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Today’s Pickup: Boeing 737 groundings to cost Southwest millions

Image: Facebook/Boeing

Good day,

The grounding of Boeing 737 MAX 8 planes is estimated to cost Southwest Airlines millions in lost revenue. The company announced today that it expects to lose $150 million in one-time expenses this quarter including the grounded flights, weather delays and unscheduled maintenance.

Southwest estimated that the grounding forced it to cancel 2,800 flights during the period ending March 31.

Did you know?

Indian logistics startup Delhivery has secured $413 million from the Japanese global technology company SoftBank Group Corp. (TOKYO: 9984), valuing the company at $1.5 billion. Delhivery, which has raised around $675 million to-date, gets its unicorn status. (Unicorns are start-ups worth $1 billion or more; over 20 Indian start-ups have achieved that status since the end of 2017.)

Quotable:

“I think rates will continue to be positive through the first half of 2019, mainly due to the contracts that were signed last year, but then I think it will turn negative.”

Tim Denoyer, vice president & senior analyst, ACT Research

In other news:

Tax Changes Hit Overseas Profits of Some U.S. Companies:

Multinational companies warn that the new tax system, meant to help them compete overseas and create domestic jobs, could instead put them at a disadvantage and reduce their incentive to invest at home. (WSJ)

U.S. January Trade Gap Narrows as Imports From China Plummet

The U.S. trade deficit pulled back in January from the widest level in a decade as imports from China plunged, suggesting American companies had been rushing shipments the prior month to beat an expected tariff boost.(Bloomberg)

Titanium pushes outside Canada with U.S.-based brokerage

Titanium Transportation Group (TSX:TTR.VN) announced today that the Canadian trucking and logistics firm will open a U.S.-based brokerage and plans to expand further south of the border. (FW)

The enormous numbers behind Amazon’s market reach

The company is best known as the world’s largest online store. But of course Amazon is much more than that. It sells advertising on its website, making the company a small but growing rival to Facebook and Google. (Bloomberg)

 

Final thoughts:

Tim Denoyer, vice president & senior analyst, ACT Research, told attendees at the ACT Research Seminar 60 conference that freight slowed sharply in the second half of 2018. Most freight metrics are starting 2019 on a downward trend, and that has ACT forecasting slower freight growth and lower, maybe even negative, rate changes in 2019.

The slowdown will hold down rate growth, with Denoyer suggesting truckload contract rates (net fuel) will rise 1 percent this year to $2.52 per mile, holding mostly steady throughout the year. LTL rate per CWT (net fuel) year-over-year will rise 4 percent to $18.64, while intermodal rate per load year-over-year is pegged for a 1 percent increase to $2,071. In 2020, the numbers are forecast for $2.47, $18.97, and $2,112.

 

Hammer down everyone!

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