Inflation on the Rise
In October, U.S. inflation showed resilience, with core CPI—excluding food and energy—rising by 0.3% for the third consecutive month. This core index has grown at an annualized rate of 3.6% over the past three months, its fastest pace since April. Meanwhile, the headline CPI rose by 0.2% from the previous month and 2.6% year-over-year, the first annual acceleration since March. Shelter costs contributed significantly to this monthly increase, underscoring the continued impact of high housing prices. Despite a slight reduction in car insurance costs, broader price stability remains elusive, with goods prices beginning to rise after a year of declines. While the labor market has shown signs of cooling, inflation remains a key consideration for policymakers, who may slow the pace of future rate cuts. Economists from Wells Fargo suggest that the Federal Open Market Committee may soon consider cutting rates only every other meeting, beginning in 2025. (Source: https://www.bloomberg.com)
Canadian Port Strike Halts while East Coast Labor Negotiations Resume
The Canadian government, led by Prime Minister Justin Trudeau, has mandated that the country's major seaports, including Vancouver and Montreal, resume operations through binding arbitration to resolve ongoing labor disputes. Labor Minister Steven MacKinnon exercised his authority to bring the disputes before the Canada Industrial Relations Board, instructing it to enforce work resumption orders and extend existing agreements until new ones are reached. This decision follows Ottawa's intervention in similar disputes with Canada's freight railroads earlier this year. The move comes as port shutdowns have disrupted roughly CA$1.3 billion in goods movement daily, affecting supply chains, jobs, and Canada's international trade reputation.
Negotiations are set to resume next week between the United States Maritime Alliance (USMX) and the International Longshoremen's Association (ILA) over a new labor contract for 45,000 union workers at 36 East and Gulf Coast ports. The talks, held in northern New Jersey, will proceed without mediators and under a media blackout. Previously, a three-day strike by the ILA halted container handling, disrupting billions in imports, until Biden administration officials helped broker an extension to the current contract, now set to expire on January 15. Key issues include a proposed 62% wage increase over six years and union opposition to automation. With a possible second strike looming, importers are pulling shipments forward, though it's unclear if the new administration under President Trump would invoke measures to prevent further work stoppages. (Source: https://www.wsj.com)
Dunavant Solution: Dunavant is closely monitoring labor developments at key Canadian and U.S. ports to mitigate potential disruptions for our customers. We are prepared to provide alternative routing and proactive solutions to ensure your cargo moves smoothly amidst these evolving labor negotiations.
How New Trump Tariffs Could Play Out
As companies brace for a possible second Trump administration, new tariffs on imports, particularly from China, could trigger significant shifts in global supply chains, pushing businesses toward nearshoring and reshoring options. Trump has suggested tariffs ranging from 10% on general imports to over 60% on goods from China, which experts say would disrupt ocean shipping and lead to higher consumer costs as importers pass on these expenses. The logistics sector is already feeling the impact, with shares of ocean shipping firms falling while U.S.-focused transportation stocks have surged as companies anticipate increased domestic shipments.
In response to potential new tariffs, U.S. importers are accelerating shipments to stockpile goods ahead of anticipated cost increases. Companies like Stanley Black & Decker and Wayfair are exploring alternate sourcing strategies, including moving production to other countries like Vietnam or Mexico, though high costs and labor constraints in the U.S. limit domestic manufacturing as a primary option. Meanwhile, economists expect that China, facing export challenges due to U.S. tariffs, might increasingly shift focus to domestic consumption for growth, with potential fiscal support measures from the government aimed at boosting local demand amid growing international trade tensions. With Trump being a deal maker, Goldman analysts assume a 20% tariff on Chinese goods if Trump wins the presidency, shrinking the Asian nation's gross domestic product by 0.7 percentage points and hitting capital formation and exports. (Source: https://www.wsj.com)
Dunavant Solution: As potential tariff changes under the new administration occur, we will ensure our clients remain proactive and prepared. With our robust customs brokerage capabilities, we'll help you navigate the complexities of evolving trade policies, mitigating costs and minimizing disruptions to your supply chain.
China Dominates US Container Import Surge
US container imports saw significant growth in October 2024, reaching 2.49 million TEUs, marking the fourth consecutive month above 2.4 million TEUs, a threshold that has historically strained US maritime logistics. This represents an 8.1% increase over October 2023 and a 20.5% rise from pre-pandemic levels in 2019, with cumulative imports for the first 10 months of 2024 up by 13.1% compared to 2023 and 16.9% compared to 2019. China remains the dominant source of US imports, with October marking the fifth consecutive month of over 900,000 TEUs, reaching 960,016 TEUs. However, this surge in imports has caused transit delays at seven of the top ten US ports, exacerbated by a 3-day strike in October. The West Coast has slightly increased its share of imports, capturing 45.8% in October, while the East and Gulf Coast ports experienced a minor dip in share.
Dunavant Solution: Dunavant is closely monitoring the delays at U.S. ports and advising customers on potential disruptions. We are prepared to provide alternative solutions if the product is needed sooner.
Diesel Prices Remain Low After Election
Diesel prices in the U.S. continued to decline, with the Department of Energy's latest retail price report showing a drop to $3.521 per gallon—the lowest since October 2021. Despite recent market fluctuations, futures prices for ultra-low sulfur diesel (ULSD) have shown limited reaction to the election, with some downward pressure likely influenced by a strengthening U.S. dollar driven by post-election bond market adjustments. The Trump administration is expected to maintain a bearish impact on oil prices, not by increasing U.S. oil production but potentially through economic slowdowns and trade tariffs that may curb demand.
Oil industry leaders like ExxonMobil's CEO Darren Woods remain skeptical of any significant production surge, noting that existing U.S. production is optimized and unlikely to expand rapidly. Meanwhile, OPEC has revised its global oil demand growth forecast downward for the fourth consecutive month, citing weaker consumption and lower prices. The organization expects demand to increase by 1.82 million barrels per day this year and 1.54 million barrels per day next year, down from previous estimates of 1.93 million and 1.64 million, respectively. (Source: https://www.freightwaves.com)
NCDOT to Partially Reopen I-40 on Jan. 1
The North Carolina Department of Transportation (NCDOT) plans to partially reopen a 9-mile stretch of Interstate 40 through the Pigeon River Gorge on January 1, following extensive damage from Hurricane Helene. The hurricane caused catastrophic flooding and mudslides, destroying communities, and washing away sections of I-40, which has hindered the transportation of critical supplies. While the reopening will permit one narrow lane of traffic at a reduced speed of 40 mph in each direction, full restoration of the interstate will take years, with stabilization work currently underway. NCDOT has awarded an $8.5 million contract for initial repairs involving soil-nail walls and concrete safety barriers and will continue to develop long-term restoration plans. Nearly 600 roads were closed following Helene, but about half were reopened as of Tuesday. The DOT reported that 297 roads remained closed. (Source: https://www.freightwaves.com)
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