ILWU and PMA Ratify West Coast Port Union Contract
The ILWU (International Longshore and Warehouse Union), representing 22,000 workers at U.S. West Coast Ports announced on August 31st that its members had ratified a tentative labor agreement with the PMA (Pacific Maritime Association), representing 29 U.S. West Coast Port Terminal Operators. The new six-year agreement, retroactive from July 1, 2022, will expire July 1, 2028. The ratification comes after a 13-month period of contentious negotiations resulting in sporadic local actions and significant diversion of cargo by Shippers to East & Gulf Coast Ports to avoid potential disruption – up to 15% of cargo diverted according to Gene Seroka, Executive Director of the Port of Los Angeles in an interview last June.
As a result of the agreement, Shippers have begun returning cargo to West Coast Ports according to a report by Descartes in Sept., which states that the top West Coast Ports increased their market share of total container import volume to 41.9% (up 3.6% from the previous month) and the top East & Gulf Coast Ports decreased their market share to 43.1% (down 3.3% from the previous month). Read more at Maritime Executive and Descartes.
Teamsters Ratify UPS Union Contract
The Teamsters Union announced that its members have ratified a tentative union agreement with UPS on August 22nd. The new 5-year contract, which will affect 340,000 UPS workers nationwide, provides $30 billion of new money over a 5-year period according to the Teamsters. Teamsters President Sean O’Brien stated: “Teamsters have set a new standard and raised the bar for pay, benefits, and working conditions in the package delivery industry.” The contract allows UPS to operate Sunday service without reopening contract negotiations and enables UPS to use more productivity-enhancing automation.
According to ShipMatrix Inc., UPS lost about 5% of its avg. daily volume (approx. 1 million parcels) to FedEx due to Shippers’ concern over a possible strike. ShipMatrix forecasts half of those diverted volumes would remain with FedEx because of their lower rates.
Meanwhile, both FedEx and UPS have announced yearly general rate increases of 5.9% resp. for 2024 (1% above the historical norm prior to the pandemic) and more dynamic pricing increases based on seasonal demand conditions. Read more at AJOT and FreightWaves.
Amazon Announces End-to-End Global Supply Chain Service
At its annual Amazon sellers conference on Sept. 12th, Amazon announced its “Supply Chain by Amazon” service which will pick up inventory from manufacturing facilities worldwide, ship it across borders, handle customs clearance and ground transportation, manage inventory replenishment, and handle final delivery. The service is available to shippers that aren’t in Amazon retail channels. According to Amazon, the service will provide Shippers up to 25% lower costs for some services compared to alternatives. Amazon will use its advanced machine learning and supply chain optimization capabilities to automatically replenish inventory into the optimal Amazon fulfillment centers to support expected customer demand. Read more FreightWaves.
Amazon Contracts with Maersk to Move Containers with Green Biofuels
Amazon has renewed a contract with Maersk, a top ocean carrier, to transport 20,000 forty-foot equivalent containers using green biofuels, such as green methanol in its 2023-2024 freight agreement. Both companies are signatories of the Climate Pledge to achieve net zero GHG emissions by 2040. According to Maersk, the agreement is estimated to contribute to emissions reductions amounting to the equivalent of 44,600 metric tonnes of CO2 compared with standard bunker fuel. As part of Maersk’s “ECO Delivery” service, the containers will be transported via Maersk’s first methanol-enabled feeder vessel using biofuel. Read more at Splash247.
Forward Air and 3PL Omni Logistics Agree to Merger
The Board of Directors of Forward Air and Third-Party Logistics Provider Omni Logistics announced a planned merger of the two companies last month. The cash-and-stock transaction, inked at $3.3 billion enterprise value, still requires regulatory approval is expected to close this year. Forward Air, headquartered in TN, is a leading ground transportation provider to the North American air freight and expedited less-than-truckload (LTL) market. Forward’s chairman estimates the company currently has a 7% market share of the $15 billion high-value, expedited LTL freight market. Omni Logistics, headquartered in Dallas, is an asset-light logistics provider focused on high-touch, expedited freight transportation, also offering forwarding, customs brokerage, and warehousing & distribution services. It has a customer base of 7,000 clients and 4,500 employees across 21 countries. The deal will double the size of Forward Air’s annual revenues to $3.7 billion. Combined, the two companies will have 300 locations, which includes Omni’s 40 terminals in the U.S., with plans to open an additional 30 terminals in North America over the next five years. Read more at FreightWaves.
JB Hunt to Acquire BNSF Logistics Brokerage Asset
J.B. Hunt, a leading multimodal service provider, will acquire some of the brokerage assets of BNSF Logistics, an affiliate of BNSF Railroad, according to a press release on Sept 14th. J.B. Hunt will acquire the segments of BNSF Logistics which provide full truckload, flatbed, temp-controlled, drayage, expedited, and less-than-truckload services to a large and diverse group of customers.
BNSF Logistics provides value-added 3PL services for BNSF Railway. Upon closing the transaction, BNSF Railway and J.B. Hunt will enter into a long-term service agreement whereby J.B. Hunt will continue to provide those services for BNSF Railway. Katie Farmer, President and CEO of BNSF Railway stated: “This continues more than 30 years of partnership between BNSF and J.B. Hunt and builds on our announcement to further integrate our joint services.” J.B. Hunt has one of the largest company-owned fleets in the country with more than 162,000 pieces of trailing equipment and nearly 1 million accessible trucks through its digital freight marketplace. Read more at J.B. Hunt.
Bidding War for Bankrupt Yellow Freight’s Real Estate Portfolio Escalates
The bidding war for the real estate portfolio of bankrupt Less-Than-Truckload (LTL) Carrier Yellow Freight escalated when Estes Express Lines increased its offer for the 170 Yellow Truck Terminals from $1.3 billion to $1.525 billion – the highest thus far according to Yellow. Other bidders have included Old Dominion with a $1.5 billion offer and others that have not been disclosed publically. Yellow Freight, the nation’s third-largest LTL Carrier, ceased operations and announced Chapter 11 bankruptcy protection on August 6th. The Carrier plans to sell its assets to pay off its debt, which is estimated to be $1.92 billion. The truck terminal properties to be sold include desirable locations in markets which include Atlanta, Boston, Chicago, Phoenix, and Sacramento. The terminals are already zoned for industrial and trucking uses, making them more valuable in cities where such zoning is difficult to obtain. The federal bankruptcy court is scheduled to designate the stalking-horse bidder for Yellow’s Truck Terminals on September 22nd. Read more at Costar.