Strong Year for Shipping Raises Capacity Issues and Rates

The December Cass Freight Indexes followed expected seasonal trends with a 6.3 percent drop in shipment volume and a matching 6.7 percent decline in freight spending.

However, the December figures mark the highest end‐of‐year values for both indexes since the beginning of the recession in 2007.

Traditionally, the peak holiday shipping season falls in the July‐to‐ September time frame as retailers build up their inventories. This year the peak was even earlier as shippers imported stock sooner because of concerns relating to the July 1 expiration of ILWU labor contracts at the ports of L.A. and Long Beach.

Some shippers also shifted their deliveries to East Coast and Gulf Coast ports. The union and port operators initially cooperated to prevent work slowdowns or backups, but as time has elapsed the ports of L.A. and Long Beach have been increasingly challenged to provide on‐time deliveries.

Ships have waited days to be unloaded, and some shippers have reported significant delays in receiving their goods. At this point in time, negotiations between the port operators and the ILWU have stalled and there is a call for federal mediation as matters deteriorate.

The number of North American freight shipments fell 6.3 percent in December, but was still 4.0 percent higher than the same period a year ago.

Slumping retail sales, which dropped 0.9 percent in December according to the National Retail Federation, contributed to the decline in freight shipments as restocking was not needed.Strong Year for Shipping Raises Capacity Issues and Rates

Tags: full-image

Category: Featured, General Update