Bubble Chart showing the flow of good in the supply chain
container ship outside the Ports of LA & LB

Coalescence of World Events May Increase U.S. West Coast Port Market Share

Industry analysts predict increased container traffic and market share will be diverted to U.S West Coast Ports this year due to several issues affecting Asia to U.S. East & Gulf Coast trade. Container freight could be diverted to West Coast Ports and transported by rail or truck to Eastern destinations to avoid increased cost and transit time or potential disruption from the following:

  • Increased Panama Canal capacity restrictions due to the ongoing drought.
  • The avoidance of the Suez Canal due to the ongoing conflict in the Red Sea and increased cost and transit time for vessels to traverse around the Cape of Good Horn.
  • Potential for East & Gulf Coast Port labor action during negotiations of the International Longshoremen’s Association (ILA) contract, set to expire in September.  Read more.
Maersk container ships at Port of Los Angeles terminal

Maersk and Hapag-Lloyd to Form New Vessel-Sharing Alliance

Top Ocean carriers Maersk and Hapag-Lloyd announced plans to form a new long-term operational collaboration called the “Gemini Cooperation” beginning February 2025. The new vessel-sharing agreement will be based on a global “hub-and-spoke” network with a contractual commitment goal of 90% reliability. The two carriers, which combined comprise approx. 22.5% of the global containership market share will create a pool of around 290 vessels with a combined capacity of 3.4 million TEUs. Maersk will deploy 60% of the vessel capacity and Hapag-Lloyd the remaining 40%. Maersk will leave its current “2M” alliance with MSC, and Hapag-Lloyd will leave “THE Alliance” with ONE, Yang Ming, and HMM Carriers at the end of January 2025. Rolf Habben Jansen, CEO of Hapag-Lloyd stated, “Teaming up with Maersk will help us further boost the quality we deliver to our customers. Additionally, we will benefit from efficiency gains in our operations and joint efforts to further accelerate the decarbonization of our industry.” Read more.


SCAQMD Issues Notices of Violation to Warehouse Indirect Source Rule/strong

The South Coast Air Quality Management District (SCAQMD) announced it has issued more than 100 violations to SoCal warehouse owners & operators within its jurisdiction, which violate the Agency’s Warehouse Indirect Source Rule (Rule 2305), including warehouses in Bloomington, City of Industry, Commerce, Fontana, Jurupa Valley, Moreno Valley, Ontario, Perris, Redlands, Rialto, Riverside and San Bernardino, CA. In a phased-in timeline, the Rule requires warehouses greater than 100,000 sq. ft. to take actions to reduce Nitrogen Oxide and Diesel Particulate Matter emissions and report actions. Violators of air quality rules can face civil penalties of up to $11,700 per day of noncompliance.

According to the Journal of Commerce and an SCAQMD spokesperson, once notices of violations are issued, individual negotiations with the Agency are triggered to set a timeline for getting into compliance or establish terms of financial penalties. If an agreement isn’t reached for individual violations, cases will most likely be filed in CA Superior Court seeking civil penalties. Read more at SCAQMD and Journal of Commerce.

Truck traffic on 710 Freeway

SoCal’s Worst Truck Bottleneck Areas

The American Transportation Research Institute’s (ATRI) latest annual report on the nation’s top truck bottlenecks identified 6 SoCal locations among the 100 worst truck bottlenecks in the nation. Utilizing truck GPS data and a speed/volume algorithm to quantify the impact of congestion at 325 freight-significant locations throughout the U.S., the ATRI analysis provides information to help guide investment decisions to improve the truck freight transportation infrastructure. The top SoCal truck bottlenecks are (#7) SR 60 at SR 57, (#11) I-710 at I-105, (#18) I-10 at I-15, (#42) I-15 at SR 91, (#60) I-110 at I-105, and (#87) SR 91 at SR 55. These areas had average peak-hour truck speeds of 27.5 to 39.0 mph. The nation’s worst truck bottleneck was I-95 & SR 4, Fort Lee, NJ. Read more.

Industrial real estate space

Pessimistic Outlook for New SoCal Industrial Real Estate Development Over Next Three Years

A recent survey of commercial real estate developers and financiers indicates a pessimistic outlook for new SoCal Industrial Real Estate development over the next three years. The Winter 2024 Allen Matkins/UCLA Anderson School of Business Commercial Real Estate Survey, a potential leading indicator of future industrial construction, forecasts that market demand will not exceed supply in SoCal through 2026. The biannual survey of commercial developers, owners, and investors in December 2023 compiles the views of supply-side participants of a 3-year time horizon (2024-2026) – chosen to approximate the average time to complete a new commercial project.

According to the report, supply is finally catching up with demand in the SoCal industrial market, including Los Angeles, Orange County, and the Inland Empire, and sub-2% vacancy rates are fading into the past. Events leading to this sentiment in the Inland Empire are the completion of a large number of new warehouses with many more under construction, the recent decline of SoCal Port traffic, and slow economic growth this year, which is expected to return to trend in 2025 and thereafter generating increased demand for imports. Read more.

Ryder Logistics truck leaving warehouse

Ryder System Completes Acquisition of 3PL Cardinal Logistics

Ryder System, a third-party logistics provider (3PL), announced the acquisition of Cardinal Logistics, Concord, NC, a 3PL specializing in providing dedicated fleets, freight brokerage services, last-mile delivery, and contract logistics services for consumer packaged goods, omnichannel, grocery, building products, automotive and industrial verticals. The terms of the acquisition were not disclosed. The deal will add 2,900 power units, 3,400 drivers, and 200 operating locations to Ryder’s existing network, which includes operation of approx. 300 warehouses encompassing more than 95 million sq. ft. Steven Martin, Senior VP of Ryder Dedicated Transportation, stated: “With complementary contractual services in many of the same industries, we gain greater economies of scale, and we can provide even more flexibility for transportation networks when seasonality and fluctuating demand inhibit the continuous use of resources. Combined with our end-to-end visibility and collaboration technology “RyderShare”, we can deliver tremendous value for customers looking for more dynamic and resilient transportation solutions.” Read

Nikola Hyla Ontario station

Nikola HYLA Class 8 Truck Hydrogen Fueling Station Opens in SoCal

Nikola Corp. announced the opening of its first hydrogen fueling station in SoCal for Class 8 Hydrogen Fuel Cell Electric Vehicle (FCEV) Trucks. Located on E. Guasti Rd., Ontario, in the Inland Empire, the modular HYLA-brand refueling station can fuel up to 40 Nikola FCEV trucks daily, with a refuel time of 20 minutes. Ole Hoefelmann, President of Nikola Energy, stated: “Easing the transition to a zero-emission trucking future and prioritizing access to a hydrogen solution network is our top objective, and we’re just getting started. Once the nine planned solutions are in place by mid-2024, Nikola will have established one of the world’s largest heavy-duty hydrogen refueling networks, providing customers accessibility at their current locations and along their planned routes.”

Nikola has not disclosed the public price of the fuel.  According to the U.S. Dept of Energy (DOE) Clean Cities Report, the average U.S. retail price of hydrogen fuel has risen 94% over the last 1.5 years to $32.32/GGE (gasoline-gallon-equivalent) in Oct 2023. Market prices are reported to be up to $36/kg. The Nikola FCEV has a specified fuel storage capacity of 60 kg and a range of 500 miles. You can read more at Nikola and DOE.