January Freight Market Update | Red Arrow Logistics

This past holiday retail season was one that exceeded expectations. Consumers had a willingness to spend, despite some economic uncertainty which had a direct impact on most sectors of the market as demand was high. Some sectors saw tighter capacity and increased pricing power during the peak season.

Port Strike Update: Dockworkers on the East and Gulf Coasts reached a tentative labor agreement with employers on Wednesday, 1/8, averting a strike that could have hammered the economy days before President-elect Donald J. Trump takes office.

The International Longshoremen’s Association, the dockworkers’ union, and the United States Maritime Alliance, the employers’ negotiating group, overcame their differences over a big sticking point in their talks: the introduction of automated cargo-moving machinery at the ports.

“This agreement protects current I.L.A. jobs and establishes a framework for implementing technologies that will create more jobs while modernizing East and Gulf Coasts ports,” the two sides said in a joint statement Wednesday evening.

 

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Ocean Freight: Ocean container spot rates have surged recently, which is a shift away from the volatile pricing that we saw in the beginning of last year. After a year of fluctuating rates, shippers are now experiencing rising costs especially on the eastbound trans-Pacific trade lane. Ocean rates out of Asia were up slightly at the end of the year but with the Lunar New Year and January GRI’s (General Rate Increases) from ocean carriers on the trans-Pacific lanes, container prices could continue to feel the pressure this month. This surge in rates is combining with strong imports at major U.S. ports. The Ports of Long Beach and Los Angeles hit record high levels in November 2024.

Airfreight: Global air cargo demand has grown by double digits for almost the past year. Yields are about 50% higher than in 2019 and 12% higher than last year, mostly due to the rates on westbound routes out of Asia and the Middle East to Europe and North America. Currently, capacity on trade lanes out of Asia is limited due to higher e-commerce volumes coming from China.

January is showing a predictable post-holiday slowdown, with demand softening after the peak season rush. Capacity levels have remained stable, though some airlines made seasonal adjustments, slightly reducing available space. Key trade lanes such as Asia-Europe and Trans-Pacific experienced steady activity, with rates easing from December highs, providing cost savings opportunities for shippers. E-commerce and consumer electronics shipments have remained resilient, while industrial and manufacturing freight saw a modest decline.

Looking ahead, demand is expected to pick up in early February as Lunar New Year celebrations conclude, particularly for outbound shipments from Asia.

Ground Transportation: Retail spending during the 2024 holiday season exceeded expectations, which helped to benefit the trucking segment. The uptick in holiday shopping had an impact on capacity and pricing in the trucking market. Tender rejection rates, which measure available capacity rose significantly during the holiday period. The Outbound Tender Reject Index (OTRI) increased by 9.34% the week before Christmas. The limited capacity also caused spot rates to jump for certain services. The National Truckload Index, which includes fuel surcharges and accessorials, rose to $2.46 per mile—10 cents higher than the previous year.

In major markets like Los Angeles, Chicago, Dallas, and Atlanta, tender rejection rates soared as retailers tried to meet the holiday demand. The reefer market particularly experienced limited capacity for transporting temperature-sensitive holiday goods.

E-commerce: According to Mastercard Spending Pulse, total retail sales from November 1st through December 24th increased by 3.8% as compared to last year. Specific categories had notable growth, with apparel sales up 3.6%, jewelry up by 4% and electronics up by 3.7%. The growth was driven by an increase in online shopping. The convenience of services like ‘buy online, pick up in-store’ has contributed to this growth.

Costco beat its quarterly earnings and sales estimates last month as e-commerce sales continue to grow for this retailer especially for items like jewelry, luggage, and furniture. Costco has benefited from its ability to sell bulk items at a better value in its stores, but also has seen other product categories flourish online. E-commerce sales rose 13% last quarter, in part by shipping big and bulky items that consumers do not want to have to try to get home from a store.

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At Red Arrow Logistics, our goal is to keep you informed and equipped with the latest industry trends, challenges, and opportunities. Whether you’re optimizing your supply chain, mitigating disruptions, or planning for future growth, we’re here to provide the expertise and solutions you need to succeed.

Red Arrow offers the scale and scope of services including air, ocean, and ground transportation to meet the budget and schedule requirements of the largest and smallest companies alike. If we can be of assistance, please email us at [email protected] or give us a call at 425-747-7914.