In our weekly roundup, we look at sources across the internet for the most important industry news throughout the past week, and we talk about what we’ll be paying attention to next week.
What We've Seen This Week
More pressure on pricing
The October Logistics Managers’ Index (LMI) logged transportation capacity at 38 which marks the 11th straight month of a contracting market. Considering we’re getting ready to head into the holiday season, this low capacity number means that freight costs are rising.
A weak holiday peak signal
The LMI also noted that though inventory levels were already expanding, they rose another 8 points to 66.9. With transportation capacity contracting and inventory increasing, one could guess that we’re seeing the demands of the holiday season and expect that rejection rates will increase as well. However, the Sonar Tender Rejection Index (STRI) fell from 17% in late June to 12.86%. So is this is the peak of holiday shipping, or are we still waiting for it to hit.
A glimmer of lower fuel costs
The weekly DOE/EIA diesel benchmark fell by 6 cents to $6.292 per gallon. While we love to see that decrease from $6.352, the price per gallon has been wobbling about $6.00 a gallon since September 14. At LYNC, we’re not going to get our hopes up until we start to see a steady declining trend.
Fraud and carrier verifications
Freightwaves published an article highlighting a weakness in carrier verification processes that is being exploited by criminals in order to steal millions of dollars in cargo. Through legal and illegal manners, suspects are gaining control of small existing operators and then booking legitimate loads—but those loads never make it to the intended destination.
Most carrier verification processes verify operating businesses, but not *who* is operating the business. And the ownership changes/takeovers don’t appear in any typical report, meaning brokers and shippers are booking loads with operators that might have had excellent records in the past, but are now being driven or directed by criminals.
Research shows AI is still proving itself
A study by the Boston Consulting Group and the Terminal Industry Committee 4.0 surveyed 100 leaders in the container ports and terminals industry about how they have used, currently use, and plan on using AI. Their data said that 44% of experts have implemented and scaled AI across their organizations, but only 4% report seeing measurable earnings coming from that implementation.
It’s still early in the relative world of AI adoption throughout the industry and 100 port leaders is a specific and small sample size, but AI’s ROI is something worth keeping an eye on
What We're Watching for Next Week
Seasonal asks vs actual lane rates
Diesel Instability
Union negotiations at Los Angeles, Long Beach Port
The International Longshore and Warehouse Union (ILWU) Local 26 represents 250 watchmen at terminals that are responsible for more than half of all cargo at Southern California ports. The original contract negotiation deadline was Wednesday, November 4th, but has since been extended to midnight on Friday. Threats of a strike are heightened by the fact that ILWU dockworkers and marine clerks are expected to stand with the watchmen in the event of a strike.
A strike would impact operations across several terminals at the Port of Long Beach and the Port of Los Angeles, so staying tuned into negotiations will be imperative for loads coming and going from those ports.
