LTL carrier Moran Transportation acquires RMX Freight Systems
Less-than-truckload carrier Moran Transportation announced Tuesday that it has acquired RMX Freight Systems.
White Cottage, Ohio-based RMX Freight Systems provides LTL and expedited transportation in Ohio and certain locations in bordering Kentucky and West Virginia. The company operates between 55 and 60 trucks out of three service centers.
Financial terms of the transaction were not disclosed.
Chicago-based Moran Transportation provides regional and local LTL service throughout seven states in the Midwest as well as parts of Canada. It also provides forwarding, cartage and pool distribution services.
The acquisition expands Moran Transportation’s terminal network to 12 locations and gives it more than 675 pieces of equipment, some of which have liftgates for indoor and residential delivery.
An integration process will begin on Nov. 11.
“Acquiring RMX Freight Systems Inc. aligns perfectly with our growth strategy and commitment to delivering exceptional service to our customers,” said Mike Moran, president of Moran Transportation. “We are excited to welcome their talented workforce into our family and leverage their expertise to improve our operational capabilities and customer service.”
AI will have huge impact on freight but also overhyped, says Transflo exec
In the logistics industry, partnerships play a pivotal role in advancing technology solutions and maximizing efficiency. By pooling expertise and resources, logistics companies can overcome barriers like the high costs of technology adoption and the demand for greater data accuracy and real-time updates, which are vital for complex logistics operations.
In addition, collaboration between technology providers accelerates solutions for predictive analytics, route optimization and fleet management, which are essential in today’s market.
Don Everhart’s Tuesday appointment at Transflo highlights the importance of a strategic approach to partnerships in logistics technology. As head of partnerships and strategy, Everhart will lead the development of collaborations in Transflo’s innovation efforts.
Transflo’s Don Everhart. (Photo: Transflo)
Everhart brings over two decades of experience leading innovation at both legacy and emerging logistics providers. He led technical teams at Knight-Swift Transportation as vice president of technology and analytics before steering technical projects at FreightVana as CTO. Everhart also shares his expertise as a technology committee member of the Transportation Intermediaries Association.
In an interview with FreightWaves, Everhart offers perspectives on emerging FreightTech trends and industry buzzwords, such as AI, along with strategic advice for leaders on adopting new technologies. He also discusses his vision for advancing innovation in his new role at Transflo.
FREIGHTWAVES:Which emerging technologies do you think will have the biggest impact on the supply chain in the next five years?
EVERHART: Obviously AI. It is a quickly evolving [tech] stack, and as an industry I think we are just scratching the surface.
The challenge here is that people have seen and [ridden] other [tech] hype cycles, so I don’t blame people for being cynical. We will continue to see novel applications of the new tech emerge and with a rapid rise of AI offerings over the next five years.
FREIGHTWAVES: Are there any technologies that are currently overhyped?
EVERHART: This is going to sound funny, but also AI.
I see many companies throwing a quick wrapper over an OpenAi [tool] or anthropic model and calling it revolutionary. Don’t forget: AI is an overarching label that encompasses more than just [language learning models].
FREIGHTWAVES: As automation and AI reshape logistics, what new skills do you think the workforce will need?
EVERHART: It’s my belief that it will be more impactful to the workers of today than search was when Google and competitors came on scene.
Advanced pattern recognition, with a focus on the critical actions required to address previously unidentified patterns, will become important.
In order to unlock the potential, the workforce will need to find a way to leverage it as a force multiplier versus viewing it as something that will replace them.
Skill growth will be needed in the arena of prompt engineering, how to tweak or think about model inputs and outputs, and helping others learn to utilize that knowledge as well.
FREIGHTWAVES: How should educational institutions or training programs adapt?
EVERHART: Embrace it. I’ve seen some academics embrace it fully, while others are still trying to ban it.
The reality is these are the tools people will use in their day-to-day jobs in the future.
FREIGHTWAVES: Is predictive logistics truly possible, or is it more effective to develop reactive systems?
EVERHART: It is my belief that an equilibrium between the two can and should exist.
Many things can be predicted, but at the core we are a reactive industry.
The supply chain is making strides in moving in that direction, but it will be more a shift of that spectrum versus a wholesale change.
FREIGHTWAVES: How accurate is current AI in forecasting disruptions?
EVERHART: It can’t fully [forecast disruption], yet. It can recognize patterns that we may not otherwise see and balance a ton of inputs that would be next to impossible for a human to weigh, but we need more data aggregation and consolidation in our industry for that to have a meaningful movement in accuracy of forecasting.
FREIGHTWAVES: How do you see blockchain technologies impacting the supply chain industry over time?
EVERHART: I think we see impacts [from blockchain] on the daily, [although] many people have declared blockchain dead or that it never landed in the supply chain.
I would say to those folks that they are interacting with blockchain technology on some regular internal level and don’t even realize it. Novel applications and their utility of tooling that relies on blockchain exist in many corners of the supply chain.
FREIGHTWAVES: With IoT, sensors and real-time data sharing, logistics has become more connected. How should leaders approach cybersecurity risks in such a connected supply chain?
EVERHART: If you don’t have a data governance policy in place for this data, that is step 1.
The exposure surface or attack vectors are growing at an exponential rate, and cybercriminals are getting more creative.
Moving to a zero-trust approach as early in your journey as possible is critical.
The days of not investing in cybersecurity even as a smaller company are gone, even if it’s just using a third-party firm for monitoring. We all have to do our part.
FREIGHTWAVES: From a technical perspective, how should logistics leaders be building their teams and operations to help fight fraud?
EVERHART: Compliance is becoming more of a technical role from a security perspective.
Consider how you are aligned internally and make sure your teams are talking.
Most importantly, collaborating with others in the industry.
FREIGHTWAVES: What should we count on technology to solve versus humans catching phishing attempts, etc.?
EVERHART: The technology being deployed on threat detection is way better than I could ever do as a human.
There are patterns and decisioning – this is where AI shines.
FREIGHTWAVES: How do you see your years of industry experience shaping your approach and impact in your new role at Transflo?
EVERHART: I have spent a considerable amount of time in my career building great relationships and seeing/seeking out opportunities to bring teams together.
This is a unique situation for me where I get to do that same work – just so happens is my favorite kind of work – at scale.
I’ve spent my first few days meeting the team and getting organized, but I am eager to unlock the potential of Transflo and our partnership ecosystem.
Shippers need expert help navigating the growing Mexican market
Cross-border freight to and from Mexico has long been a hassle that many shippers and manufacturers avoid when possible. Customs processing, infrastructure failures, crime and delays are especially difficult to navigate for traditionally domestic companies.
Echo Global Logistics is able to leverage its network retailers, suppliers and top-notch logistics expertise to help shippers avoid the perilous pitfalls of transportation through Mexico.
Troy Ryley, President of the Mexico division for Echo Global Logistics, says that growing demand has brought a host of manufacturers and shippers from various sectors into the Mexican supply chain, and they need expert assistance from Echo to keep their operations running smoothly.
Ryley says he started with Echo’s Mexico-based branch before NAFTA had been signed, and he’s seen an immense shift in the shipping environment since then.
“When I came on, Echo’s program in Mexico hadn’t been developed to its potential,” he said. “We learned very quickly that it’s not like what we do domestically. There are a lot of elements to the equation at the border especially.”
With decades of experience and a well-established network, Echo is now able to provide much needed aid to cross-border shippers. “We’re taking the base truck brokerage model and turning it into an integrated logistics model to meet our clients’ needs, and that’s been very well received,” Ryley said.
According to Ryley, there are a number of difficult hurdles unique to Mexico, and transporting freight reliably across the border requires the kind of network and knowledge base that Echo has developed. “When we solve those issues for a client as a strategic partner with single-party accountability, it creates tremendous value,” Ryley said.
Due to its preexisting cross-border capabilities, Echo is in the process of launching other products, such as warehouse distribution at its facility in Laredo, Texas, as well as a US/Mexican customs brokerage operation that will become part of the core Echo offering.
“The one consistency with Mexico is inconsistency,” Ryley said. “It’s hard to predict things like infrastructure and regulatory issues. We once dealt with a hurricane that wiped out the main roads between Monterrey and Laredo, our main artery of transportation.”
“I’ve seen customs facilities blown down in hurricanes and strikes among border workers that shut down inspection docks and bridges,” Ryley said. “What the client needs is a company that offers not just day-to-day service, but also robust contingency planning.”
According to Ryley, shippers need logistical help in order to shift and be flexible in a difficult environment. “These dynamics change constantly,” he said. “It’s not that these things may occur, but that they will occur, and often.”
Theft and fraud are also major concerns for many companies operating in Mexico, but Ryley says that proper insurance is the only effective risk mitigation. “There are things you can do to lower your exposure in Mexico, but there’s no bulletproof plan,” Ryley said.
Many transportation companies utilize GPS tracking units, convoys of security vehicles, fenced or walled compounds and a variety of other traditional security tactics, but are still not without considerable risk.
“You can do all the right things, but the fact is, the bad guys will be willing to use jammers, they’ll be able to bring more guns, they’ll break into anywhere, and they’ll do all kinds of things to ensure that they can take what they want,” Ryley said. “Your only reliable safety net is to purchase proper cargo insurance.”
As far as cargo insurance is concerned, Mexico operates with very different standards to the US. “There’s a low limit to liability, so you need to make sure you have the right partner,” Ryley said. “Reliance Partners handle our insurance needs in Mexico. We get preferential rates for our clients, who can add that service to their Echo program.”
As China’s supply chain becomes increasingly volatile due to an uncertain political climate, risk of more lockdowns in the case of another pandemic like COVID-19, looming tariffs and a general trend of nearshoring among US manufacturers and shippers, Mexico is seeing massive increases in manufacturing and overall market share.
“There’s a tendency toward regionalization of production,” Ryley said. “US companies are planning to limit their risk exposure in the supply chain, and that means diversifying. They can’t source solely out of China.”
This trend accelerated greatly during the COVID-19 lockdowns of 2020 and beyond, according to Ryley. “I think Covid taught us a valuable lesson – the longer and more complex your supply chain, the more risk you’re exposed to and the less reliably you can forecast potential issues,” he said.
Mexico’s manufacturing and distribution growth is due not only to domestic North American companies, however. Chinese companies are also attempting to retain access to the US market.
“China knows all of this, and they know their best entry is through the backdoor,” Ryley said. “They’re working to establish themselves in the Mexican market to maintain a foothold in North America.”
“I can’t think of an automaker that’s not operating in Mexico today, but besides that there are obviously many other sectors following the same trend,” Ryley said. “There’s a huge advantage to being somewhere like Monterrey, where you’re within a few hours of the US market.”
While Ryley is hopeful that technology updates will improve infrastructure and efficiency across the border, he’s concerned that the country will not adapt quickly to the influx of freight and manufacturing.
“Recently, the Mexican military has been put in charge of the ports and customs facilities, borders and ocean ports, but unfortunately I don’t think they’ve been strategic enough to prepare for the kind of growth we’re seeing,” Ryley said. “We’re already seeing inflation on personnel costs in this market because of the increasing need for labor and development.”
As a consequence, it seems likely that the relatively complex and unpredictable nature of shipping across the United States–Mexico border will continue to be a concern for shippers for the foreseeable future.
“Partnering with an expert who has a solution where you can improve efficiencies, reduce costs and avoid the worst hassles of an environment like Mexico just makes sense,” Ryley said.
Georgia Ports Authority marine terminals handled 450,700 twenty-foot equivalent container units (TEUs), the second-busiest September on record, and an increase of 12% from the same month a year ago.
“In September, we saw front-loading of containers as customers worked to ensure cargo availability ahead of the holiday shopping season,” said GPA President and Chief Executive Griff Lynch, in a release. “With another 375,000 TEUs currently on the water, we’re expecting continued strength in October.”
September import loads totaled 234,630 TEUs in Savannah, up 17% from the same month in 2023. Loaded exports fell 8.8%. Only September 2021 saw higher volume, at 472,000 TEUs.
The Port of Savannah’s container volumes totaled more than 1.4 million TEUs, up 13%, for the first quarter of fiscal 2025, which began July 1.
The inland terminal at Appalachian Regional Port handled 3,000 containers in September, an increase of 11%, for a record quarter of more than 10,000 containers.
Growth of the inland rail yards was boosted by the Port of Savannah’s Mason Mega Rail Terminal, which saw a one-day record of 2,169 containers moved on Oct. 4.
Lynch said that construction on the Blue Ridge Connector rail project in Gainesville is now 23% complete. Current activities include dirt work, and the installation of utilities and storm drainage. The inland port is slated to open in 2026.
At the Port of Brunswick, Colonel’s Island Terminal handled 78,430 vehicles and high/heavy equipment in September, an increase of 10% y/y.
The GPA Board in September approved the addition of 50 acres of paved vehicle storage at Colonel’s Island to accommodate increasing roll-on/roll-off trade. The expansion will open in the summer of 2025, and comes after the recent addition of more than 120 acres of paved storage. The GPA said Colonel’s Island still has 200 more acres available for growth.
Vendor troubles slow delivery of Amazon freighter aircraft
Amazon has four fewer Airbus package freighters for peak season than planned because the company responsible for converting the planes from passenger to cargo configuration is behind schedule and temporarily shifting production out of the United States until it can build a qualified workforce and supplier base. That has prompted charges of mismanagement from the lessor providing the aircraft.
Elbe Flugzeugwerke GmbH (EFW), a joint venture between aircraft manufacturer Airbus and Singapore Technologies Engineering, promised to deliver 10 rebuilt Airbus A330-300 widebody jets by the fourth quarter for use by Amazon’s private cargo airline. Amazon (NASDAQ: AMZN) has received six of the A330 cargo jets since September 2023 and placed them with Hawaiian Airlines to fly in its domestic air distribution network under a 10-year transportation services agreement.
In an interview earlier this year, EFW Chief Executive Jordi Boto acknowledged shortcomings with the production process at sites in San Antonio and Mobile, Alabama, which he attributed to subpar training and workforce shortages stemming from the lingering effects of aviation industry layoffs during the COVID crisis. He said the company planned to relocate freighter conversion work to facilities in Asia and Europe until training and recruiting could be brought up to standard.
Final work is being carried out on the remaining aircraft at both modification sites, and no more conversions will be carried out in San Antonio and Mobile in 2025, EFW spokeswoman Anke Lemke said in an email last week.
Amazon is leasing the Airbus cargo jets from Seattle-based Altavair, which owns the aircraft and contracted with EFW to retrofit them for carrying shipping containers on the main deck.
Altavair CEO Steve Rimmer said EFW’s problems mostly resulted from a deliberate decision to prioritize ST Engineering’s more lucrative airline maintenance and repair work at the U.S. production sites, not supply chain disruptions plaguing the entire aircraft manufacturing and conversion industry. ST Engineering’s commercial aerospace unit is a global provider of maintenance, repair and overhaul services (MRO) for aircraft, engines and components.
Rimmer accused EFW of protecting a majority shareholder’s interests over customers when it moved skilled labor from the Mobile conversion line to fill gaps at ST Engineering’s next-door maintenance shop and Airbus’ manufacturing plant for A220 and A320 family passenger jets as airline operations recovered and demand for aircraft increased.
“They saw an opportunity as Airbus’ production lines in Mobile started gearing up again to rent labor to Airbus. Conversion customers were clearly left behind in the dust. The skilled labor is there. They’ve just chosen to allocate it to other higher-yielding things,” Rimmer told FreightWaves in a phone interview.
He characterized the Mobile operation as “an unmitigated disaster.”
An EFW machinest works to remodel an Airbus passenger jet for dedicated cargo service. (Photo: EFW)
Tearing down and rebuilding an A330-300 for cargo service costs more than $20 million, not including additional maintenance, and takes about four months under normal conditions, experts say.
ST Engineering’s facility in San Antonio does MRO work and cargo conversions of A321 narrowbody aircraft. EFW also has production lines at its headquarters in Dresden, Germany, and Singapore, as well as third-party sites in Istanbul and in Chengdu, Guangzhou, Shanghai and Tianjin, China.
A representative with another EFW customer, who asked not to be identified so as not to jeopardize ongoing business ties, said the conversion process in Mobile “was a horrible experience” that involved late deliveries, invoices that were 40% to 50% higher than initial estimates and poor communication.
EFW’s customer list includes AerCap (lessor), BBAM (lessor), Air China Cargo, Air Transport Services Group (U.S. freighter operator and lessor), DHL Aviation, CDB Aviation (lessor, part of China Development Bank), Turkey-based MNG Airlines, Qantas, and SmartLynx Airlines.
Each A330 for Amazon has been delivered about six months late. Rimmer said the remaining aircraft should be delivered by the end of the first quarter.
How the delays have impacted Amazon is difficult to quantify. An Amazon spokesperson declined to comment about the A330 deliveries. But Hawaiian Airlines has hired new pilots and maintenance technicians who can’t generate revenue yet without a full complement of freighters. Aviation experts say airlines need at least six to eight cargo planes for optimal operating efficiency and spare capacity when repairs are conducted. Amazon likely would want to carefully coordinate routes operated by A330s and its Boeing 767 and 737 aircraft to minimize capacity mismatches and delays.
Labor challenges
Demand for all-cargo aircraft spiked during the pandemic when shipping activity surged and the grounding of most passenger flights eliminated some 50% of global air cargo capacity. Shippers experienced capacity shortages and high rates during the airline industry’s slow recovery in 2021 and 2022. Leasing companies that lost revenues because passenger assets were grounded hurried to repurpose narrowbody aircraft as freighters and speculative investors entered the conversion market for the first time.
Modifying a passenger jet for dedicated cargo operations is a complex process in which the aircraft is stripped to the bones and retrofitted with a ruggedized interior, reinforced flooring and bulkheads to support heavy containers, a large cargo door, a cockpit barrier, and new wiring.
The global economic shutdown during the pandemic created massive dislocation up and down the supply chain, with factories at limited capacity, port congestion, vessels off schedule, overcrowded warehouses and empty store shelves. Most companies laid off workers during the crisis and then had trouble restaffing when business picked up.
Amazon’s first A330 freighter, operated by Hawaiian Airlines, gets a water cannon salute from the Cincinnati-Northern Kentucky airport as it departs on its first commercial flight in early October 2023. (Photo: Amazon)
The aerospace industry has struggled to fully recover. Some suppliers went out of business. Aircraft manufacturers and repair facilities experienced huge delays for parts and raw materials through 2023 and let go of skilled employees they didn’t think would be needed. Many workers left the industry for other jobs and never came back. Other industries, especially the defense industry after Russia’s invasion of Ukraine, poached aircraft machinists with offers of better pay and work conditions.
Boto said EFW’s assembly facilities in San Antonio and Mobile were hard-hit by the shortage of trained technicians at the same time the workload was increasing. With work quality and production rates suffering, the decision was made to transfer conversions to EFW facilities in other parts of the world. The company intends to bring back conversions to the U.S. in three or four years once it revamps the entire production and labor process, including recruiting and training, and figures out how to create a strong work culture rooted in quality. The best way to attract and keep good technicians is to set up a training academy or work with technical schools, he said.
“You have to invest in training. … Conversion is the highest level of complexity that an operator can have,” because technicians must have the flexibility to deal with imperfections in a 15- or 20-year-old plane, such as corrosion, that a machinist doesn’t encounter when building a plane from scratch, said Boto.
EFW needs to do a better job of providing management support to partner facilities and monitoring their progress, he acknowledged.
“We have to change the way we support the sites. [Before,] we were delivering them the job cards, the technical documentation and the conversion kits. Now we have to be much more on-site. We have to send work parties to fully train them and work alongside them in critical phases of the conversion. We learned that. So we are rediscovering, a little bit – the whole business, actually,” said Boto.
Sending conversion work to Europe and Asia makes sense, because many current customers are in Asia and it allows ST Engineering to concentrate on its MRO business, the EFW chief explained. Also, production of the A321 has slowed as passenger airlines hold on to aircraft longer because Boeing, Airbus and engine makers are dealing with their own delays related to supply chain and quality issues, which means there is less feedstock of used aircraft to repurpose for cargo conversions.
Frayed relationship
EFW communicated openly with Altavair and other customers as soon as delays were obvious so they had time to find other aircraft to fill a need on a temporary basis, according to Boto. Fitting reallocated planes into a new repair facility requires extensive negotiations to persuade customers to either move up or move back reservation slots and ensure suppliers can deliver parts ahead of schedule, he said.
Altavair negotiated with Airbus to buy four new A330-300 jets that were built for Hainan Airlines in China and never delivered, and bought the other six used aircraft from Abu Dhabi-based Etihad Airways.
The lessor selected EFW in 2022 to overhaul the Airbus A330s, because it was viewed as a subsidiary of the original equipment manufacturer and ST Engineering had a long track record as a reputable retrofit outfit. Rival Israel Aircraft Industries was new to A330 conversions and farming out some jobs to third-party installers. Relying on Airbus’ conversion program had the advantage of full access to Airbus’ original design data, fully integrated manuals and maintenance support that independent conversion shops don’t have. EFW was best positioned to meet Amazon’s requirement to have all 10 planes in service by the 2024 peak season, said Rimmer.
From the outset, ST Engineering fell behind in supplying pieces of EFW conversion kits to the Mobile production line
The ST Engineering maintenance, repair and overhaul facility in San Antonio, Texas, includes a hangar for cargo conversions (right foreground). ST Engineering will suspend conversion work there by the end of the year. (Photo: ST Engineering)
“As a shareholder in EFW, you should be looking and saying, what’s the impact of these actions on my clients? And that didn’t happen. They just stepped back and claimed that they couldn’t influence things,” Altavair’s CEO said.
EFW’s problems appear to be limited to U.S. facilities. Rimmer said one of its aircraft was inducted at a Chinese installation site that had never done an A330 conversion before and was finished ahead of schedule.
“It demonstrates that if you’re committed you can get it done. Conversions at sites in China have been markedly different and significantly better managed. The results are very evident. It’s very clear ST Aero made choices to allocate workforce at its U.S. site to higher-yielding business,” said Rimmer. “Yes, they’ve got some skill shortages now, but if you walk across to the other side of the MRO hangars, there’s no shortages. All the experienced and more skilled labor is working on the MRO business, and the skill sets on the conversion side are significantly less experienced.”
Altavair is pursuing contractual remedies to compensate for the late delivery of aircraft, he said.
Asked if EFW is making any accommodations to resolve Altavair’s concerns, Boto said, “I prefer not to discuss this subject. When you have a customer and you tell him you’re going to have delays it’s not an easy thing.”
Benchmark diesel price rises against backdrop of falling futures
On a day which signaled that war-driven price increases for now at least are going to disappear from oil markets, the benchmark diesel price used for most fuel surcharges rose.
The weekly average retail diesel price published by the Department of Energy/Energy Information Administration rose 2 cents a gallon to $3.573. The increase came after a drop last week of 7.8 cents per gallon, but the benchmark had risen the prior four weeks.
The upward move in the DOE/EIA price came on a day when the futures price of ultra low sulfur diesel (ULSD) on the CME commodity exchange posted one of the biggest declines in the past several months.
Monday’s ULSD settlement of $2.1286 a gallon marked a decline of 10.95 cents per gallon for the day’s trading. It was the largest one-day decline since a 16.9-cent slide on Dec. 1, 2023.
That Dec. 1 drop marked a 5.97% downward change. Monday’s decline was 4.89% in the ULSD price.
The most recent market low in ULSD was a settlement of $2.0538 a gallon on Sept. 10.
There was no ambiguity in markets about why oil fell so hard: Israeli attacks on Iran in retaliation for Iran’s missile launches against Israel Oct. 1 lived up to the predictions that Israel would not attack Iranian oil facilities, whether they were production sites or export facilities, nor would it attack Iranian sites that are believed to be part of Iran’s efforts to build its own nuclear weapons capability.
There were still positions in the market that would have profited had the Israeli attack hit Iranian oil targets.
A Bloomberg report Monday noted that many of the bets placed in the market that would have paid off had Iranian oil facilities been impacted were not outright positions but rather options bets that would have given the holder the right – but not the obligation – to buy oil at a certain price higher than where oil traded Monday. The West Texas Intermediate contract on the CME settled Monday at $67.38 a barrel, the lowest since Sept. 11. That was a one-day drop of $4.40.
But as Bloomberg reported, those options proved to be worthless once prices fell as the parameters of the Israeli attack took shape. “That plunge has helped contribute to a chunk of about 800,000 Brent [the world’s crude benchmark] December call options set to expire without a profit on Monday as traders’ urge to protect against a price spike evaporates,” Bloomberg reported.
With that factor out of the market at least for now, prices again had little to support them. In the Brent market, a decline of $4.63 a barrel was a drop of 6.09%. That percentage was reported to be the largest one-day decline since July 12, 2022.
A somewhat bullish voice could be heard Monday in the wake of the post-Iran attack collapse from Amrita Sen, director of research at Energy Aspects.
Sen said in an interview with CNBC that the assumptions in the supply/demand forecasts into 2025, which are almost all bearish, are relying too much on forecasts of significantly higher output from non-OPEC nations. Specifically, going forward, just as the models have been doing for months, analysts see continued big gains from the U.S., Brazil, Guyana and Canada.
But Sen said she believes that may not happen. “We’ve seen non-OPEC really really underperform, and it’s not something the media has caught on to,” she said.
Most forecasts have these nations adding 1 million barrels per day in output this year. “But guess where we are today – just above 300,000 barrels per day,” Sen said, citing the U.S. and Brazil as key reasons for that shortfall.
U.S crude production closed out 2023 at 13.308 million barrels a day, according to the monthly EIA report, which is considered more definitive than the EIA’s weekly report which comes out on Wednesdays. In July, output was 13.205 million barrels a day. That is the most recent report available as there is a two month lag between the weekly reports and the monthly numbers.
But the weekly U.S. production figure during the past two weeks has been at a record, 13.5 million barrels a day. It would not be until the monthly EIA report issued in late December that that 13.5 million-barrel-per-day figure could be supported or revised downward.
A bearish factor on the production side emerged last week, however: more output from Libya.
This was not just the return to production as a result of a recent agreement between warring factions from the east and west halves of the country that drastically cut output. It was the fact that the output is climbing beyond estimates.
The country’s National Oil Corp. last week reported a one-day output of 1.327 million barrels a day, which it said was the largest daily output in several years.
Libyan output at the end of last year was 1.18 million barrels a day, according to the International Energy Agency. By August, before the divisions in the country led to the shutdown of a significant amount of production, daily output was just under 1 million barrels, according to the IEA.
Yellow’s shareholders get second crack at trimming withdrawal liabilities
A federal bankruptcy judge in Delaware admitted Monday to making a mistake in a September opinion regarding the treatment of roughly $6.5 billion in withdrawal liability claims against Yellow Corp. The prior ruling sent the defunct less-than-truckload carrier’s stock spiraling last month as shareholders came to grips with the notion that pension claims would likely see more than just the fractional recovery once thought.
Judge Craig Goldblatt’s initial opinion incorrectly asserted Yellow was in default prior to its August 2023 bankruptcy filing. The timing of the default could determine if the claims are due in full or are subject to a 20-year cap and discounting to present value. Goldblatt’s initial take was that the company’s default had accelerated the amounts due without the need for discounting.
He instructed counsel for both parties to submit written arguments, noting he couldn’t provide a decision until the timing of the default can be determined. The matter could ultimately be taken up at a later trial date.
Shares of Yellow (OTC: YELLQ) jumped 78% to 80 cents per share halfway through the Monday hearing before closing the day up 31%. The stock tanked nearly 90% from $5.20 to 60 cents the day Goldblatt’s initial ruling was announced.
Yellow’s largest shareholder, MFN Partners, joined Yellow’s counsel in arguing against the initial ruling. The Boston-based private equity firm, which also provided bankruptcy financing to Yellow, acquired a more than 40% equity stake in the company in the days ahead of its July 30, 2023, closure.
MFN and its affiliate Mobile Street Holdings have come under scrutiny from pension funds holding claims against the estate. Mobile Street recently purchased withdrawal liability claims from two separate pensions, placing it in an “irreconcilably inconsistent” position where it is now also fighting against the claims that it owns, the funds contend.
The pension funds said MFN attempted to conceal the claims purchases from the court by using an affiliate.
The Monday update from the court likely further delays a final Chapter 11 plan Yellow put before the court earlier this month. That plan, which outlines likely recovery scenarios for all classes of creditors, was initially held up for the Sept. 13 opinion deciding how the withdrawal liabilities would be treated.
The court also heard summary judgment motions regarding Worker Adjustment and Retraining Notification Act claims against the estate on Monday. However, Goldblatt deferred a ruling until the scheduled Dec. 9 trial date.
Fresh off a one-day strike Sunday, unionized dockworkers at the Port of Montreal voted to hold another strike this week.
The partial, unlimited strike by 1,200 longshore employees against two Tremont terminals is slated to begin at 11 a.m. local time Thursday, according to published reports.
Earlier this month the Tremont facilities were hit by a three-day overtime strike at Canada’s second-busiest port.
Members of the Quebec Federation of Workers (FTQ) local, affiliated with the Canadian Union of Public Employees, are protesting on issues of pay, work-life balance and scheduling.
The Canadian Federation of Independent Businesses said in a statement Sunday that the union’s actions were affecting small and medium-size businesses ahead of the holiday retail season. The group called on the federal government to ensure that the port remained open.
The longshore contract expired Dec. 31, 2023. Dockworkers have refused to work overtime since Oct. 10.
Gulf Coast ports post sluggish cargo movements in September
Ports in Houston and Corpus Christi, Texas, posted modest gains in freight movements during September, while the Port of New Orleans saw mixed results in container and breakbulk shipments.
Port Houston’s monthly container flows up slightly in September
Port Houston handled 329,462 twenty-foot equivalent units in September, a 1% increase from the same period in 2023.
Loaded imports were up 4% year over year at 162,338 TEUs, while loaded exports were down 8% year over year in September at 114,299 TEUs.
Overall, container volume is up 9% year to date at Port Houston’s terminals, totaling 2.6 million TEUs. Total container tonnage is up 9% year to date at 28.4 million tons.
“General cargo is still down for the year, but the steel market is slowly improving,” Charlie Jenkins, CEO of Port Houston, said during the port’s monthly commission meeting on Tuesday. “Total TEU volumes remain very, very strong in the container market.”
Imports of steel products were up 25% year over year to 435,152 tons in September.
“The big impact on the general cargo is really the loss of autos and loss of Volkswagen,” Jenkins said. “Autos are down 89% year to date for the shift into that customer.”
Volkswagen Group of America announced in 2022 that it was moving its North America automotive shipping hub from Houston to the Port of Freeport, Texas. Earlier this month, Volkswagen launched the $114 million automotive terminal in Freeport, aiming to handle up to 140,000 passenger vehicles annually.
Port Houston recorded 689 ship calls in September, compared to 688 in the same month in 2023. The port reported 314 barge calls in September, a 9% y/y increase.
Jenkins also gave the commission an update on tariffs for the port’s purchase of eight electric ship-to-shore container cranes for more than $113 million in July.
Port Houston officials said they will have to pay $28.5 million in duty fees for importing eight ship-to-shore cranes from China. (Photo: Port Houston)
The cranes are being manufactured by Zhenhua Heavy Industries Co., a China-based, state-owned company and the world’s largest manufacturer of container cranes, accounting for over 70% of the world market.
Under tariffs on Chinese imports initiated by the Biden administration in May, the eight container cranes are subject to a 25% duty, about $28.5 million in taxes.
In September, U.S. Trade Representative Katherine Tai announced that Chinese-made ship-to-shore cranes ordered prior to May 14, 2024, and cranes that enter the U.S. prior to May 14, 2026, would be excluded from the tariffs.
“Our team worked diligently to have these cranes covered in a previous order before the tariffs went into effect, if at all possible,” Jenkins said. “Unfortunately, only three cranes we ordered are covered under the rules. The eight cranes ordered in July are still underneath the tariff, with the total impact about $28 million. I believe we’re the only port impacted in the nation with this tariff, and it’s a pretty big hit.”
Port of New Orleans appoints new CEO, sees surge in breakbulk cargo
The Port of New Orleans recently announced Beth Ann Branch as port president and CEO, as well as CEO of the New Orleans Public Belt Railroad beginning Dec. 1.
Branch has been working as chief commercial officer at the Alabama Port Authority in Mobile since 2021. Prior to that role, Branch led business development and international marketing for the Port of Oakland’s maritime division.
Additionally, Branch worked in leadership positions at shipping giant Maersk for 18 years in the company’s U.S. regional headquarters outside New York and global headquarters in Copenhagen, Denmark.
“Port NOLA plays an essential role in driving economic growth for our region and state, and I look forward to building on this strong foundation in global commerce,” Branch said in a news release.
In June, Brandy D. Christian stepped down as the port’s CEO and president to pursue an opportunity in the private sector.
The Port of New Orleans’ container volume decreased 10.4% y/y in September to 36,931 TEUs.
Breakbulk cargo totaled 95,662 short tons in September, a 62% jump compared to the same month in 2023.
Breakbulk cargo at the Port of New Orleans totaled 95,662 short tons in September, boosted by imports of steel. (Photo: Port of New Orleans)
The top breakbulk commodity was steel, and breakbulk imports of natural rubber and project cargo rose, Kimberly Curth, Port of New Orleans spokeswoman, told FreightWaves.
“The top containerized commodities were plastic resins, various chemicals and paper on the export side,” Curth said. “For imports, we had coffee, wood products, and chemicals.”
The port handled 9,745 Class I rail car switches in September, a 23% increase from September 2023. The port handles switching operations for six Class I railroads: BNSF, CN, CSX, CPKC, Norfolk Southern and Union Pacific.
Crude oil shipments slip at Port of Corpus Christi
The Port of Corpus Christi handled 17.09 million tons of cargo in September, a 0.1% increase compared to the same year-ago month, when it handled 17.07 million tons of freight.
Total shipments of crude oil dipped at the port in September, when Corpus Christi handled 10.7 million tons, compared to 11.1 million tons in 2023.
Exports of crude oil totaled 10 million tons, a 2% year-over-year decrease. Imports fell 16% y/y to 698,240 tons.
Petroleum shipments increased 1% year over year in September to 4.99 million tons, with exports totaling 4 million tons during the month.
Dry bulk cargo rose 47% y/y to 761,692 tons, while shipments of bulk grain increased 41% to 267,600 tons.
Liquid bulk cargo volumes totaled 85,290 tons in September, a 21% year-over-year increase from 2023.
The Port of Corpus Christi had 318 barge calls in September, a 30% y/y decline. Ship calls during September totaled 201, compared to 209 in September 2023.
As Helene keeps key roads closed, Trimble’s routing service makes adjustments
Significant closures caused by flooding from Hurricane Helene remain on interstates 26 and 40 on both sides of the North Carolina/Tennessee border, putting the onus on routing software that steers truckers clear of roadways that aren’t available to them.
While there are still hundreds of other road closures in both states, from U.S. highways down to small state roads, the status of the two key interstates serving the western North Carolina and eastern Tennessee region remains mixed.
Closings are based on a complex set of rules and regulations, but the most extreme shutdowns remain on Interstate 40 on both sides of the state line and on Interstate 26 in Tennessee.
To deal with those diversions, truckers are looking to their routing software – the second time in six to seven months they have needed to do so because of significant closures. In the first case, the collapse of the Francis Scott Key Bridge in Baltimore, the solution wasn’t all that complicated: Take the two tunnels that go under Baltimore Harbor, or stay on Interstate 695 around the western side of the Baltimore metropolitan area.
But the significant loss of access on two interstates, to say nothing of U.S. highways, poses a far more complex problem. For example, the North Carolina Department of Transportation Friday was reporting approximately 415 road closures and at least 120 bridges that needed to be replaced in that state alone.
Rishi Mehra, vice president of commercial mapping and routing technology at Trimble, works with the segment at the technology company that offers CoPilot, which at its most basic is a routing service for trucks and other vehicles.
Mehra told FreightWaves in a recent interview that the ability of the trucking industry to work around the outages “is starting to look a lot better.”
“We have started to divert traffic, based on the guidelines, to go a little bit more south and then across from the north,” he said.
The guidelines are uploaded into the Trimble CoPilot system and serve as the basis for diverting truck traffic around closed roads. PC Miler is the Trimble companion software that operates in a trucking company’s back office; CoPilot is in the truck cab.
Falling back on the US Highways
Mehra said Trimble (NASDAQ: TRMB) has been “taking advantage of U.S. highways.” He added that the diversionary routing was not done solely by Trimble, but was produced after consultations with local authorities about where they preferred vehicles, especially trucks, to travel while avoiding closed roads.
For example, U.S. Highway 19 runs parallel to Interstate 26 most of the way from Asheville, North Carolina, up to the Tennessee line. U.S. Highway 25 also runs from the Asheville area into Tennessee, though it enters the Volunteer State at a considerable distance from where I-26 crosses the border.
Mehra noted that around Asheville itself, the interstates are open. “That is helping ease the traffic flow in other areas,” he said, calling it more “structured” as a result. “We are corresponding with local authorities to make sure we are not diverting traffic that would hamper the restoration process in any way.”
Local governments are not necessarily Trimble customers, Mehra said. What Trimble wants from those authorities, is “for them to feed us information. What are you seeing? What are you modeling? How can we route trucks away from the area? How can we best regulate traffic for you?”
The end is not near
The return of full access to the two key interstates in the region is not going to happen anytime soon. Months rather than weeks is the focus of much of the discussion.
It can be a good news/bad news situation. For example, I-26 in North Carolina, which despite having an even number normally reserved for east-west highways, runs mostly north to northwest south and north of Asheville, is fully open after a brief closure in the wake of Helene.
The problem is that once a driver on 26 nears the Tennessee line, the vehicle won’t be allowed to cross into that state because except for local traffic, the road is closed near the state line.
So, a truck coming out of North Carolina and headed toward Tennessee on 26, according to Mark Nagi, a spokesman for the Tennessee Department of Transportation, would need to exit the interstate at Exit 3 in North Carolina. Passenger vehicles can continue on but must exit Interstate 26 at Exit 40 in Tennessee and then detour through the town of Erwin. Commercial vehicles making local deliveries can continue past Exit 3.
Meanwhile, truck traffic coming down Interstate 26 from the north, like the Johnson City, Tennessee, area, needs to exit 26 at Exit 37, Nagi said in an email to FreightWaves.
Hopes for I26 traffic in Tennessee
The state hopes to be able to open I-26 all the way this week, but as a two-lane highway, he added.
“Construction activities continue on I-26 to get 1-lane in both directions between Exit 37 and Exit 40,” Nagi said. “This traffic will be on the westbound side. Once completed a vital east-west connection on the interstate will be reestablished. Look for this to occur later this week.”
However, wide loads will not be permitted. Nagi said those loads are being detoured through a wide-sweeping alternate route using Interstates 81 and 77.
Interstate 26 has guidelines that allow local vehicles to use the roadway in that area near Erwin, but not for the portion with two collapsed bridges on 26 that are between exits 37 and 40. The local vehicles able to use the interstate are after Exit 40 to the border with North Carolina.
But even on that stretch of Interstate 26 between Exit 40 and the state line, in addition to the local traffic-only restriction, the road is a two-lane highway – one lane open in each direction.
Meanwhile, according to Nagi, Interstate 40 is open in Cocke County, Tennessee, in each direction – one lane each on the normally westbound side of the highway – between mile marker 446 and 451, which is just before the state line.
But it is only open to local traffic, the spokesman said. He said any commercial vehicles headed down I-40 toward the border with North Carolina should exit at Exit 440.
Across the border, I-40 is closed in both directions in North Carolina from the state line to Exit 20.
Aaron Moody, a spokesman for the North Carolina Department of Transportation, said the state has recently awarded an $8 million contract to stabilize Interstate 40 before a larger rebuilding is undertaken.
He called discussion about when Interstate 40 in North Carolina might return to normal the “million-dollar question.”
Asked if I-40 in North Carolina could be turned into a two-lane highway on the portion of the road that wasn’t heavily damaged by floodwaters, as has been done in Tennessee on Interstate 26, Moody said that would largely depend on the plans of the contractor the state ultimately chooses for a permanent rebuild of I-40 in the Tar Heel state.
“We can’t really answer that with great confidence right now, because we don’t know what designs will be brought to the table, and we don’t know what the safety requirements will look like for contractors trying to go in there,” Moody said.
Are shippers understanding?
What is going on with the repair of damaged roads – not just interstates – has an impact on what Trimble is doing.
Mehra said how a company gets rerouted could depend on its relationship with a shipper. That relationship could be such that the shipper willingly accepts a 50-to-100-mile diversion. “So we’ve helped with some of that analysis,” Mehra said “Some of our customers have come back and said, ‘Can you analyze this for us and let us know what the true impact would be if we completely avoid this whole stretch and take a different road?’” In some cases, he added, shippers fully accept the diversion and the extra miles.
Relying on U.S. highways has its own set of challenges. Some stretches of a U.S. highway allow traffic to flow without interruptions and at a rate close to that of an interstate highway; others can have a series of red lights.
Mehra said no routing software can fully plan out the impact of red lights on a U.S. highway or any local road. But the traffic model is “slowed down,” he said, “to model that impact into the travel time. But some red lights are unavoidable in areas.”
