Yemen. There is no expected change to this situation for the foreseeable future.

The majority of vessels are travelling around the Cape of Good Hope which adds, on average, 14 days to transit time. Rerouting or pausing even a portion of those vessels can have a significant impact, not just to trade that moves via the Red Sea, but across all global trade lanes. This leads to blank sailings and service changes. It is estimated that 6 to 9% of global capacity is absorbed by this alternative routing.

Blank sailings/tight capacity

Carriers have added more vessels to the services routing via the Cape of Good Hope to maintain weekly service between Asia/India and the Europe/North America markets. This has tightened vessel space and, coupled with a surge of demand on some key east-west lanes, it has completely removed the excess capacity from the market.

It is also estimated that the congestion levels at key Asia, West Mediterranean, and Latin America (LATAM) ports is causing as much as 8% capacity removal from the market due to vessels being delayed at various ports. The markets most impacted by the Suez Canal diversions such as U.S.–India and U.S.–Asia are seeing more blank sailings than other lanes due to challenges maintaining schedule integrity.

Sea Intelligence reported global schedule reliability improved by 3.58% from April to 55.8% in May (the highest in 2024). However, reliability remains 11 percentage points below May 2023. CMA was the most reliable carrier at 57.1% on-time performance.

Port congestion/container shortages

With all the vessel diversions required due to the situation with the two canals, adverse weather in Asia and LATAM, coupled by surging demand/volumes on several key trade lanes such as Asia–Europe, Asia–North America, and Asia–LATAM, means severe port congestion at the major transshipment ports in Asia, LATAM, and the West Mediterranean.

This is causing more schedule instability with carriers. The extended transit times are also contributing to container shortages in some key markets, such as Asia (north China specifically), Europe, and at rail ramps in North America.

War in Ukraine

The war in Ukraine and resulting sanctions on Russia may affect capacity from/to Europe, the Middle East, and North Africa. There remain numerous service suspensions/port omissions to Russia and Ukraine.

Supply and demand

From Asia to the North America West Coast, space has improved as carriers have injected significant capacity for July and August. However, capacity to the U.S. East Coast is fairly flat and both LATAM and Mexico face congestion at local ports.

The trend is different to Europe, where rates are holding strong. Despite a temporary increase in capacity in July to North Europe in July (11%), August will see capacity back down. To the Mediterranean, capacity is down 14% in July versus June, and congestion at destinations continues to disrupt schedules.

On Trans-Atlantic Westbound (TAWB) lanes, capacity is enough on most services from North Europe. Steamship lines are starting to shift capacity to other trade lanes by swapping vessels for smaller ones, or allocating more transshipment capacity to the lanes with strong demand (e.g., Asia to U.S. East Coast).

Mediterranean origins are subject to congestion and space is becoming critical, leading to rate increases. Bookings are 3–4 weeks out. Carriers are also re-shuffling capacity to accommodate other lanes and leaving smaller vessels/no extra loader options to Mediterranean origins. As the largest ports in the region have also become transshipment ports to help manage the Suez Canal issues, their terminal yard spaces are saturated, causing challenges to ingate export cargo.

While fairly balanced, ISC-North America has been directly impacted by the Suez Canal disruptions. Equipment and vessel space issues from Asia are spreading. Steamship lines are shifting capacity and equipment away from lower paying India to NAM shipments, to accommodate the very strong Asia exports yielding higher rates. On this lane, carriers are struggling to maintain schedule integrity due to a lack of assets and congestion.

U.S. Container Import Volume Year-over-Year Comparison 

According to Descartes Datamyne, in June 2024 U.S. container import volumes declined from May 2024, decreasing 2.1% to 2,297,979 twenty-foot equivalent units (TEUs). Versus June 2023, TEU import volume was up 10.4%, continuing to demonstrate exceptional year-over-year performance.

Asia

August is the middle of traditional peak season and rates in the core Asia trade lane remains elevated because of it. Despite high demand, spot rates are softening on some selected lanes, like Trans-Pacific West Coast (TPWC) and LATAM. This is mainly due to injection of more ad hoc loaders and some new services.

CMA, Cosco, and MSC have started to deploy new services into TPWC and East Coast. Shipping lines have also moved capacity from lower paying trade lanes to higher paying ones to maximize margins.

The Asia to Oceania trade lane is one of those affected; it is helping push up spot rates for the month of August.

Rates for the Asia to North Europe market is holding up better than Southern Europe and Mediterranean markets. There are three new independent services launched by Hapag-Lloyd, CMA CGM, and MSC to North Europe.

Port congestion in the core Southeast Asia transshipment hub ports, Port Klang and Singapore, have improved. However, there is more congestion being reported for major China ports. 

Asia–Europe

Due to the longer transit time routing via the Cape of Good Hope, there are fewer weekly vessels serving this lane, which has also tightened effective capacity.

Demand increased in April and May as shippers moved cargo ahead of the planned general rate increases (GRIs) and the May holiday in Asia, resulting in tight space.

For Asia–Europe, Alphaliner and Drewry estimate report:

• Services are currently 10% short of the capacity needed
• Spot freight rates have increased by as much as 20%

Once normal Suez Canal transits can resume, overcapacity will re-assert itself in the market, and the expectation is pricing will soften once again. 

Europe

Labor challenges

Labor disruptions in Italy, Germany, and France have been frequent over the past couple of months. Impact is limited, unless it compounds with other existing issues (e.g., congestion in the Mediterranean).

Space is getting very tight on the Trans-Atlantic lanes from the Mediterranean to Canada and Mexico. Carriers will likely increase rates. Because carriers are not required to communicate rate increases with 30 days’ notice (as is required in the United States), it may make forecasting rates to these countries more difficult to predict. Expect to plan far in advance and place pre-bookings to secure space when needed. 

LATAM

Intra-America and Asia services are still struggling with space. Accordingly, carriers have been implementing GRIs in the Americas since April 2024 for all types of contracts. Consider booking at least four weeks in advance.

Europe is stable; rates are flat.

Ports in south LATAM are facing several omissions caused by ship sling delays from ongoing port congestion. Currently, the most reliable schedule is in Santos, but this port is also impacted by congestion. There is a shortage of 20′ and special equipment across the coast.

The Rio Grande port is currently open, but switching to an alternative port can help overcome congestion and lack of yard capacity currently being experienced at the port. Due to these disruptions, carriers are omitting this port to recover their schedules and prioritize other ports with bigger volumes.

Both Paranagua and Itapoa ports are struggling with port facilities and release windows to deliver empty containers and receive loaded ones in time to operate vessels. Previously, shippers had almost seven full days to work on container loading and delivery, now there are just 2–3 days to complete it. 

North America

U.S. labor challenges

Shippers are watching developments with the labor negotiations for U.S. East and Gulf Coast ports. The International Longshoremen’s Association (ILA) published a statement on Friday July 12, 2024, increasing pressure for the United States Maritime Alliance to take action on the APM Terminals Auto Gate system in Mobile, Alabama.

The ILA advised in June that negotiations on the Master Agreement will not start again until their concerns regarding this automation process are answered. ILA reiterated they are ready to strike on October 1, 2024, if no new agreement is in place.

In a July 24, 2024, event hosted by Supply Chain Dive, transportation secretary, Pete Buttigieg, said the Biden Administration continues to monitor the situation and is trying to encourage positive outcomes for both sides.

U.S.–Europe

Port strikes

There have been intermittent port strikes in Hamburg, Bremerhaven, and the inland port city of Bremen as dockworkers demand increased wages to match the increased cost of living. The most recent strikes took place on July 9–10, 2024.

Growing demand 

Demand is improving on the TAWB lane as traditional peak season begins. At the same time, ocean carriers are starting to remove capacity on U.S. East Coast (USEC) services by reducing the size of the vessels. They are reallocating the larger vessels to other lanes where demand is stronger. There are no cancelled service strings planned at this time, but there is an increased frequency of blank sailings.

Space is still tight from U.S. West Coast (USWC) to Europe due to lack of sailing options, and carriers are substantially booked on all water services, especially Los Angeles and Oakland. As an alternative to all water service, CMA and OOCL are offering rail service via Houston to Europe.

Space at USGC ports to Europe improved, but carriers still have solid load factors due to limited service options and a strong resin export market.

Space is currently tight on the EMA service into East Mediterranean and Turkey ports due to strong cotton volumes (ex. United States).

Congestion issues

There is a growing congestion issue at key west Mediterranean ports such as Valencia, Algeciras, and Tanger due to rapidly rising volumes. The volume increases are largely due to carriers having to now transship cargo via west Mediterranean ports, connecting with feeder vessels into the Middle East and India to continue to serve those markets.

Olympic games

The Olympic Games are coming to France, running from July 26 through September 8. The influx of tourist activity and the establishment of security measures will cause disruption, congestion, and shipment delays into and out of France during this period. 

U.S.–Asia 

USWC

Volumes at USWC ports have increased approximately 20% compared to the same period in 2023. Carriers are experiencing more demand for services via the USWC due to the continued challenges with obtaining appointments through the Panama Canal and extended transit times through the Cape of Good Hope.

Trans-Pacific Eastbound (TPEB)

Demand has continued to show some strength on the TPEB lane, therefore the number of planned blank sailings continue to be relatively low. However, port congestion in Asia and at some USEC ports like Charleston, is causing some schedule unreliability, which can lead to some blank sailing weeks. 

Asia port congestion 

Congestion at transshipment ports in Asia remains a significant issue. Shipments can be delayed as much as 14–21 days at many major transshipment ports, such as Busan, Shanghai, and Singapore. This is mainly due to the increase in transshipment services caused by carriers choosing to omit port calls to re-establish schedule integrity and catch Panama Canal transit appointments. Carriers report it is taking as much as 5–7 days to have their vessels worked at some large Asia ports like Singapore and Shanghai.

Some carriers are switching their transshipment hubs to alternative ports in Malaysia, India, and Columbo, which has a downstream effect, building congestion in those ports as well.

Singapore has opened the first of three new container berths at the Tuas mega-container terminal, which should help ease some current congestion.

New vessels increasing capacity

A wave of new vessels entering the market in 2024 has increased capacity by as much as 10%. The vessels are mainly expected to be added to the Asia trade lanes. However, the impact of this increase in capacity has been completely cancelled out for the time being by the vessel diversions through the Cape of Good Hope, coupled with growing port congestion, and the rise in demand seen on multiple Asia lanes since early Q1 2024.

Equipment shortages

There are equipment shortages in Asia due to extended transit times, rising demand, and schedule instability, which is causing carriers to use vessel space to move empties to serve TPEB demand, rather than leave them in North America to support exports.

Rate increases

Carriers announced important rate increases for July and August 2024. Carriers seek higher rates to support the added costs from port congestion and to justify carrying loaded exports, rather than just sending empty containers back to Asia to meet strong Asia export demand.

U.S.–Oceania

Due to continued congestion and operational issues in Charleston, North Carolina, Hapag, MSC, and Maersk’s direct service has shifted to the Savannah port.

Demand in Oceania has softened in many sectors since Q4 2023, and some economists expect the economy is currently in recession. Peak season normally starts in Q3, but so far it has been soft this year.

Vessel space to Oceania is relatively open

Rates are expected to remain stable for Q3 2024, however if peak season were to be stronger than expected, this may change. CMA has noticed fuller vessels on their USEC–Oceania service and have announced a GRI for August 2024.

Carriers with direct services to Oceania continue to go through the Panama Canal from the USEC.

Carriers with transshipment services via Asia into Oceania will route via the Panama Canal or the Cape of Good Hope, depending on U.S. port of exit and their port of transshipment. Routings via Cape of Good Hope have impacted transit times by 10–14 days.

U.S.–LATAM

Congestion and delays

Schedule reliability to South America East Coast (SAEC) ports has been impacted by significant delays at the ports of Navegantes and Rio Grande in southern Brazil, which are heavily congested, leading to blank sailings and port omissions.

Recent heavy rains in the southern Brazil region are adding to the existing port delays and congestion. Many carriers are choosing to omit south Brazil ports with their main vessels, and instead transship into the region via the Santos port. Consider shipping into Itapoa and Paranagua ports in southern Brazil where direct service options are more available. However, be aware congestion is growing at these ports as well, due the cargo diversions.

The congestion issues have caused an increase in the volume of transshipment cargo, and the main transshipment ports are starting to experience dramatically increased congestion, leading to significant delays at these transshipment ports as well.

Carriers serving the Caribbean and South America markets have announced GRIs for July and August 2024.

Amazon River levels

The Amazon River has not seen a water level increase since mid-June 2024. With the region entering a dry season from July 2024 to early 2025, anticipate restrictions on cargo levels and low water surcharges.

Hurricane season

Hurricane season has started early this year with severe weather sweeping across the region already, particularly in the Caribbean and Central America. Weather experts warn this could be a particularly difficult hurricane season. Anticipate disruption and vessel delays throughout the remainder of Q3 and into Q4 2024.

U.S.–South Asia, Middle East, Africa (SAMA)

Tight space, canceled services, and rate increases

Rate increases were announced for July and August 2024 due to the current instability of service and very tight vessel space.

Space from USEC and U.S. Gulf Coast (USGC) ports to the India and Middle East lanes have been significantly impacted due to the piracy risks associated with transiting through the Suez Canal by Houthi rebels in Yemen. All container carriers are now diverting their vessels via the Cape of Good Hope, which is increasing transit times and blank sailings.

Services into Red Sea ports are currently suspended with many carriers, and for those carriers still offering service, significant surcharges have been added to the freight costs. There is limited service to Persian Gulf ports in the Middle East. Carriers are accessing the Red Sea ports via feeder service from Mediterranean ports, which has led to significant congestion at these West Mediterranean port hubs. Expect to book four or more weeks in advance to secure space.

Port congestion and delays

Congestion at Southeast Asia ports is causing carriers to expand their transshipment hubs to alternative ports like Abu Dhabi, Mundra, and Colombo. These ports are now seeing a growing congestion issue due to the significant increase in the volumes.

The building congestion issues at Mundra and Nhava Sheva ports are further complicated by bad weather conditions over the past couple of weeks in the region.

Severe weather during recent transits via the Cape of Good Hope has caused delays for many vessels taking this routing.

SAMA

Export market to North America and Oceania are dynamic with space challenges, blank sailings, backlog, price elevations, and surges in cargo demand. Carriers are issuing limited bookings at premium rates.

While Asia–Europe/Mediterranean rates are up trending with a slight improvement in cargo demand, the intra-Asia and LATAM markets are softening so rates are stable to dropping. 

Oceania

North America to Oceania

Market conditions from North America remain stable, with space and schedule integrity maintaining availability and regularity.

Europe to Oceania

The Europe to Oceania market is tightened due to ongoing disruption in the Red Sea/Suez Canal. Carriers continue to implement contingency surcharges. This disruption is also impacting transit times with the 14-day transit via the Cape of Good Hope.

Expect to see schedule disruptions continue throughout Q3 and consider forward planning 4–6-weeks in advance.

Asia to Oceania

There have been service suspensions via Asia due to port congestion in transshipment hubs. This demand will be moved to carriers, and the market will most likely be able to absorb this drop in capacity.

Northeast and Southeast Asia capacity continues to tighten following blank sailings and port omissions. Rates remain unstable with the implementation of GRIs and peak season surcharges (PSS) throughout August. Schedule reliability continues to be impacted. Carriers advise blank sailings are connected to schedule recovery.

Northeast Asia is experiencing severe container shortages—overall, this market continues to experience volatile conditions. MSC announced the removal of Capricorn/Kiwi service, which will impact supply from southeast Asia to Australia as well as northeast Asia to Australia WC/NZ. This capacity reduction, along with the removal of larger capacity ships for other higher yielding trade lanes, will create supply chain disruptions and challenging space issues.

Trans-Tasman market

This lane is experiencing ongoing delays along the New Zealand (NZ) coast, affecting schedule integrity. Delays at port have reduced and now range from 0.5–1 day. While schedule reliability is impacted, rates remain stable, space is available, and equipment is readily obtainable.

Coastal shipping

Australian coastal shipping remains strong, without major delays or issues. Aside from 2 – 3 days or irregular port omissions from east to west coast, schedule integrity is stable. Capacity remains out of key ports, with rates holding firm (ex. Brisbane, Sydney, and Melbourne). No equipment issues have been reported from key east coast ports.

Exports from Oceania 

Export rates are under pressure with strong load factors creating competition—expect this to continue throughout August. Capacity is tightening from Australia and New Zealand to Europe and the east coast of the United States. Plan to book 5–6 weeks in advance.

New Zealand is in peak produce season, and space is tightening to the United States. Equipment impacted spans both 20' and 40' dry and refrigerated containers.

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Asia

Demand

From a demand perspective, both ecommerce and general cargo should remain stable. Expect similar demand to July of this year as ecommerce continues to occupy a significant portion of the available capacity. However, carriers out of Hong Kong will start to impose rate increases from August onwards.

Capacity 

From a capacity perspective, major vehicle recalls in the United States involving Korean brands will put pressure on air freight demand from South Korea to the United States. This is on top of the existing high demand for memory chips that are flowing into the United States due to the booming artificial intelligence (AI) industry.

Taiwan typhoon impact

The typhoon Taiwan experienced in late July will impact Taiwanese carriers (collectively a major capacity contributor to Trans-Pacific route) in the short term. That combined with the high demand for air freight (specifically for AI chips), will lead to tighter capacity for Taiwanese carriers. Rates will likely stay elevated.

Middle East conflict

The conflict situation in the Middle East has increased recently. However, the overall equipment imbalances and capacity have improved, thereby mitigating its impact on ocean freight. Ocean to air conversion should remain stable and ultimately create better stability in air freight demand.

Overall, capacity in August will likely remain moderately tight while demand remains stable, keeping rates elevated.  

Europe

According to the WorldACD weekly report, air freight capacity from Europe to North America saw a slight 1% decline in the last two weeks compared to the previous two and a 4% increase y/y. Rates saw a slight 1% increase over the last two weeks compared to the previous two, which is a 14% decline y/y. 

Latin America (LATAM)

• São Paulo/Guarulhos International Airport (GRU) has steadied export windows and shippers are able to get the delivery window schedule in 2–3 days
• U.S. lane is also steady; airlines have immediate availability 
• LATAM space is flat; carriers are open to negotiations (when providing targets)
• Europe lane has finished fruit peak season; now the lane is completely open to negotiate spot pricing over 300
• Asia and Oceania are flat and stable 

North America

The U.S. export market remains stable in most markets with ample capacity to meet demand, especially for cargo that fits on passenger flights. The increased travel demand during the summer months in the northern hemisphere helps keep this condition in place through Q3 at least.

However, the United States to LATAM has some capacity challenges. Freighter capacity has exited the market for both maintenance and lease agreements ending/not renewed between airlines and charter companies. Add in an uptick in demand and capacity is tighter than usual for southbound volumes, with high spot market rates and extended transit times.

Added passenger capacity has impacted some airlines in terms of how they position their freighter aircraft. For the Trans-Atlantic market, capacity has spread out demand, leading to lower utilization of cargo flights.

With the high demand and yields for Asia export cargo, some airlines are repositioning those freighters into that market, lessening the main deck capacity elsewhere. Which is why there are such significant differences in air rates and transit when freighters are required. The United States to Australia market is particularly challenging from this respect.

The India market remains steady for U.S. exports, but U.S. imports remain congested:

• Pharmaceutical, automotive, and textile vertical continue to play major role
• Backlogs have lessened in recent weeks and spot rates are trending down, but rates remain elevated relative to January 2024
• U.S. exports to India is relatively well balanced between capacity and demand

Trans-Atlantic westbound market is relatively balanced:

• The addition of summer passenger aircraft has balanced supply and demand for lower deck cargo
• Main deck capacity remains tight, driving higher spot market rates
• The market on U.S. exports remains open and stable 

SAMA

The frequency of flights and capacity is stable, with Air India expanding routes in the Netherlands, United Kingdom, and the United States.

Flights are consistently on schedule and airports have been operating smoothly with no congestion issues. Expect rates to rise out of Europe, Asia, and the United States to account for increasing fuel costs and high number of exports.

Volume to Intra-Middle East is expected to increase, especially with multiple projects initiated by Saudi Arabia.

Expect the spot rates to trend upwards and for steady growth in both import and export tonnage compared to 2023.

Oceania

Overall, import markets have been subdued, which can be typical during end of financial year periods. Expect this to increase in Q3 as ocean markets increase rates and equipment shortages develop.

North America

Oceania to North America PAX capacity has reduced slightly. Some direct flights were removed and redeployed for the Trans-Atlantic summer holiday season. Some freighter capacity has also been removed due to the softer demand from North America to Australia, keeping rates stable during Q2.

Europe

Oceania to Europe has also seen some interruption due to extended flight paths avoiding air space above areas of geopolitical concern. Longer flight paths add flight time, and additional fuel requirements reduce weight allowance for cargo. There have been some additional flights returning to the EU–AU market, which has kept rates stable.

Asia

Oceania to Asia has abundant capacity with availability open on many lanes. Rate levels reflect pre-pandemic conditions in most cases.

Trans-Tasman markets are also quite stable, with capacity able to cater for current market demands. Rate levels are also quite stable currently.  

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Intermodal

The Canadian National (CN) and Canadian Pacific Kansas City (CPKC) railways are at the bargaining tables with the Teamsters Canadian Rail Conference (TCRC) and federal mediators. A new strike vote took place within the union on June 29, 2024, reauthorizing the strike.

As there will still be some uncertainty surrounding the outcome, some steamship lines are diverting sailings away from Vancouver and toward the U.S. west coast. The Canadian Industrial Relations Board (CIRB) will issue a decision regarding negotiations on August 9, 2024, so no strike can take place until a decision is rendered, and 72-hour notice is provided.

Currently, the earliest a strike could potentially occur would be mid-August or later. This situation remains fluid, so stay in touch with account teams for the most up to date information.

Market conditions

Growth in intermodal has remained strong, primarily driven by international intermodal. Domestic intermodal volume performance is up 2.3% y/y while international intermodal is up 17.4% y/y.

The international growth has been fueled by inland ocean container deliveries. However, there are indications of an ocean container shortage. If this continues, ocean providers may offer incentives for transloading at the ports to drive demand for domestic intermodal containers out of the West Coast.

Despite several factors contributing to growing import volumes earlier this year, there has not been the normal seasonal increase from Q1 to Q2. This likely means it will be a moderate peak season. The larger North American market has ample capacity to handle demand, with an estimated 20–25% of container supply being stacked and ready to deploy.

Pricing prospects

Increasing pricing is anticipated for the second half of 2024. Expect this to continue through 2025 in the low single digit range. Railroads have new labor agreements that are driving up labor costs combined with inflationary pressure that will drive these rate increases. Now is the best time to lock in intermodal rates before they start to increase.

Service metrics

Intermodal service, as measured by train speeds, is tracking just below the five-year average. However, the number of trains being held at terminals is running well below five-year averages, indicating the equipment and workforce supply is healthy.

With strong service and low pricing, contact the C.H. Robinson team to take advantage of intermodal benefits.

Rail

Canadian National (CN) and Canadian Pacific (CP) are both negotiating new contracts with their respective labor unions. The federal government in Canada appointed mediators to assist in the negotiations. At this point, no agreement has been reached.

The Minister of Labor, Seamus O’Regan, made an application to the CIRB to consider the railway as an essential service in Canada. Due to the uncertainty around the continuity of rail service in Canada, some carriers such are diverting some U.S. rail cargo via Seattle/Tacoma port.

The rail union has now issued a second strike vote, since the previous vote expired after 60 days. The CIRB has announced they will issue their ruling on August 9, 2024. A strike cannot take place until that ruling is issued.

Los Angeles/Long Beach

Due to the strong increased import volume through Los Angeles/Long Beach ports, there have been delays with rail service, particularly if it’s an off-dock rail connection, which requires the use of a truck and chassis to bring the containers into the port. The truck delivery is delayed, leading to an increased number of containers missing planned vessels.

North America ports

Port of Montreal

The contract between union labor and the port of Montreal authority expired on Dec 31, 2023. Talks had broken off for some time while awaiting a decision from the Canada Labor Relations Board, which was received in mid-March.

Sporadic mediation talks took place in April. A contract offer from the MEA has been fully rejected by the union. For any pressure tactics to be applied by the union, they would need to conduct a strike vote and then provide 72 hours’ notice before they could go on strike.

United States east coast ports

The contract with the ILA labor union on the USEC and USGC ports is due to expire on Sept 30, 2024. While there have been no labor disruptions on the USEC since 1977, press releases indicate negotiations between the two parties are not going well and talks have broken off for now.

The two sides appear to be far apart. The president of the ILA union announced union members should be prepared for a coast-wide strike in October 2024.

On June 10, 2024, the ILA suspended talks with the United States Maritime Alliance (USMX) after discovering that APM terminals and Maersk Line are utilizing an automated gate system, which autonomously processes trucks without ILA labor. This was discovered at the Port of Mobile, but it’s reportedly being used in other ports as well. As of today’s date, talks have not resumed and there is a call for government intervention to get the two sides back to the negotiating table.

Vancouver and Prince Rupert ports

Negotiations with a smaller union of foremen in Vancouver and Prince Rupert are ongoing with the BC Maritime Employers Association (BCMEA). It has been revealed that the main sticking point in the current negotiations involves semi-automated cranes operating at the DP World terminal in Vancouver.

Workers at that terminal have taken a strike vote and are in position to strike on 72 hours’ notice. The BCMEA has filed a complaint with the CIRB to request government intervention and mediation. The CIRB is expected to render a decision in early August. No strike action can take place until this decision is released.

Charleston port

Charleston port is suffering from significant congestion after multiple recent incidents, including a terminal system shutdown, an oil spill, and repair work causing one of the terminals close. There are currently 8–12 vessels awaiting a berth and vessels are waiting approximately 10 days to secure a berth. Ocean carriers have reacted quickly and many are omitting the port.

As congestion worsened, the port of Charleston suspended construction work for two weeks at the Wando terminal, which helped clear some port congestion, however the port advised they expect congestion issues to persist through to November 2024.

An agreement was finally reached between the port of Charleston and the ILA on using union labor in the Leatherman terminal. Re-opening the Leatherman terminal will add to the port capacity while the terminal construction is ongoing.

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North America

Southeast

Tampa

The Port of Tampa Container Terminal will no longer be collecting demurrage on behalf of the ocean carriers due to the new FMC ruling. Additionally, TCT will only serve drivers with a pre-advised appointment pin. Any driver without a pin will be turned away.

Charleston

Since the Port of Charleston opened the third berth at the Wando Welch Terminal, congestion is no longer an issue. At the time of writing, there are zero ships waiting. However, the challenges in Charleston have caused steamship lines to omit/bypass Charleston.

MSC has done a Freeport shuffle with containers and truckers are finding it hard to know which containers will be coming in—if ever. The port is working to return services to normal. Currently port traffic has not been an issue and congestion is minimal to none.

Savannah

Import dwell time is four days. The waiting time for vessel berth at the terminal is up to one day, depending on the vessel's size. Effective July 7, 2024, Georgia Ports began locking vessels expected to be at berth and working. The first day of receiving (ERD) will be seven days prior to the vessel going to work. The terminal cut will be set at 16:00 hours, two days prior to the vessel going to work. This could cause issues with getting exports back in prior to the cut, this is a potential disruption to watch.

Northeast

New York/New Jersey

Carriers report port terminals (i.e., PNCT, APM, Maher, GCT Bayonne, and GCT New York) are still experiencing congestion from the increase in volume and the Fourth of July holiday backlog on the port roads leading to the gates.

APM/PNCT traffic has had the greatest impact to truck turn times. Carriers report they are averaging three to five hours to out-gate. APM has acknowledged the congestion leading toward their terminal. They are working to steady the flow of traffic by increasing the flexibility of their appointment system and maximizing gate hours to help alleviate congestion.

Baltimore

While the port is open and functional, drivers report they are still supporting volumes out of Norfolk and Philadelphia. Traditionally, a driver could do three to four local Baltimore moves, but pulling a load out of Norfolk could result in only one move a day.

This is due to road transit time and traffic in the tunnels stemming from the Francis Scott Key Bridge collapse. This has caused little congestion overall though as carriers actively manage volumes between multiple ports.

Central/Ohio Valley

Cleveland

Carriers report the NS is holding onto empties for a little too long, so wheels stay under the empties that are actually needed for incoming loads. NS lift lines are moving slowly, causing delays in appointments.

Memphis

The I-55 bridge is open again and running smoothly, which is a key route into Arkansas from the Memphis rails. Chassis also appears to be in good supply, at present.

Chicago

The UP G4 and NS Landers are still a little challenging, slow lift operations.

West/Gulf

Los Angeles/Long Beach

The potential for ILA strikes at USEC ports could challenge that region if a deal is not reached this year. This will drive volumes to the USWC as some shippers may want to avoid the USEC.

Week 27 has shown significant increase in volumes, up by 42.01% over the previous week and by 51.04% y/y. Volumes are predicted to drop again in the next two weeks.

Seattle/Tacoma

Expect a three day wait time at Husky, up to three days at Washington United terminal at Tacoma, and two days in Seattle. Additionally, import rail dwells are 3.7 days at Husky, 6.1 days at Washington United Terminal, and 1–3 days at T18.

Rail car supplies are in a severe deficit over the next couple of weeks in Tacoma, which is contributing to higher import rail dwell times.

Washington United Terminal 1 is limiting their operations to a maximum of three gangs on vessels and one berth operation until further notice, due to lack of rail cars to evacuate imports. They are also delaying start-up operations on vessels for the same reason.

SAMA

Rates are expected to firm up, partially due to festival season in Q4. The trucking industry is booming, with key developments such as improved communications, increased supply and demand, and greater use of technology.

Oceania

National empty parks have given notice of pricing increases. Review the latest Wharf Ancillary Charges client advisory for more information.

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U.S.–Mexico

The Interoceanic Corridor of the Isthmus of Tehuantepec is a key federal project aimed at boosting nearshoring. It connects four ports on the Atlantic and Pacific oceans through 1,100 kilometers of railway, with the intention of enhancing logistics and industrial development.

The United States, in coordination with Mexico, has imposed new tariffs to prevent China from bypassing existing duties through transshipment. The new tariffs include a 25% duty on steel and a 10% duty on aluminum from China, Russia, Iran, or Belarus but shipped through Mexico.

The Complemento Carta Porte, required for transportation on Mexican federal highways, will see changes with version 3.1 that became mandatory on July 17, 2024. Read about the updates to Carta Porte on the C.H. Robinson blog.

Factors influencing trucking rates in Mexico

• Diesel fuel prices in Mexico have increased 5.66% compared to June 2024
• Rate of inflation reached 4.78% in mid-June, increasing costs for spare parts and maintenance
• Toll highways, which are safer and faster, has also increased 3%
• Security concerns also drive expenses, especially for routes to and from the states of Puebla, Mexico, and Guanajuato due to have higher theft rates

The peso-dollar exchange rate is above 18 pesos, which helps offset cost pressures for cross-border carriers that invoice in U.S. dollars, though it’s unclear how the exchange rate will behave in the short term due to both the United States and Mexico having election years.

Economic information impacting costs and freight demand

In May 2024, Mexico's exports to the United States reached historic highs, increasing by 6.1% y/y. The Mexico economy grew at an annual rate of 1.6% in Q1 2024.

Unemployment has remained below 3% for 19 consecutive months, reaching 2.61% in May; however, the IMF has adjusted its growth forecast for Mexico in 2024 to 2.2%, down from 2.7%.

Mexico's incoming president, Claudia Sheinbaum, plans to promote industry-specific investments by dividing the country into specialized regions and constructing at least 100 new industrial parks.

• The plan calls for Baja California and nearby states to be hubs of semiconductors and renewable energy production.
• Northern border states will emphasize auto parts and manufacturing while the southeastern Maya Corridor will target services, tourism, and renewable energy.
• The plan for the Bajío region is to specialize in automotive and aerospace industries.
• Mexico City and its surroundings’ planned focus is on manufacturing, medical devices, and pharmaceuticals.

In the first half of 2024, Mexico's manufacturing industries have shown significant growth. Electronic equipment manufacturers grew by 49.7%, machinery and equipment manufacturers by 39.1%, and transportation equipment manufacturers by 38.6%.

The U.S. and Mexico are collaborating on a broader initiative involving 11 countries to develop semiconductor manufacturing. This project aims to enhance assembly, testing, and packaging capabilities.

Automotive news

In the first half of 2024, Mexico's automotive production increased by 5.24% y/y, with vehicle exports rising by 10.67%. Light trucks comprised 75.5% of production. As the industry contributes nearly 4% of Mexico's GDP and 20.5% of manufacturing GDP, this growth has a significant impact.

Mexico aims to produce 5 million cars annually, a target delayed by the pandemic. Production is expected to reach 3.9 to 4 million vehicles this year. The main disruptor of freight during the summer months have been weather events in different parts of Mexico, with unusually high precipitation in northeast and central Mexico causing road closures and flooding. More rain is expected to continue in August.

Talk to a C.H. Robinson representative and leverage our expertise, built on 100 years of cross-border experience.

U.S.–Canada

Potential railroad strike

Trade and freight flow will be unhindered until the Canadian Industrial Relations Board comes to a decision on the impact a strike will have on the Canadian economy. The next update is to be announced on the August 9, 2024.

There will not be a work stoppage until then. Any work stoppage requires 72 hours’ notice after the CIRB issues its decision, or after any ‘cool down’ period that may be ordered by the CIRB.

The last rail strike sent rates skyrocketing for freight moving across Canada. Prices tripled and even quadrupled during winter 2021–2022. A potential strike really dampens Canada as a viable trade partner internationally and could be worrisome for companies looking to sell and expand into Canada, due to the unknown cost of transportation and potential supply chain disruption that could hinder delivery.

Canada market conditions

The Bank of Canada began reducing interest rates in June from 5% to 4.75%, which marked the first decrease since the COVID-19 pandemic took place in March 2020. In July, the government continued to see signs of easing inflation, so they decreased rates again from 4.75% to 4.5%. Their plan is to continue slightly reducing rates as inflation cools. This is a welcome sign for borrowers and could potentially lead to increased freight demand.

The seasonal surge in freight demand that started in the second quarter has now eased as the seasonally slower months for freight originating in Canada approach. For June, the Loadlink Canadian Spot Market Truck Index reflected the first negative change month over month (m/m) this year.

Due to the current low freight rates, now combined with the declining volumes, more carriers are going out of business and exiting the market. If rates remain low, or even decrease further, expect this trend to continue.

Factors influencing truck rates in Canada

Increase at cross-border tolls

Customers absorb customs costs, but the increase in the costs of tolls at the border when coming in and out of Canada have risen. With the current market at a lull, carriers are absorbing the cost increase every time they cross the border.

Border delays

Delays at borders are frequent and often caused by factors such as, but not limited to, incorrect paperwork, insufficient information from the shipper, prolonged processing from the customs broker, or system issues from the Canada Border Services Agency (CBSA).

Often, the broker and/or carrier absorbs these costs, especially those associated with customs broker or CBSA issues.

Drivers are often paid on mileage traveled, so prolonged wait times that keep drivers at the border, consuming their available driving hours has an impact on driver compensation.

Road closures

Winter road closures certainly impact rates. In the winter of 2021, a major highway in British Columbia was impacted by a natural occurrence that shut down the flow of traffic in and out of the province.

To ensure freight was delivered, carriers rerouted trucks into the Northwestern U.S. states by placing shipments in bond and recrossing into Canada. With the added miles, tolls, and bond, costs skyrocketed.

Freight flow from Ontario to Quebec and vice versa is the most traversed lane for Canadian carriers. From the end of October to the middle of April, the weight the roads can take is reduced and triaxle equipment is introduced into the market.

Because carriers are hauling more weight and the specialized equipment, there is a rate increase for this corridor. Canadian shippers are paying a premium to ship their goods in this lane.

Currency conversion

Canadian carriers are losing purchasing power when operating in the United States. as the Canadian dollar continues to weaken against the U.S. dollar, currently at $1.38CDN/USD at the time of writing this.

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North America

Changes to the Harmonized Tariff Schedule of the United States (HTSUS) and Schedule B

The U.S. International Trade Commission’s 484(f) Committee made changes to the HTSUS and Schedule B, effective July 1, 2024. Visit their website to view the most updated 2024 HTSUS including the change record.

Consumer Product Safety Commission (CPSC) pilot expanded

As part of its expanded beta pilot test, CPSC will expand the number of beta pilot test participants from 50 up to 2,000 importers and extend the test period from six months to up to three years, or until an effective date of a final rule implementing an eFiling requirement is announced.

This will allow U.S. Customs and Border Protection (CBP) to further scale the information technology (IT), procedural, and processing requirements before a final rule goes into effect.

Heightened enforcement on de minimis entries

CBP has increased enforcement on de minimis manifest entries under Section 321 and Type 86 entries. The enforcement targets vague cargo descriptions and ensures cargo is valued properly under the $800 de minimis threshold. Review the list of acceptable cargo descriptions provided by the CBP to determine the impact on your business.

Section 301 China tariff increases anticipated

On May 28, 2024, the United States Trade Representative (USTR) outlined the proposed Harmonized Tariff Schedule (HTS) subheadings that will be expecting the ad valorem tariff increases of 25%, 50%, and 100%, effective August 1, 2024, and increases in 2025 and 2026 effective on January 1 of the corresponding year.

Upcoming changes to the Complemento Carta Porte

The Complemento Carta Porte is a mandatory document for transportation across Mexican federal highways. The latest version, 3.1, is set to become mandatory on July 17, 2024. There are two main changes from version 3.0 to 3.1:

• Customs regime: Now allows multiple customs regimes in one document, instead of being limited to one.
• Customs tariff number (HS Code): Changed from mandatory to optional for international shipments.

The Servicio de Administración Tributaria (SAT) has also updated technical documentation, FAQs, and catalogs for HazMat and ocean services. Non-compliance with these regulations can result in fines and sanctions. For assistance with compliance, reach out to a C.H. Robinson representative.

Visit our Trade & Tariff Insights page for the latest news, insights, perspectives, and resources from our customs and trade policy experts.

Oceania

With the conclusion of the Brown Marmorated Stink Bug (BMSB) season, there is a distinct reduction in processing time for quarantine entries. There are no customs processing delays recorded by the Department of Agriculture, Fisheries and Forestry and the Ministry for Primary Industries.

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United States

On June 25, 2024, Vinn White was named the acting administrator of the Federal Motor Carrier Safety Administration. Usually, the FMCSA administrator is scheduled to be confirmed by the U.S. Senate to assume the full title of administrator.

Since Mr. White was named with only five months until the next election, it is unlikely he will be confirmed before the end of the year. This means all significant FMCSA priorities, such as the speed limiter rule, will most likely be delayed until 2025.

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Retail diesel's national U.S. average price per gallon of $3.72 in June is down from $3.82 in May, and still lower than the $3.80 average from June 2023.

The visual below, created with data provided by the EIA, shows fuel is down in the long run, but it has increased slightly from the year to date (YTD) record lows set during mid-June.

Despite the overall decrease of diesel rates, crude oil prices have generally increased YTD. There are many factors that play into the cost of diesel, but crude oil prices are the largest, so there remains upside risk for diesel if oil prices remain elevated or increase any further.

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