Ti’s Global Monthly Monitor indicates as the US economy continues to improve, freight movements remain positive.
Despite rising oil prices, freight movement is responding well to the improving US economy. Many ports are reporting positive gains while rail and intermodal continue to increase in use. Airfreight, however, continues to be a concern as declines continue for this mode of transportation.
Many US ports reported good gains in January as restocking activity continued from December. The Port of Los Angeles reported an almost 6% increase in containerized shipments, whereas the Ports of Tacoma and Savannah reported increases of 4% and 4.3% respectively. February is traditionally a slow month but with the additional Chinese festivities spill-over into the month, there may be more declines than increases.
Rail and intermodal activity began the year strong thanks to restocking in early January. However, US February volumes declined almost 1%. This may be due to declines in coal and grain activity along with the restocking activity that occurred in January. However, Canadian rails reported strong gains which may indicate a possible market shift from some US ports to Canadian ports.
The increase in January ocean freight imports probably resulted in an increase in intermodal rail activity in February. US intermodal rail activity increased 1.5% and 9% for Canadian intermodal rail. For the first two months, US and Canadian intermodal rail activity increased at 1.5% and 5.7% respectively.
Finally, airfreight remains concerning. Perhaps because of rising oil prices and fuel surcharges, many shippers have shifted to other modes. The Los Angeles International Airport reported a 5% decline in total cargo for January. Chicago’s O’Hare International Airport reported a 10.8% decline in January cargo. While international cargo declined 9.23%, domestic air cargo declined over 14% for the month. The decline in domestic air cargo has been an increasing trend for many US airports over the past year or so which leads to a strong possibility the freight has shifted to rail and/or intermodal. A shift from international air cargo to ocean transport is also quite likely. Like the ports, airports will likely see cargo decline or perhaps even a slight increase in international cargo for February. However, the outlook for March appears more promising thanks to Apple’s iPad 3 shipments from China. Already, airfreight rates have jumped in anticipation as Apple commandeered multiple airlines and freight forwarders to move its iPad 3 from China to the US. British Airways, DHL and UPS are among the providers rumored to be working with Apple.
As we enter the last month of first quarter 2012, it appears freight movement remained fairly positive. Even though February will probably remain quiet, freight activity should pick up as the quarter ends thanks to an increase in manufacturing and the need to replenish inventory. Apple’s launch of the iPad 3 will also be a big boost to the ailing airfreight market.