Automation. The word that has kept the ILA and USMX at a standstill, even as the port of Los Angeles is set for its best year yet. The port of LA handled 884,315 TEUs in November, a month that usually sees volumes dip after a busy peak season. While there is a pending strike in January, set to be worse than the first one in October, it remains to be seen how outgoing President Biden and incoming President Trump will handle it.
Continue reading our newsletter to learn more of what transpired at the end of the year.
The Automation Question Looms Over East and Gulf Coast Ports
The International Longshoremen's Association (ILA) and U.S. East and Gulf Coast port employers are at an impasse over automation. Tensions are escalating as the union rejects the inclusion of semi-automated cranes in their contracts. President-elect Donald Trump's vocal support for the ILA adds a layer of political complexity to the negotiations, reminiscent of his interventions in past trade disputes.
The United States Maritime Alliance (USMX) argues that automation is critical for efficiency and long-term growth, but the ILA insists it would eliminate union jobs. With no immediate solution in sight and the contract extension nearing its deadline, speculation mounts over how the situation will unfold. Trump might broker a compromise, allowing the ILA a brief strike before negotiating a phased approach to automation paired with job creation assurances.
Port of Los Angeles Surges Toward Record Container Volumes in 2024
The Port of Los Angeles is on track for a record-breaking year, reporting 884,315 TEUs handled in November — an off-peak month — marking a 16% year-over-year increase. Total volumes for 2024 have reached 9.37 million TEUs, a 19% jump from last year and well above the five-year average.
Executive Director Gene Seroka attributes the growth to strong consumer spending, strategic importer actions amid geopolitical uncertainties, and improved operational efficiencies.
Loaded imports rose by 19%, while exports increased by 11%, boosted by efforts to support agricultural exporters. The port expects strong volumes into December and early 2025, driven by Asian exports ahead of the Lunar New Year.
Retailers Brace for Rising Imports Amid Labor and Tariff Concerns
U.S. retailers perceive the recent threats of labor strikes and new tariffs as real. To mitigate the impact, imports have been ramping up through spring 2024. Import volumes are projected to reach 25.6 million TEUs for the year, a 14.8% increase from 2023. While concerns are centered on a possible Jan. 15 strike by the ILA and new tariff policies under the incoming administration, the earlier-than-usual Lunar New Year in China has also contributed to the surge in cargo frontloading.
According to the National Retail Federation's Global Port Tracker, December imports are expected to rise 14.3% year-over-year, and continued growth is forecasted for early 2024. October marked the 18th consecutive month with imports surpassing 2 million TEUs, though month-to-month volumes dipped slightly.
Chinese Marketplaces Gain Ground as U.S. Shoppers Seek Holiday Savings
Amid rising interest in budget-friendly options, 36% of American consumers are shopping at Chinese online marketplaces this holiday season, with nearly half of Gen Z joining the trend. Platforms like Temu, Shein, TikTok Shop, and AliExpress compete for U.S. shoppers' attention, offering low prices that often undercut domestic retailers. 23% of U.S. consumers choose Temu among Chinese platforms, followed by Shein at 18.3%.
Despite their popularity, trust in these platforms remains low, with only 6% of shoppers expressing confidence in Temu compared to 86% for Amazon. To compete, Amazon has launched "Amazon Haul," featuring items priced under $20, some as low as $1. Spending patterns indicate a shift toward frugality, especially among younger consumers. While 40% of Americans plan to spend less on gifts this year, Gen Z and millennials are leading the way in embracing these platforms for their affordability and product variety.
Manufacturing and Freight Markets Show Mixed Signals in November
The ISM Manufacturing PMI improved slightly in November, rising to 48.4%, but it remained below the threshold for expansion. The new orders index entered growth territory for the first time in seven months at 50.4%. In the freight market, Savannah emerged as a key area of activity. Despite a 4% drop in import volumes compared to October, year-over-year figures were up 12%, boosting outbound truckload volumes by 16%.
Atlanta is the top destination, with freight volumes rising 9% and spot rates increasing 13% compared to last year. However, rates are beginning to stabilize as the peak shipping season winds down. Nationally, load-to-truck ratios nearly doubled compared to last year, while linehaul spot rates increased to $1.74/mile, $0.09 higher than 2022 levels.
Trucking Industry Faces Regulatory, Legal, and Economic Challenges in 2024
In 2024, infrastructure projects funded by the $1.2 trillion bipartisan infrastructure law continued, with $62 billion allocated for road, bridge, and tunnel improvements. However, key developments included the adoption of stricter worker classification rules similar to California's AB 5 law, which faced minimal resistance following legal setbacks. On the regulatory front, major rulemakings were delayed until 2025, though adjustments to safety programs and drug policy proposals, like reclassifying marijuana, were under consideration.
Legal challenges intensified, with nuclear verdicts and escalating lawsuit amounts burdening carriers. Other notable events included a high-profile contract dispute over military moving services, efforts to improve underride safety, and scrutiny of predatory leasing agreements affecting owner-operators.
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