Signs of a solid peak season are arriving

This week’s FreightWaves Supply Chain Pricing Power Index: 35 (Shippers)

Last week’s FreightWaves Supply Chain Pricing Power Index: 35 (Shippers)

Three-month FreightWaves Supply Chain Pricing Power Index Outlook: 40 (Shippers)

The FreightWaves Supply Chain Pricing Power Index uses the analytics and data in FreightWaves SONAR to analyze the market and estimate the negotiating power for rates between shippers and carriers.

This week’s Pricing Power Index is based on the following indicators:

Volume yet to react for peak season

The start of November is traditionally a softer period for freight demand ahead of the retail peak season that tends to start gaining momentum around the middle of the month. This year, with the Thanksgiving holiday being the latest possible day it can be, volumes haven’t found any positive momentum as the middle of the month is just days away.

*SONAR: Outbound Tender Volume Index — Seasonality View: 2024 (white) and 2023 (pink)*
**To learn more about FreightWaves SONAR**, ***click here***.

The Outbound Tender Volume Index (OTVI), a measure of national freight demand that tracks shippers’ requests for trucking capacity, continued to decline over the past week, falling by 2.19%. For the first time since late September, OTVI has turned negative, down 0.13% year over year.

Long-haul volumes, loads moving 800 miles or more, have yet to turn on as the intermodal market has been a pressure relief valve for the imports that have been coming into the country. Loaded domestic intermodal volumes are up over 6% compared to this time last year, whereas long-haul trucking volumes are down 3.2%. As intermodal’s value proposition weakens due to increased time sensitivity, long-haul truckload volumes will find some positive momentum, following a seasonal pattern.

*SONAR: Contract Load Accepted Volume – Seasonality View: 2024 (white) and 2023 (pink)*
**To learn more about FreightWaves SONAR**, ***click here***.

Contract Load Accepted Volume (CLAV) is an index that measures accepted load volumes moving under contracted agreements. In short, it is similar to OTVI but without the rejected tenders. Looking at accepted tender volumes, the decline was larger than the decline in OTVI thanks to an increase in rejection rates, falling by 3% over the past week. With the fairly sizable decrease in CLAV w/w, accepted tender volumes are now down 2.92% y/y.

Spending growth remains tepid, according to the most recent Bank of America card spending report. Total card spending per household was up 0.9% y/y for the week ending Nov. 2. Autos continued to provide a boost to spending; retail spending excluding autos was down 0.5% y/y in the week. Online electronics and gas spending remain large drags on overall spending, falling 7.2% and 10.1% y/y, respectively, though gas spending is being driven largely by lower prices as opposed to significant changes in demand.

*SONAR: Outbound Tender Volume Index – Weekly Change*
**To learn more about FreightWaves SONAR**, ***click here***.

With the decline in freight demand overall, the majority of freight markets experienced lower volumes week over week. Of the 135 freight markets tracked within FreightWaves SONAR, just 50 had higher volumes compared to last week.

The Ontario, California, freight market, the largest in the country by outbound volume, saw some growth in volumes over the past week, rising 0.4%.

Houston also experienced some uptick in tender volumes over the past week, rising 3.9%. The other major Texas freight market, Dallas, experienced a fairly sizable decline in volumes, falling by 2.27% w/w.

*SONAR: Van Outbound Tender Volume Index (white, right axis) and Reefer Outbound Tender Volume Index (green, left axis)*
**To learn more about FreightWaves SONAR**, ***click here***.

By mode: The dry van market continues to be the primary source of volume weakness as dry van volumes continue to creep lower. The Van Outbound Tender Volume Index fell by 2.72% over the past week. With the weakness to start November, dry van tender volumes are down 1.26% y/y.

The reefer market continues to show signs of life, though seasonality is likely playing a large part in the growth in volumes over the past week. The Reefer Outbound Tender Volume Index increased by 1.22%, recovering from a slowdown to start the month. Even with the increase this week, reefer volumes are still lower year over year, currently down 2.69%.

Rejection rates break above 6%

While volumes aren’t showing signs of life, at least yet, the capacity side of the market is starting to percolate. For the first time outside of the Fourth of July holiday, tender rejection rates have eclipsed 6%, which, while it doesn’t create a significant increase in operational challenges, does signal that this peak season is ripe for disruption for the first time in more than two years.

*SONAR: Outbound Tender Reject Index – Seasonality View: 2024 (white), 2023 (pink) and 2019 (orange)*
**To learn more about FreightWaves SONAR**, ***click here***.

Over the past week, the Outbound Tender Reject Index (OTRI), a measure of relative capacity, increased by 79 basis points to 6.01%, eclipsing the 6% level for only the second time since August 2022. At present, the OTRI is 257 bps higher than it was this time last year and 93 bps higher than it was in 2019. While the market this year is different from 2019’s, the upward movement is a positive sign for carriers heading into 2025, though it may take some time for the market to shift in a sustainable way.

*SONAR: Outbound Tender Reject Index – Weekly change*
***To learn more about FreightWaves SONAR,*** ***click here***.

The map above shows the Outbound Tender Reject Index — Weekly Change for the 135 markets across the country. Markets shaded in blue and white are those where tender rejection rates have increased over the past week, whereas those in red have seen rejection rates decline. The bolder the color, the more significant the change.

Of the 135 markets, 97 reported higher rejection rates over the past week.

Tender rejection rates in Southern California have moved higher over the past week, which is a positive sign for the overall market as these markets tend to be the heartbeat of the U.S. freight economy. Tender rejection rates in Ontario increased by 107 bps to 4.96%.

The Chicago freight market also experienced a significant increase over the past week, rising 169 bps w/w to 7.86%. The current rejection rate in Chicago is at the highest level since mid-April 2022.

*SONAR: Van Outbound Tender Reject Index (white), Reefer Outbound Tender Reject Index (green) and Flatbed Outbound Tender Reject Index (orange)*
***To learn more about FreightWaves SONAR,*** ***click here***.

By mode: Dry van rejection rates have finally crept above 5% with the rise over the past week, making it the final equipment type to reach that threshold. The Van Outbound Tender Reject Index increased by 50 bps over the past week to 5.15%. Van rejection rates are 222 bps higher than they were this time last year, an indication that the market has indeed gotten tighter but is still relatively loose, historically speaking.

The reefer rejection rate continues to show that the reefer market has battled out of its own freight recession experienced earlier this year. The Reefer Outbound Tender Reject Index increased by 426 bps over the past week to 17.68%. Reefer rejection rates are almost double what they were this time last year, up 885 bps y/y.

If the Federal Open Market Committee continues to cut the target range for the federal funds rate, it will present increased opportunities for flatbed operators as capital investments increase. The Flatbed Outbound Tender Reject Index continues to inch higher, rising 56 bps over the past week to 11.59%. Compared with this time last year, flatbed rejection rates are 222 bps higher.

Spot rates have 1 of the best weeks of the year

It took some time for spot rates to react to rejection rates moving higher, but some positive momentum has been found in recent weeks. Spot rates have been moving higher since early October and are now less than 10 cents per mile under the year-to-date highs established in January. With the recent upward movement, a higher baseline for spot rates is set ahead of the holidays, leading to the potential for even momentum to be captured during the final six weeks of 2024.

*SONAR: FreightWaves National Truckload Index – Linehaul Only (white, right axis) and Initially Reported Van Contract Rate (green, left axis)*
***To learn more about FreightWaves SONAR,*** ***click here***.

This week, the National Truckload Index — which includes fuel surcharge and various accessorials — saw one of its most significant single-week increases, rising 9 cents per mile after last week’s 3-cent-per-mile decrease, now up to $2.34. With the increase, the NTI is now widening the gap with last year’s figure, now 11 cents per mile higher y/y. The linehaul variant of the NTI (NTIL) — which excludes fuel surcharges and other accessorials — increased slightly less than the NTI. That is an indication that fuel prices did help create some boost to all-in spot rates, but it was marginal at best. The NTIL rose by 8 cents per mile to $1.78. The NTIL is 23 cents per mile higher than it was this time last year, a sign of how impactful the decline in diesel fuel prices, which are down 18.5% y/y, have been on all-in spot rates. If there is a rapid shift in fuel prices moving higher, that could create a significant shock to all-in spot rates as the underlying rate is up 14.8% y/y.

Initially reported dry van contract rates, which exclude fuel, have remained fairly stable the past couple of months, as shippers have become more understanding over the past year that pricing could shift significantly. Over the past week, the initially reported dry van contract rate was unchanged at $2.31. Initially reported dry van contract rates are 2 cents per mile lower than they were this time last year. The Logistics Managers’ Index future outlook for transportation prices reached 81 in October, a signal that a fairly large shift in transportation prices is likely next year as any reading over 50 signals expansion.

*SONAR: RATES.USA*
***To learn more about FreightWaves SONAR,*** ***click here***.

The chart above shows the spread between the NTIL and dry van contract rates is trending back to pre-pandemic levels. The spread remains wide, but with the recent positive momentum in spot rates and flattening of contract rates, the spread is starting to narrow. Over the past week, the spread between contract and spot rates narrowed by 4 cents per mile and is 22 cents narrower than it was this time last year.

*SONAR: FreightWaves TRAC rate from Los Angeles to Dallas.*
***To learn more about FreightWaves TRAC,*** ***click here***.

The FreightWaves Trusted Rate Assessment Consortium spot rate from Los Angeles to Dallas continues to trend higher, but not without some volatility along the way. The TRAC rate from Los Angeles to Dallas increased by 4 cents per mile to $2.64. Spot rates along this lane are 14 cents per mile above the contract at present.

*SONAR: FreightWaves TRAC rate from Atlanta to Chicago.*
***To learn more about FreightWaves TRAC,*** ***click here***.

From Chicago to Atlanta, spot rates have been rising since early October, but the past week presented a challenge. The TRAC rate for this lane fell by 5 cents per mile over the past week to $2.67. Spot rates are 10 cents per mile below the contract rate, but that spread is as narrow as it has been all year.

Borderlands Mexico: Averitt completes major facilities expansion in San Antonio

Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: Averitt completes major facilities expansion in San Antonio; Bennett Family of Companies opens new facility in Texas; Aerospace manufacturer completes $28M expansion in Mexico; and Mode Global acquires freight brokerage division of Jillamy.

Averitt completes major facilities expansion in San Antonio

Less-than-truckload carrier Averitt is ready to launch its new 85,000-square-foot distribution and fulfillment warehouse along I-35 in San Antonio.

In addition to the new distribution and fulfillment warehouse, Averitt also expanded its cross-dock trucking terminal to 80 doors, and added a new maintenance facility.

Construction for a drive through fueling station at the site will be finalized next year.

Ed Habe, vice president of Mexico sales for Averitt in San Antonio, said nearshoring is already increasing the demand for warehouse and logistics services across Texas, especially cities near or along the border.

San Antonio is located between Laredo and Austin, along the I-35 corridor. The city is about 160 miles from the Mexican border in Laredo.

“San Antonio has already seen the effect of nearshoring,” Habe told FreightWaves in an interview. “Carrier Global already has a warehouse here. Toyota and Navistar have major manufacturing plants here, partly because of San Antonio’s proximity to Mexico. They all have Mexican companies or customers in Mexico. Navistar sends freight back and forth across the border to its plant in General Escobedo, Mexico. San Antonio is part of the I-35 corridor, the busiest freight corridor in the U.S., which extends all the way to Laredo and then all the way into Mexico.”

Averitt is a transportation and logistics provider headquartered in Cookeville, Tennessee. The company has 4,500 tractors and 14,750 trailers, with 85 locations across the country. Averitt’s team consists of more than 8,000 associates.

Averitt recently completed an expansion of its facility in San Antonio, including a new 85,000-square-foot distribution and fulfillment warehouse along I-35. (Photo: Averitt)

Nearshoring — the relocation of production and manufacturing operations from one country to another to be closer to end consumers — has been creating manufacturing growth across Mexico as shippers look for supply chains that are closer, cheaper and more favorable to doing business with the U.S.

Averitt isn’t the only trucking company or transportation provider looking to bolster its capacity for growth in the cross-border traffic between the U.S. and Mexico.

Some of the latest companies to expand or open new facilities in Texas are Kuehne+Nagel, Ryder System and Maersk. Uber Freight recently opened a new office in the Mexican city of Nuevo Laredo, which lies across the border from Laredo, Texas.

Averitt’s San Antonio facility provides services such as truckload and LTL, as well as distribution and portside container drayage from a nearby Union Pacific railyard.

Averitt originally opened its location in San Antonio in 2001. When it opened, the facility included about 17,000 square feet of space, with 38 dock doors for trucks. Today, Averitt’s San Antonio facility has about 30 truck drivers and 50 associates.

Averitt’s strategy in Texas is focused on the long-term growth of U.S.-Mexico trade and creating a network of facilities that can serve any cross-border customer’s needs.

Across Texas, Averitt has more than 800,000 square feet of distribution and fulfillment warehousing, including facilities in Dallas, Houston, Austin, Laredo, El Paso, Harlingen and Del Rio.

The expansion in San Antonio also comes on the heels of the company’s announcement in September that it had opened a new service center in Tyler, Texas, a 20,500-square-foot facility with 33 dock doors.

“One of our strengths is diversification,” Habe said. “Maybe one area, like less-than-truckload may be slow, but our dedicated division is busy, or warehousing is busy.The diversification definitely gives us strength in that we’re not just tied into one type of service. We basically provide diverse services all over Mexico and the U.S., but this expansion in San Antonio is exciting. It’s almost three times the size of what we have in Laredo. It’ll definitely be a backup for Laredo. If the warehouse in Laredo is full, we have San Antonio.”

Bennett Family of Companies opens new facility in Texas

Bennett Family of Companies recently expanded with a new location in Dayton, Texas.

The facility houses Bennett On-Site Services, BOSS Heavy Haul and Bennett Motor Express. The location includes a 10,000-square-foot office and a 38-acre yard.

“The size and the location of the new facility will be instrumental in helping us achieve our goal of becoming the premier specialized carrier in the Gulf Coast. With this move, we can better leverage opportunities to offer value-added services in the marketplace,” Mark Brewton, general manager for Bennett Motor Express Houston Co. Store, said in a news release.

McDonough, Georgia-based Bennett Family of Companies offers specialized transportation, logistics, heavy haul and heavy lift services and solutions.

Aerospace manufacturer completes $28M expansion in Mexico

ITP Aero recently completed the expansion of its factory in Quetaro, Mexico.

The Querataro facility produces low pressure turbine static parts and tubes for the aerospace industry.Officials for ITP Aero said they are launching new product lines from the facility.

The $28 million expansion will add 250 jobs over the next three years, the company said. The Querataro facility, which opened in 1998, currently employs 1,000 workers.

“We were pioneers in making Queretaro a world-class aerospace hub,” Eva Azoulay, CEO of ITP Aero, said in a news release. “Our growth and investments here demonstrate our commitment to the Mexican aerospace sector, developing new technological capabilities and keeping Queretaro at the forefront of aerospace technology.”

ITP Aero is based in Zamudio, Spain. The company designs, develops, manufactures aircraft engines. They also provide maintenance, repair and other services for engines used in airlines, helicopters, business aviation and defense applications.

Mode Global acquires freight brokerage division of Jillamy

Mode Global, a third-party logistics firm, has acquired the freight brokerage business of Jillamy Inc., a supply chain and logistics provider, and an independent agent of Mode Transportation.

The acquisition strengthens Mode Global’s position in the marketplace by integrating Jillamy’s freight expertise and resources, according to a news release.

Mode Global will assume Jillamy’s logistics and freight management solutions, while Jillamy’s warehousing, packaging and fulfillment services remain unchanged.

As part of the transaction, Mode Global will gain more than 200 employees and add facilities in Pennsylvania, Arizona, Florida, Texas, Illinois, South Carolina, Maryland and Ontario to its existing national footprint.

Dallas-based Mode Global is the eighth-largest truckload freight brokerage andone of the largest non-asset intermodal providers in the U.S.

Spot rates break out ahead of holidays

Chart of the Week: National Truckload Index (Linehaul Only), Outbound Tender Rejection Rate – USA SONAR: NTIL.USA, OTRI.USA

Nationwide dry van spot rates minus the influence of fuel jumped 5% last week as carriers rejected contracted truckload tenders at the second-fastest pace of the year, prompting FreightWaves CEO and founder Craig Fuller to call an end to the Great Freight Recession.

The National Truckload Index Linehaul Only (NTIL) measures the average spot rate for dry van loads moving more than 250 miles excluding the total estimated cost of fuel. The NTIL has been trending higher over the past year and a half but has moved erratically, as is the nature of commodities negotiated on a daily basis.

The peak of the truckload market in 2024 occurred around the Fourth of July, a seasonal moment when capacity comes offline and shippers push freight out en masse at the end of the second quarter.

That top should be surpassed in the coming weeks as the holiday shipping season hits its stride. The jump in spot rates is coming as carrier rejection rates have jumped above 6% for just the second time since the middle of 2022.

The Outbound Tender Reject Index (OTRI) measures the rate at which carriers reject load coverage requests from their contracted shippers, something they do not like to do. A “normal” market, which is of course a debatable label, lives somewhere in the 5%-7% range with holiday spikes to around 8%-10% and lulls to around 4%.

The average rejection rate for the past two years has been at or below 4%, including the holidays, which has led to strong downward pressure on contract rates. The overly competitive market has forced many carriers to offer rates at or below operational breakeven levels. This is not healthy or sustainable.

As a result, carriers have been leaving the market at an average clip of around 200-600 per week in 2024, according to Carrier Details analysis of Federal Motor Carrier Safety Administration data. This is on the heels of the most intense growth the industry has ever seen, in 2020-22. This is the definition of an economic bubble bursting. So is this the sustainable flip that many transportation service providers have been waiting for?

Market interrupted

The International Longshoremen’s Association strike occurred over a month ago, but shippers adjusted their shipping patterns to deal with the potential disruptions.

The shift in imports moving into the western ports from the east has been so severe that spot rates for containers from China to the east coast are offering discounts over their much shorter west coast counterparts.

The ports of Los Angeles and Long Beach handle the bulk of the volume, which helps make the Los Angeles-area markets the largest outbound freight centers in the U.S., representing over 7% of the total outbound shipments.

Truckload tender volumes are up about 15% y/y out of the Los Angeles and Ontario, California, markets. Intermodal container shipments on the rails are up an astonishing 32% but have fallen slightly off peak growth as the holidays approach.

Intermodal has been providing a strong relief valve to the truckload market, exceeding pandemic-era peak levels out of Los Angeles. With retailers’ sense of urgency increasing, trucking has become slightly more viable for transcontinental shipping.

That said, spot rates were increasing more than decreasing in most markets across the U.S. as of late last week. The strain of covering large amounts of West Coast freight has limited capacity in all regions of the country.

This holiday shipping season is shaping up to be more volatile than 2023’s. From a purely directional standpoint, the truckload market has been tightening, just at a near-imperceptible rate since May 2023. While the market may lull at times, increased reactivity is a near certainty for the coming year.

About the Chart of the Week

The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real time. Each week a Market Expert will post a chart, along with commentary, live on the front page. After that, the Chart of the Week will be archived on FreightWaves.com for future reference.

SONAR aggregates data from hundreds of sources, presenting the data in charts and maps and providing commentary on what freight market experts want to know about the industry in real time.

The FreightWaves data science and product teams are releasing new datasets each week and enhancing the client experience.

To request a SONAR demo, click here.

Tariffs and retail prices: What consumers need to know

Tariffs on retail goods don’t usually directly control the final price that consumers pay.

When products are brought into the U.S., the tariff is calculated based on the declared value of the goods at the point of import, not on the retail price at which they’re sold.

This declared value omits additional costs such as labor, marketing, logistics, rent and the profit margin that retailers add. Consequently, the price on the shelf can be significantly higher than the tariffed import value.

For instance, the markup on big-ticket items like cars might be relatively modest, around 5%, whereas luxury goods can see markups up to 500%. However, most consumer products are typically marked up by over 100% over their import value.

Sourcing is never fixed:

Consumers worry that retailers will just pass on the cost of tariffs in terms of wholesale costs. The more likely answer is that companies will look for cheaper suppliers, countries for sourcing or domestic manufacturers. Sourcing is not static or fixed.

So, what will importers do to respond to tariffs?

Importers’ strategies:

Absorbing tariffs: Importers might pay the tariff out of their profit margin to stabilize consumer prices.
Sourcing from alternatives: They could shift production to countries with more favorable trade agreements with the U.S.
Increasing prices: As a last resort, if neither absorbing the cost nor changing suppliers is feasible, the price to consumers might increase.

If importers discover cheaper alternatives, they’ll shift their sourcing to maintain profitability. Otherwise, they have to decide whether to absorb the cost or pass it on to consumers, depending on how much the market will tolerate the price hike.

Impact on suppliers:

Manufacturers, especially those exporting to the U.S., face similar decisions.

The U.S. is the world’s largest consumer market. A significant drop in demand due to high tariffs can push suppliers to reduce prices to remain competitive, offsetting some or all of the costs of tariffs.

Foreign government subsidies to their manufacturers:

Some foreign governments will likely subsidize their manufacturers to ensure they don’t lose U.S. market share to foreign or domestic competitors. For decades, U.S. manufacturers and policymakers have complained about China subsidizing manufacturing to steal market share from U.S. domestic manufacturers. This means consumer prices could stay the same while the tariff cost is offset by reducing the foreign manufacturer’s price and margin.

Market dynamics:

Ultimately, the level of demand sets a ceiling on how much prices can rise. If prices get too high, sales diminish.

Strategic tariff use:

Implementing tariffs, particularly on nations like China, strategically nudges businesses to diversify their supply chains by seeking suppliers in countries with better trade relations or boosting domestic production.

As a result of these tariffs, should demand for Chinese goods decrease, Chinese manufacturers are compelled to either lower their prices or risk losing market share, possibly leading to business closure.

Supply chain flexibility:

The adaptability of modern supply chains is crucial. Over time, sources of supply can be redirected to areas with lower costs and higher reliability. This flexibility isn’t a weakness; it’s an inherent strength of economics, allowing for a more resilient and efficient distribution of goods worldwide.

Railroads ask federal courts to order FRA to take action on waylaid safety waivers

This story originally appeared on Trains.com.

WASHINGTON – BNSF Railway, CSX, and Union Pacific filed lawsuits against the Federal Railroad Administration today for its failure to act on a half dozen safety waiver requests that in some cases would allow railroads to scale back visual inspections in areas where they have deployed new high-tech train and track inspection systems.

The litigation asks federal courts to find FRA’s inaction on waiver requests is “arbitrary and capricious” and in violation of FRA’s own regulations requiring action within nine months, the Association of American Railroads said.

“Rail safety is a shared responsibility, and the FRA’s unlawful delays are creating uncertainty and preventing critical advancements in safety and efficiency,” AAR CEO Ian Jefferies said in a statement. “By law, the FRA is required within specified timelines to act and either grant or deny these petitions, yet it has repeatedly failed to meet its legal obligation, forcing the industry to file suit. Enhancing the safety and efficiency of the rail network cannot wait, and the industry has now had to file lawsuits to try to break FRA’s systemic inaction.”

The AAR says that the next level of safety improvements will hinge on new approaches to track and train inspections.

“Continually advancing new approaches is critical and under the present regulatory framework often requires a waiver from rules that were put in place decades ago and did not necessarily contemplate modern advances in technology,” the AAR said.

Railroads are free to deploy autonomous track inspection systems, as well as wayside detectors and other equipment that can spot defects in moving equipment, such as brake system problems or cracked wheels. However, they cannot simultaneously scale back visual inspections due to regulations that specify how often the traditional inspections must be performed.

Trains News Wire reported on Monday that the safety agency bows to organized labor concerns and misses its own deadlines when reviewing railroad requests to expand track and train inspection programs that also reduce visual inspections.

And, in a departure from longstanding FRA practice, a political appointee is now involved in waiver decision-making. Previously the Railroad Safety Board waiver reviews were handled by the FRA’s career safety professionals, who acted independently and made decisions solely on the basis of safety.

Now, in some instances the recommendations of staff safety experts are ignored due to political considerations, according to people familiar with the matter. If rail labor opposes a waiver, the petition is rejected or ignored, they say.

The FRA’s proposed rulemaking on safety waivers, introduced last week, seems to confirm this approach. In order to pass FRA muster, a waiver request must be deemed in the public interest and consistent with rail safety. The proposed rule aims to define those terms for the first time. “To show that a proposal is ‘in the public interest,’ FRA proposes that a petitioner could provide evidence that the regulatory relief requested would not eliminate jobs or eliminate required visual inspections, but would add additional positions, or improve the existing positions,” the rulemaking says.

AAR says Congress has required FRA to modernize its regulations by periodically reviewing longstanding waivers to determine if revising the existing regulations based upon the results of those programs would be appropriate.

Some of the waylaid waivers have been awaiting an FRA decision for more than two years. In some cases, the requests are for extensions of waivers that would renew existing programs that have been shown to improve safety.

“Importantly, these technologies are not intended to simply be stacked on top of the underlying outdated regulatory framework,” the AAR says. “Rather, there are tremendous opportunities to employ science and data to modernize, harmonize and improve current regulated approaches to railroad safety.”

The FRA has disagreed, noting in some cases that railroads need to take a “belt and suspenders” approach that uses new technology while maintaining required inspections using railroad employees.

BNSF filed suit over three delayed waiver requests; Union Pacific two; and CSX one. Although Norfolk Southern has several waiver requests caught in FRA limbo, the railroad did not file a suit against the safety watchdog.

The AAR is a party to the lawsuits, which use common language regarding the FRA’s inaction.

“FRA (1) is denying waivers even when the undisputed evidence shows the waiver will enable the railroad to conduct safer operations; (2) is refusing to rule on new waiver requests; (3) is refusing to renew existing waivers that have been on the books for years; and, on information and belief, (4) has invited rail labor officials to review all existing waivers outside of the normal notice-and-comment process and identify waivers they would like to see revoked or non-renewed when they expire,” according to the legal filings. “In implementing its new policy, FRA has been disregarding or directing the decisions of the agency’s own Safety Review Board, including by (for the first time) placing political appointees on the Board.”

The lawsuits ask federal courts to treat FRA’s delayed action on the waiver and reconsideration requests as effective denials and either set them aside or direct FRA to grant them.

As an alternative, the railroads have asked federal courts to order the FRA to rule on the waiver requests within 30 days.

An FRA spokesman declined to comment on pending legal matters.

China is vulnerable to US tariffs. We should exploit this.

China isn’t about to let its export market go belly-up. Instead, it will do what it always does – pump money into its industries to soften the blow of U.S. tariffs.

By subsidizing the costs that tariffs impose, China inadvertently reduces the financial strain on U.S. importers. However, this move will make Chinese businesses lean more heavily on their government’s stimulus packages to keep the lights on.

Here’s where it gets interesting: Unlike the U.S., where stimulus might go directly to consumers, China directs its financial aid toward local governments and businesses. This means their economy relies on domestic spending to cushion the impact of our trade policies.

China’s economy is heavily dependent on exports, and that’s its weak spot. Strategically, we ought to exploit this vulnerability.

Lockout looms in Montreal port labor dispute

Employers at the Port of Montreal said they would lock out striking workers if their union rejected the latest contract offer.

The Maritime Employers Association (MEA) late Thursday submitted what it called a “final, comprehensive” offer to Canadian Union of Public Employees Local 375, calling for an overall 20% pay raise over six years. Absent a new agreement, the MEA said it would lock out union workers as of 9 p.m. Sunday.

The union since Oct. 31 has halted container handling at two facilities run by Termont, which account for 40% of Montreal’s annual box capacity. The strike is an escalation of months of intermittent job actions that employers say have hurt business at Canada’s second-busiest import gateway.

“The MEA asks the union for a reply by 8 p.m. this Sunday on this offer, which provides for a cumulative increase of more than 20% over six years,” the employers said in a statement posted to their website. “The MEA has also informed the union that, in the absence of an agreement on the offer submitted, and as a result of its actions, only essential services and activities unrelated to longshoring will continue at the Port of Montréal from 9 p.m. on Sunday, November 10.”

The union did not immediately respond to emails seeking comment.

In a separate contract fight, employers in British Columbia have locked out union dockworkers at the ports of Vancouver and Prince Rupert on Canada’s west coast.

Labor Minister Steven MacKinnon in a post on X said that he is closely monitoring negotiations. “Both sets of talks are progressing at an insufficient pace, indicating a concerning absence of urgency from the parties involved,” MacKinnon wrote.

With Montreal container traffic disrupted, Canada’s major railroads have suspended service to the port.

As of Tuesday, a CPKC spokesman said the carrier advised customers that it will restrict all export loads and pre-billed empties destined to the ports in Montreal for Cast and Racine, facilities operated by Montreal Gateway Terminals. The terminals have combined handling capacity of 1.3 million twenty-foot equivalent units, and host carriers CMA CGM, CSAL, Hanjin, Hapag-Lloyd, Maersk, MSC, OOCL, Hamburg Sud and Cosco.

Also Tuesday, CN said rail operations at Cast and Racine were suspended until further notice, according to a spokesperson.

“This action is due to operational constraints and uncertainty arising from the ongoing renewal of the Montreal longshoremen collective agreement,” the company said in a customer advisory. “As a result, CN will suspend and remove all capacity at our inland terminals for exports destined for Cast and Racine until further notice. We are closely monitoring the situation and will provide updates as they become available.”

This article was updated Nov. 8 to add comments from Canadian Labor Minister Steven MacKinnon.

Find more articles by Stuart Chirls here.

Related coverage:

East Coast port contract talks to resume

Lockout stalls more container ships outside western Canada ports

Reports claim Houthis make Red Sea vessel attacks a $2B business

Amazon top toy seller talks tariffs under Trump; RIP great freight recession | WHAT THE TRUCK?!?

On episode 781 of WHAT THE TRUCK?!? Dooner is joined by Amazon top toy seller, Molson Hart. They’re talking about tariffs under Trump; peak season shipping; selling on Amazon; appearing on Tucker Carlson; and we will learn how the International Longshoremen’s Association port strike nearly killed him.

FreightWaves’ CEO and founder Craig Fuller declares an end to the great freight recession.

Reliance Partners’ Thom Albrecht is coming on with some clarity following the election. Now that we know who has won, how will freight move forward? We’ll learn about Albrecht’s 2025 freight and capacity outlook post-election.

Plus, tender rejection rates take off; trucker gets truck eyes and more.

Catch new shows live at noon EDT Mondays, Wednesdays and Fridays on FreightWaves LinkedIn, Facebook, X or YouTube, or on demand by looking up WHAT THE TRUCK?!? on your favorite podcast player and at 5 p.m. Eastern on SiriusXM’s Road Dog Trucking Channel 146.

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Running on Ice: Reducing pharma waste with ‘coolers on steroids’

All thawed out

Waste is a feature of every supply chain, and reducing it is a challenge. In the pharmaceutical world, there are typically such stringent shipping regulations that waste is inevitable. But there is a new solution for those looking to reduce waste resulting from supply chain inefficiencies.

ArcticRx has launched a shipping container that focuses on commodities at high risk for damage, which conveniently enough is a fair amount of the medical supply chain. This new product is essentially a dishwasher-size pod that can be used to transport and store materials for 21 days or more on dry ice and via other means of cooling.

The heavy-duty plastic containers can maintain temperatures as low as minus 78 degrees Celsius – critical for vaccines especially. Shane Bivens, co-founder of ArcticRX, said in a Waste 360 article, “With our unique design and thermal technology, we’ve created a way to efficiently get products to parts of the world where this has not been possible with existing logistics.” The article describes the pods as “coolers on steroids that leverage ultra-low temperatures to move products safely and with less complexity.”

Temperature checks

It’s third-quarter earnings season, another chance for companies to predict what’s to come for the rest of the year. All publicly traded companies publish their results, and a newcomer to that list is Lineage. The temperature-controlled giant that set the record for the largest initial public offering of 2024 has issued its first quarterly report since the blockbuster IPO.

Some of the highlights include a $543 million net loss, attributed to the costs of the IPO; the acquisition of ColdPoint Logistics for $223 million; and a quarterly dividend of $2.11 a share.

FreightWaves’ Todd Maiden quotes President and CEO Greg Lehmkuhl: “We are excited to report strong results for our first quarter as a public company, demonstrating our ability to perform well in various economic environments. Looking forward, we are well positioned to drive compounding growth, benefiting from our industry-leading real estate portfolio, innovative technology, and our strategic capital deployment engine.”

Food and drug

Kids’ lunchtime favorite has made its way to the NFL: Smucker’s Uncrustables, which are frozen peanut butter and jelly sandwiches with no crust. The sandwich was created by Len Kretchman, a former wide receiver at North Dakota State University.

According to The Athletic, “NFL teams go through anywhere from 3,600 to 4,300 Uncrustables a week. When you factor in training camps and the teams that did not share their data, NFL teams easily go through at least 80,000 Uncrustables a year.”

For reference, that’s about 1,111 of the 72-count wholesale boxes.

Turns out it’s not a horrible option for players. Some nutritionists, according to The Athletic article, have said, “The bread and jelly give players quick carbohydrates. The peanut butter provides a little fat and a little protein. They’re easy to digest, convenient to eat and a comfort food that players love (though there is wide disagreement as to whether grape or strawberry is the better jelly flavor — the correct answer is strawberry).”

So, it turns out demand for Uncrustables isn’t just at back-to-school time. But I have to wonder what they’re doing in Denver to go through 700 a week.

Cold chain lanes

This week’s market under a microscope is Green Bay, Wisconsin. Reefer outbound tender volumes have taken a dive in the land of cheese as volumes fell 9.3% week over week. Taking the opposite approach were reefer outbound tender rejections. They rose sharply to 14.4%, a 510-basis-point increase w/w. Reefer rejection rates haven’t been this high since mid-October.

Spot rates could be similar to those of mid-October. However, since reefer outbound tender volumes fell so aggressively, spot rates will see little impact as there is excess capacity in the market. Heading into major food holidays, reefer capacity for food and beverage will be a little tighter compared with other industries. Those turkeys aren’t going to deliver themselves.

Is SONAR for you? Check it out with a demo!

Shelf life

3 out of 4 European shippers have experienced supply chain disruption in the past 12 months – more than half with significant cost impact

Brazil cold chain for pharmaceutical market witnesses upsurge

Swissport launches new cargo facility at Heathrow Airport

New compostable gel pack increases sustainability for cold chain shipping

WSU-led initiative focuses on veterinary vaccines to combat food insecurity

Wanna chat in the cooler? Shoot me an email with comments, questions or story ideas at moconnell@www.freightwaves.com.

See you on the internet.

MaryIf this newsletter was forwarded to you, you must be pretty chill. Join the coolest community in freight and subscribe for more at www.freightwaves.com/subscribe.

East Coast port contract talks to resume

Negotiations on a new labor contract covering workers at 36 East and Gulf Coast ports are set to resume next week between employers and their longshore union.

Representatives of the United States Maritime Alliance (USMX) and the International Longshoremen’s Association (ILA) will meet in northern New Jersey, where both organizations have offices, sources confirmed.

Mediators will not be present at the talks, according to the sources, who requested anonymity as they were not authorized to comment publicly.

The USMX and ILA earlier declared a media blackout during negotiations.

Biden administration officials in October helped end a three-day strike by the ILA as the sides agreed to extend the current contract until Jan. 15 while negotiations resumed. The work stoppage shut down container handling and threatened a logjam of billions of dollars of imports ranging from pharmaceuticals and fresh fruits and vegetables to apparel and auto parts.

At the time of the extension, USMX and ILA agreed to a 62% pay hike over the six years of a new pact covering 45,000 union workers. Automation remains a key sticking point as the union has adamantly opposed the introduction of new port technology that could replace longshore jobs.

One option would have the sides extending ther current contract again while negotiations continued.

The Jan. 15 deadline which comes just days before the Jan. 20 inauguration of Donald Trump as president. Importers have been pulling shipments forward ahead of a possible second strike as well as tariffs planned by Trump on goods imported from China, but it’s unclear if ILA leadership would call for another work stoppage. ILA President Harold Daggett in the recent past met with Trump, and it’s uncertain if the new administration would invoke the Taft-Hartley Act to order striking longshore employees back to work, something the Biden administration refused to do.