Gary Frantz is a contributing editor for DC Velocity and its sister publication, Supply Chain Xchange. He is a veteran communications executive with more than 30 years of experience in the transportation and logistics industries. He's served as communications director and strategic media relations counselor for companies including XPO Logistics, Con-way, Menlo Logistics, GT Nexus, Circle International Group, and Consolidated Freightways. Gary is currently principal of GNF Communications LLC, a consultancy providing freelance writing, editorial and media strategy services. He's a proud graduate of the Journalism program at California State University–Chico.
The great ocean freight tsunami that swamped the maritime industry from the fall of 2021 through spring 2022—and threw ports and containership lines for a loop—has subsided. In its place has emerged a market slowly returning to some semblance of pre-pandemic normal while facing the prospect of a recession on the near-term horizon, rapidly softening demand, and plummeting rates for container cargoes that have yet to hit bottom—and are foreshadowing rate wars of past years.
“Spot rate levels are back to pre-pandemic levels,” observes Lars Jensen, chief executive officer of consulting firm Vespucci Maritime. He cites two principal reasons. One has been the recovery of ports from congestion bottlenecks through the first half of last year. “High rate levels were partly a function of vessels trapped by congestion. As those eased, more capacity was released into the market,” he notes.
The second was a sudden sharp drop in demand starting in September, “where [the market] collapsed, especially in Asia-to-North America and Asia-to-Europe lanes,” driven by inventory corrections on the part of importers in the U.S. and Europe, he says. It’s a cycle that’s typical of a market bracing for uncertain economic times, and shippers consequently dialing back ordering and more aggressively managing inventory levels.
Yet there could be a silver lining on the other side, Jensen notes. “Every time an inventory correction occurs, once addressed, you get a wave of cargo on the back side. Consumers regain confidence, and importers need to bring business back to normal levels, which leads to a surge in cargo,” he explains.
Betting on how deep the decline will be and when the rebound will begin is the challenge for shippers, ports, and vessel operators alike. Ship operators are likely to cancel more sailings in response to weaker demand and the diminished need for capacity. “One scenario is that we are heading into a recession that is short-lived,” Jensen says. In that case, he sees a market continuing to collapse in January and February, then rebounding sometime in the spring.
“If we are heading into a deeper and longer recession, then cargo going back to the normal surge will be late in the year,” he predicts. “That will leave a relatively depressed [ocean freight] market for [most of] 2023.”
PORTS: A RETURN TO NORMALCY?
Ports are feeling the impact as well, although in different ways. The double-digit surge in cargo experienced in 2021 has been considerably dialed back. In October, the Port of Long Beach (POLB) saw a 16% decline in container volumes compared to the previous year. Yet for the first 10 months of 2022, the port was tracking 1.5% ahead of 2021. Mario Cordero, POLB’s executive director, says he expects the full year 2022 to be flat. “For me, that’s not a bad number given that 2021 was a record year of unprecedented surges.”
He sees the port “on the cusp of normalization.” Where in January 2021, there were nearly 110 containerships anchored outside the port waiting to unload, “today there are zero vessels at anchor and backed up,” he notes. Container dwell, the amount of time a container sits in the port, is down 93% from the worst congestion in November 2021. Today, only 3% of containers dwell in the port more than a few days. On the rail side, “back in July, we had 13,000 rail containers that were dwelling at the terminals nine days or more. That number today is less than 350,” he reports.
Cordero is optimistic as he considers lessons learned from the past two years. “Anytime you move 20 million containers in a gateway, you need to transform your operations,” he says. Looking ahead, Cordero and his team are focused on improving and expanding the port’s infrastructure and increasing productivity and velocity. Over the past decade, the port has invested some $4 billion in its infrastructure. Over the next decade, the port’s plans call for $2.6 billion in capital expenditures, “a lot of that directed toward rail improvements and expansion,” Cordero notes.
One particular issue somewhat unique to Southern California ports is meeting upcoming goals for emissions reduction, notably a zero-emissions goal for trucks by 2035 and for cargo-handling equipment by 2030. “Both of these objectives are very challenging,” Cordero says. The port is getting a helping hand from the federal government, having recently won a $30 million grant to replace diesel-powered yard tractors with zero-emission electric models. “We’re moving ahead with electrification in a socially responsible way sensitive to the importance of the job market.”
DIVERSIONARY TACTICS
The 2021/2022 port congestion issues, particularly on the West Coast, also caused shippers to take a more in-depth look at their supply chains—and where they have import ocean cargoes landing in the U.S. One outcome was a marked diversion of ocean container cargo from West Coast to East Coast ports, a surge that led to congestion issues there, particularly in Savannah, Georgia. Another factor was concern about rail labor contracts and fears of a looming strike, which Congress averted. Some believed that trucking—and to some extent, westbound rail service—would be easier to find from East Coast ports and would reduce their risk of exposure to potentially strike-affected rail service from the West Coast.
A recent survey of shippers by investment firm Cowen & Co. found that while a majority of shippers likely will move much of their freight back to the West Coast, a small but significant portion of that volume will never return. “We believe there may be a [roughly] 10% permanent shift of freight to the East Coast … creating long-term opportunities for Eastern transportation companies,” the report said.
Among the motives the report’s lead author, Jason Seidl, cites for the shift are: the impact on Southern California truck capacity from regulations related to California emission requirements and the impact of AB5, the law that restricts businesses from classifying workers as independent contractors rather than employees; the opportunity for (and increasing interest in) reshoring to Mexico and the benefits associated with potential shifts; reduced political risk; the lower cost of transportation; and the further technology enablement of the supply chain.
“A LITTLE BIT OF BREATHING ROOM”
East Coast ports have been adjusting to the shifts in business as well. Beth Rooney, director of the Port of New York & New Jersey, noted that of the port’s 10.5% growth in the past year, roughly 85% of that was cargo diverted to New York/New Jersey from West Coast ports. “It has been an interesting evolution,” she says. “All the East and Gulf Coast ports benefited from those shipper decisions.”
In her conversations with the maritime community about freight diversion, she says, she’s found “it’s more a function of anxiety, what is going to happen with [West Coast longshore] labor negotiations, rail congestion concerns, what’s happening on the drayage trucking side,” and the prospect of California ports losing some 25% of their drayage capacity on January 1, when new laws kicked in.
More than anything else, shippers are searching for reliability, consistency, and peace of mind, Rooney observes. And that presents opportunity. “We won’t have another 18% increase like we had in 2021, but I don’t think we are going to be flat or losing ground in 2023,” she notes. “We will get close to what we have been, which is 2% to 2.5% compound annual growth.”
One upside of the softer market, Rooney says, is that “we have a little bit of breathing room. We handled volumes we were not expecting until the 2027 or 2028 time frame [last year].” The slower pace makes this a good time to continue to work on developing capacity and improving fluidity, she oberves.
She also cites the need for increased creativity and innovation. “We are operating as a supply chain participant pretty much the same way as when container shipping started in 1956. And it’s not unique to us. It’s a national issue.”
A MATTER OF CAPACITY
For their part, vessel operators are watching the market and reacting swiftly to address declining demand, rationing capacity to match. That could lead to more blank (canceled) sailings and other adjustments.
“Our aim is to focus on improving service levels and vessel schedule integrity, which has been impacted by record cargo volumes the past two years,” says Narin Phol, Maersk North America regional managing director based in the U.S. As for capacity, Phol believes that “current fleet capacity will stay the same. And as we retire old tonnage, we will replace it with new, green methanol-fuel ships. We have 19 green methanol ships on order.”
Vessel operator Hapag-Lloyd has also put plans for further expansion on hold. Over the past two years, the containership giant has placed orders for 22 new vessels “with a capacity of more than 400,000 TEUs [20-foot equivalent units],” notes company spokesman Tim Siefert. “We have no plans for [additional] newbuilds at the moment.”
Will rate wars of the past return? “We cannot speculate,” Siefert says. “As usual, it is hard to foretell rate developments in the market when they always depend on the supply and demand balance,” he explains. “A crucial point will be the influx of capacity over the next [several] years. At the same time, we will see more scrapping and fleet modernization programs on the back of environmental obligations.”
Vespucci Maritime’s Jensen says that while there hasn’t been much scrapping over the past two years, he expects it will pick up. “In a market where you had $20,000 per-container freight rates, it doesn’t matter how rusted or leaky your ship is, because someone will pay you for it,” he says.
Yet between a looming recession, declining demand, new environmental obligations, and operational changes such as fewer vessels in service and slow steaming (the practice of deliberately reducing ship speeds to minimize fuel consumption and carbon emissions), capacity eventually will come out of the industry. He cites consensus estimates of about a 10% capacity reduction over the next year. New capacity is not expected to come on-stream until later in 2023 or 2024.
At the end of the day, Jensen says, vessel operators are watching closely how deep a “hard landing” will be for the market and how low rates will go ahead of a rebound. “The rule of thumb was if a freight rate goes so low [that] the carrier becomes cash-negative, they’d step away from the brink” to stem potential losses, he says, adding that excessively low rates and negative cash flow would push them toward bankruptcy.
But vessel operators, reaping the benefits of two years of record profits, are in much better shape today than in the market downturns of the past. “They are all sitting on massive coffers of cash,” Jensen says.
Warehouse automation orders declined by 3% in 2024, according to a February report from market research firm Interact Analysis. The company said the decline was due to economic, political, and market-specific challenges, including persistently high interest rates in many regions and the residual effects of an oversupply of warehouses built during the Covid-19 pandemic.
The research also found that increasing competition from Chinese vendors is expected to drive down prices and slow revenue growth over the report’s forecast period to 2030.
Global macro-economic factors such as high interest rates, political uncertainty around elections, and the Chinese real estate crisis have “significantly impacted sales cycles, slowing the pace of orders,” according to the report.
Despite the decline, analysts said growth is expected to pick up from 2025, which they said they anticipate will mark a year of slow recovery for the sector. Pre-pandemic growth levels are expected to return in 2026, with long-term expansion projected at a compound annual growth rate (CAGR) of 8% between 2024 and 2030.
The analysis also found two market segments that are bucking the trend: durable manufacturing and food & beverage industries continued to spend on automation during the downturn. Warehouse automation revenues in food & beverage, in particular, were bolstered by cold-chain automation, as well as by large-scale projects from consumer-packaged goods (CPG) manufacturers. The sectors registered the highest growth in warehouse automation revenues between 2022 and 2024, with increases of 11% (durable manufacturing) and 10% (food & beverage), according to the research.
The Swedish supply chain software company Kodiak Hub is expanding into the U.S. market, backed by a $6 million venture capital boost for its supplier relationship management (SRM) platform.
The Stockholm-based company says its move could help U.S. companies build resilient, sustainable supply chains amid growing pressure from regulatory changes, emerging tariffs, and increasing demands for supply chain transparency.
According to the company, its platform gives procurement teams a 360-degree view of supplier risk, resiliency, and performance, helping them to make smarter decisions faster. Kodiak Hub says its artificial intelligence (AI) based tech has helped users to reduce supplier onboarding times by 80%, improve supplier engagement by 90%, achieve 7-10% cost savings on total spend, and save approximately 10 hours per week by automating certain SRM tasks.
The Swedish venture capital firm Oxx had a similar message when it announced in November that it would back Kodiak Hub with new funding. Oxx says that Kodiak Hub is a better tool for chief procurement officers (CPOs) and strategic sourcing managers than existing software platforms like Excel sheets, enterprise resource planning (ERP) systems, or Procure-to-Pay suites.
“As demand for transparency and fair-trade practices grows, organizations must strengthen their supply chains to protect their reputation, profitability, and long-term trust,” Malin Schmidt, founder & CEO of Kodiak Hub, said in a release. “By embedding AI-driven insights directly into procurement workflows, our platform helps procurement teams anticipate these risks and unlock major opportunities for growth.”
Here's our monthly roundup of some of the charitable works and donations by companies in the material handling and logistics space.
For the sixth consecutive year, dedicated contract carriage and freight management services provider Transervice Logistics Inc. collected books, CDs, DVDs, and magazines for Book Fairies, a nonprofit book donation organization in the New York Tri-State area. Transervice employees broke their own in-house record last year by donating 13 boxes of print and video assets to children in under-resourced communities on Long Island and the five boroughs of New York City.
Logistics real estate investment and development firm Dermody Properties has recognized eight community organizations in markets where it operates with its 2024 Annual Thanksgiving Capstone awards. The organizations, which included food banks and disaster relief agencies, received a combined $85,000 in awards ranging from $5,000 to $25,000.
Prime Inc. truck driver Dee Sova has donated $5,000 to Harmony House, an organization that provides shelter and support services to domestic violence survivors in Springfield, Missouri. The donation follows Sova's selection as the 2024 recipient of the Trucking Cares Foundation's John Lex Premier Achievement Award, which was accompanied by a $5,000 check to be given in her name to a charity of her choice.
Employees of dedicated contract carrier Lily Transportation donated dog food and supplies to a local animal shelter at a holiday event held at the company's Fort Worth, Texas, location. The event, which benefited City of Saginaw (Texas) Animal Services, was coordinated by "Lily Paws," a dedicated committee within Lily Transportation that focuses on improving the lives of shelter dogs nationwide.
Freight transportation conglomerate Averitt has continued its support of military service members by participating in the "10,000 for the Troops" card collection program organized by radio station New Country 96.3 KSCS in Dallas/Fort Worth. In 2024, Averitt associates collected and shipped more than 18,000 holiday cards to troops overseas. Contributions included cards from 17 different Averitt facilities, primarily in Texas, along with 4,000 cards from the company's corporate office in Cookeville, Tennessee.
Electric vehicle (EV) sales have seen slow and steady growth, as the vehicles continue to gain converts among consumers and delivery fleet operators alike. But a consistent frustration for drivers has been pulling up to a charging station only to find that the charger has been intentionally broken or disabled.
To address that threat, the EV charging solution provider ChargePoint has launched two products to combat charger vandalism.
The first is a cut-resistant charging cable that's designed to deter theft. The cable, which incorporates what the manufacturer calls "novel cut-resistant materials," is substantially more difficult for would-be vandals to cut but is still flexible enough for drivers to maneuver comfortably, the California firm said. ChargePoint intends to make its cut-resistant cables available for all of its commercial and fleet charging stations, and, starting in the middle of the year, will license the cable design to other charging station manufacturers as part of an industrywide effort to combat cable theft and vandalism.
The second product, ChargePoint Protect, is an alarm system that detects charging cable tampering in real time and literally sounds the alarm using the charger's existing speakers, screens, and lighting system. It also sends SMS or email messages to ChargePoint customers notifying them that the system's alarm has been triggered.
ChargePoint says it expects these two new solutions, when combined, will benefit charging station owners by reducing station repair costs associated with vandalism and EV drivers by ensuring they can trust charging stations to work when and where they need them.
New Jersey is home to the most congested freight bottleneck in the country for the seventh straight year, according to research from the American Transportation Research Institute (ATRI), released today.
ATRI’s annual list of the Top 100 Truck Bottlenecks aims to highlight the nation’s most congested highways and help local, state, and federal governments target funding to areas most in need of relief. The data show ways to reduce chokepoints, lower emissions, and drive economic growth, according to the researchers.
The 2025 Top Truck Bottleneck List measures the level of truck-involved congestion at more than 325 locations on the national highway system. The analysis is based on an extensive database of freight truck GPS data and uses several customized software applications and analysis methods, along with terabytes of data from trucking operations, to produce a congestion impact ranking for each location. The bottleneck locations detailed in the latest ATRI list represent the top 100 congested locations, although ATRI continuously monitors more than 325 freight-critical locations, the group said.
For the seventh straight year, the intersection of I-95 and State Route 4 near the George Washington Bridge in Fort Lee, New Jersey, is the top freight bottleneck in the country. The remaining top 10 bottlenecks include: Chicago, I-294 at I-290/I-88; Houston, I-45 at I-69/US 59; Atlanta, I-285 at I-85 (North); Nashville: I-24/I-40 at I-440 (East); Atlanta: I-75 at I-285 (North); Los Angeles, SR 60 at SR 57; Cincinnati, I-71 at I-75; Houston, I-10 at I-45; and Atlanta, I-20 at I-285 (West).
ATRI’s analysis, which utilized data from 2024, found that traffic conditions continue to deteriorate from recent years, partly due to work zones resulting from increased infrastructure investment. Average rush hour truck speeds were 34.2 miles per hour (MPH), down 3% from the previous year. Among the top 10 locations, average rush hour truck speeds were 29.7 MPH.
In addition to squandering time and money, these delays also waste fuel—with trucks burning an estimated 6.4 billion gallons of diesel fuel and producing more than 65 million metric tons of additional carbon emissions while stuck in traffic jams, according to ATRI.
On a positive note, ATRI said its analysis helps quantify the value of infrastructure investment, pointing to improvements at Chicago’s Jane Byrne Interchange as an example. Once the number one truck bottleneck in the country for three years in a row, the recently constructed interchange saw rush hour truck speeds improve by nearly 25% after construction was completed, according to the report.
“Delays inflicted on truckers by congestion are the equivalent of 436,000 drivers sitting idle for an entire year,” ATRI President and COO Rebecca Brewster said in a statement announcing the findings. “These metrics are getting worse, but the good news is that states do not need to accept the status quo. Illinois was once home to the top bottleneck in the country, but following a sustained effort to expand capacity, the Jane Byrne Interchange in Chicago no longer ranks in the top 10. This data gives policymakers a road map to reduce chokepoints, lower emissions, and drive economic growth.”