The domino effects are just starting to hit. Plus: FedEx dethroned UPS, Mexico truck production plunges, another $26M AI supply chain raise, and more.
Freight margins are razor-thin. The brokerages surviving it built nearshore teams that actually work.
Flatbed rejections hit a record 48.7%, broker numbers stop falling, and diesel jumps 30 cents overnight.
Question of the Day: The next World Cup will be jointly held by the US, Mexico, and Canada. Which cargo rail line directly connects all cities outside the US and half of all host cities in total? Scroll to the bottom to find out.
Good Friday morning. Today's feature unpacks the TQL overtime verdict and what it means for the broader brokerage world. We're also taking a look at Costco's surging sales, while Walmart claims weight loss drugs have certain customers buying less food in its stores. As the UN flags global growth concerns, we also spotlight positive forecasts for the holiday e-commerce season.
🤔 Question of the Day: The next World Cup will be jointly held by the US, Mexico, and Canada. Which cargo rail line directly connects all cities outside the US and half of all host cities in total? Scroll to the bottom to find out.
In today's email:
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🐔 WHAT’S COOKIN’ IN FREIGHT
📈 Costco's September Sales Soar. Costco, the wholesale club giant, reported impressive sales gains in September 2023. With net sales up 6% compared to the previous year, totaling $22.75 billion, the company showcased strong performance. Comparable store sales rose by 4.5% company-wide, with significant increases in the U.S. (+3.2%), Canada (+6.7%), and Other International markets (+10%). E-commerce sales also surged by 3.7%. Even when excluding gas price and foreign exchange impacts, the results remained positive. Costco continues to thrive, with 861 warehouses worldwide and a growing online presence across several countries.
🌍 NY-NJ Port Cargo Decrease Highlights 2023 Economic Shifts. The Port of New York and New Jersey reported a 21% YoY decrease in cargo volumes in August 2023, a significant downturn attributed to U.S. retailers leveraging their overstocked inventory in anticipation of the holiday season. Specifically, cargo volumes in August were down 8.6% from July 2023 and declined 3% compared to August 2019. However, there was a silver lining with a 2.7% volume increase handled year-to-date by the end of August 2023, relative to the same period in 2019. On a broader scale, the global economy has been struggling, with growth rates dropping from 3% in 2022 to 2.4% in 2023, as per UNCTAD's report, reflecting deeper economic challenges.
💊 Walmart Observes Sales Shift Due to Weight Loss Drugs. Walmart U.S. CEO John Furner commented on a perceived shift in food buying patterns among consumers using weight loss drugs like Ozempic, observing a slight reduction in the overall food basket and calorie intake. As these appetite-curbing drugs gain traction, projections suggest that 7% of the U.S. population might use them by 2035. However, a counterpoint by @DisruptorStocks suggests that these GLP-1 drugs are being wrongfully blamed. They highlight that year-over-year volume changes in various food categories are down across the board, not solely due to appetite suppression in a segment of the population.
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Total Quality Logistics (TQL), the U.S.'s second-biggest freight broker, received a decision in a case that was filed over a decade ago. A judge ruled that they owe overtime pay to thousands of former workers who clocked in over 40 hours weekly. Here's a breakdown of the decision and what it means for other brokers.
The Lawsuit
Judge's Ruling
TIA Involvement
Oak classified LAETs and junior LAEs as salaried employees, reportedly based on guidance from the Transportation Intermediaries Association (TIA). TIA represents freight brokers in the U.S. The impact on other freight brokerage members is a concern.
Potential Impact
A court decision like this could have significant implications for other freight brokers in the industry.
Commentary on the Outcome
Matthew Leffler (@ArmchariAtty) tweeted some interesting speculations on the numbers regarding the verdict:
Craig Fuller (@FreightAlley) replied to Matthew's tweet, with:
Source: FreightWaves
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AROUND THE FREIGHT WEB
📉 Target's $30B Slide Amid Theft Surge. Following a series of significant theft incidents and subsequent store closures in cities like New York and San Francisco, Target's $TGT stock value has plummeted, wiping out $30 billion in market value over six months.
💩 Freight Rebound Unlikely Until 2025. Despite some positive short-term indicators related to consumer spending, the freight markets continue to grapple with challenges such as saturated retail inventories, increasing interest rates, and elevated costs.
🚂 New Rail Route. Union Pacific pioneers a new intermodal service linking Mexico & the US Southeast, addressing surging demand in the automotive sector.
📉 Stock Market Dip. Notable stocks, including Coca-Cola, Pepsi, and General Motors, hit new 52-week lows yesterday.
🎁 Record Online Holiday Sales? Retailers prep for record online discounts this holiday season, with sales forecasted to see a 5% boost from last year to $222 billion.
🔍 Espionage Fears at Alibaba's Liège Logistics Hub. Belgian intelligence is investigating potential espionage activities by Chinese entities at Alibaba's logistics hub in Liège, amid concerns over software accessing merchant data.
ANSWER TO QUESTION OF THE DAY
The CPKC (Canadian Pacific Kansas City) rail line connects all 5 host cities outside the US (Toronto, Vancouver, Guadalajara, Mexico City, Monterrey) as well as 3 cities within the US (Dallas, Houston, and Kansas City). The newly merged CPKC line is the only railroad that runs transcontinental from the Atlantic to the Pacific in Canada, as well as Transnationally from Mexico north through the US to Canada.
Interested in learning more about rail? Please consider attending a free in-person or virtual presentation on the campus of Loyola University Chicago on Wednesday, 10/11. Advanced registration is required. Guaranteed not boring or the beer is free.
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The domino effects are just starting to hit. Plus: FedEx dethroned UPS, Mexico truck production plunges, another $26M AI supply chain raise, and more.
Flatbed rejections hit a record 48.7%, broker numbers stop falling, and diesel jumps 30 cents overnight.
Congress is moving to put driverless 80,000-lb trucks on public roads. Plus: 13,000 California CDLs get cancelled, diesel hits a 32-year record, Florida wants $50K to get your truck back, and more.
Ryan Schreiber breaks down everything about strategy, relationships, mindset, and AI in logistics.
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