🍺 How Modelo Overtook Budweiser

Buenos Días. You might want to hold onto your beer for this one. Once upon a time, Budweiser ruled the world, but guess who's the new king? That's right - it's Modelo. The ports in LA are bustling, but the trucking industry is slow dancing due to a sluggish produce season. Meanwhile, Amazon made $6B on Prime Day in just 24 hours. Air cargo rates are nosediving, Canadian ports are back in business after a strike, and we have a demonstration of how artificial intelligence can help you understand your carrier contracts.

In today's email:

• Three Freight Headlines: June was a strong month for the Port of Los Angeles, the freight industry is experiencing a slow produce season, & Amazon's Prime Day made $6.4 billion on its first day.
• How Mexican Beer Conquered The American Beer Market
• Around the Freight Web: Freight market trends, Uber Freight layoffs, FMCSA's new inspection system, plus more.

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🐔 WHAT’S COOKIN’ IN FREIGHT

🏗 Port of Los Angeles Registers Stellar June Performance. The Port of Los Angeles reported its best performance since July of the previous year, having moved 833,035 Twenty-Foot Equivalent Units (TEUs) in June. The Executive Director, Gene Seroka, pointed out that cargo volume had risen by an impressive 70% since February, marking four consecutive months of gains. While a slight easing in cargo is expected in July, Seroka expresses optimism for improved performance in the latter half of 2023. However, in the first half of 2023, the Port handled 4,137,379 TEUs, marking a 24% decline in comparison to the same period the previous year.

🐌 Sluggish Produce Season. The typical boost in freight demand expected during the produce season has failed to materialize this year, with the trucking industry already facing a slowdown. Normally, the period from February to July is a vital one for freight demand, but this year, several elements came together to weaken it. Among these were an excess of available trucks and a weaker demand heading into the season, coupled with an underwhelming harvest due to unfavorable weather conditions. The American Trucking Associations' data showed for-hire truck tonnage decreasing by 5.4% in March and 1.7% in April, with a small rise of 2.4% in May. These numbers also represent a year-over-year decline.

🤑 Prime Day Earns Amazon $6.4bn in First 24 Hours. During Amazon's Prime Day, U.S. consumers spent $6.4 billion online within the first 24 hours, reflecting a 6% increase from the previous year. However, this fell short of estimates for stronger growth as shoppers sought bargains. This 48-hour event, in its ninth year, is designed to attract new customers and deepen existing customer relationships before the holiday season. As reported by Numerator, the average order size increased 7% from last year to $56.64. The best-selling categories included home goods and household essentials, and there was a nearly 20% rise in orders using buy now, pay later services.

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HOW MEXICAN BEER CONQUERED THE US

Early Days of Beer Imports

The US beer market has had a tumultuous history with influences from import trends, wars, prohibition, and local breweries. After prohibition ended in 1933, Heineken was the first imported beer to reenter the American market. By the 1970s, the import market had begun to grow, making up nearly 3% of the entire beer market.

Grupo Modelo's Entry into the US Market

The success of Heineken sparked interest in Grupo Modelo, a brewing company from Mexico. They sought to penetrate the expanding American beer market with their brands, particularly Corona. Their strategy, leveraging the rise in disposable income and glamorization of spending in the 1980s, paid off with rapid sales growth and a leading spot in top-selling imports.

Challenges and Recovery

In 1987, a false rumor that Corona's golden beer was actually employee urine significantly hurt their sales. By the 1990s, the rumor had faded and Corona introduced Corona Light, coinciding with the popularity of light beer in the US. The introduction of their iconic TV commercials also boosted their image, leading to Corona overtaking Heineken as the top-selling import in the US by 1998.

Major Takeovers and Antitrust Suit

Anheuser-Busch acquired a stake in Grupo Modelo in 1993, and the stake was transferred to AB InBev after a merger in 2008. In 2012, AB InBev announced its plan to acquire the remaining 50% of Grupo Modelo, which led to an antitrust suit by the US Justice Department. To avoid further legal trouble, AB InBev decided to sell the US rights while retaining the global rights.

Constellation Brands' Acquisition

Constellation Brands stepped in to buy the US rights for $4.75 billion, even though they had not been in the beer business before 2013. They had been a distribution partner with Grupo Modelo, laying a strong foundation for beer import and sale in the US. Part of the deal was also the purchase of Nava, one of the world's largest breweries.

Rise of Modelo

With the acquisition complete, Constellation set their sights on growing Modelo, particularly targeting the everyday beer market led by Bud Light. Their plan, which involved sports sponsorships, English advertisements, and a new slogan, worked tremendously well. By 2018, Modelo had become the top-selling imported beer in the US, eventually becoming the top-selling beer overall in 2023.

Source: MorningBrew YouTube.

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AROUND THE FREIGHT WEB

🚚  Freight Market Nearing Bottom? The latest Cass Freight Index report indicates the freight market may be nearing its bottom, with the volume downturn appearing to be in the later stages, and data suggests a potential new cycle could be on the horizon.

💼 Uber Freight Announces Layoffs. Uber Freight has made its second round of job cuts this year, impacting 40-50 employees in its brokerage operations.

🧐 FMCSA Tests In-Motion Inspections. The FMCSA is developing a wireless inspection system to streamline roadside checks on commercial vehicles and reduce emissions.

🛩 Air Cargo Rates Plunge. June saw a 41% year-over-year decline in air cargo spot rates.

🚢 Canadian Ports Reopen After Strike. Canadian ports are set to reopen after resolving a labor dispute, but residual disruptions to US imports are expected to continue for weeks or months.

📉 Inflation Rise Slows in June. June saw a lower than expected inflation increase of just 0.2%, marking the slowest annual rate of price increases in over two years.

🤝 Leveraging AI to Understand Carrier Contracts. Adam Wingfield suggests using Claude AI for better understanding and management of various agreements in the trucking industry.

🚛 Lay's Truck Gets Taken By Flood In VT. Watch a clip of a Lay's truck being dragged down by the floods in Vermont.

FREIGHT MEME OF THE DAY