U.S. Economy
The U.S. Federal Reserve (Fed) announced that it will cut its benchmark interest rate to 4.25-4.5% per year from the previous range of 4.5-4.75% at the Federal Open Market Committee (FOMC) meeting on the 18th. In a statement, the Fed said that “labor market conditions have generally eased since the beginning of the year, and the unemployment rate, while rising, remains low.” “Inflation has made progress toward the Committee's 2 percent objective, but remains somewhat elevated,” the Fed said. The Fed also raised its median interest rate forecast for 2026 to 3.4% from 2.9%.
The minimum wage in New York City and California will increase by 50 cents to $16.50 in 2026. In New York City in particular, the minimum wage is tied to the Consumer Price Index (CPI) after an automatic increase to $17 in 2026. However, if the unemployment rate increases, the minimum wage increase will be suspended. The Commerce Department reports that the U.S. gross domestic product (GDP) grew at a finalized rate of 3.1% in the third quarter. This was up 0.3 percentage points from the preliminary estimate (2.8%) released a month earlier. This is the second consecutive quarter of 3% annualized growth, following 3.0% growth in the second quarter. Fearing rising prices due to Trump's tariffs, Americans are trading in cars and appliances and stocking up on coffee, olive oil, and more. The Wall Street Journal (WSJ) reported Thursday. A Credit.com survey also found that one in three Americans are worried that President-elect Trump's tariffs will increase the cost of essentials. President-elect Trump's tariffs are causing prices to skyrocket. The most common items stockpiled include toilet paper (77%), emergency food (76%), medical supplies such as hand sanitizer (58%), over-the-counter medications (54%), cosmetics (34%), and appliances (33%). Firearms/ammunition (26%) and water purification equipment such as water purifiers (25%) are also favored by many.
Maritime Cargo Market Trends
ILA plays President-elect Trump card in standoff with USMX
Rail delays at LA and LGB continue amidst strong growth in Asia to US volumes due to pre-transit demand amidst concerns over President-elect Trump's 'tariff bomb' and other diversionary demand amidst East and Gulf port strike fears. (See 'LA/LGB Rail dwell Time' below)
Trump reiterates support for ILA (US East and Gulf ports union)
Mr. Dennis Daggett, a union official of the International Longshoremen's Association (ILA), whose visit to the Mar-a-Lago home by President-elect Trump led to President-elect Trump's support for the union, reiterated his support by reposting his praise for President-elect Trump on his social media account, Truth Social, which has 8 million followers. This further narrowed USMX's position. The first two months of 2025 are expected to be the coldest of any winter, with tariffs on China, a pre-Chinese New Year volume surge, and service disruptions as new alliances and networks launch, in addition to concerns about East and Gulf Coast port strikes.
MSC/CMA-CGM to Impose Surcharges for Panama Canal Transit (1/1)
In response to the Panama Canal Authority's (ACP) announcement of new tariffs and fee changes to improve the canal reservation system, MSC and CMA-CGM have announced that they will impose a Panama transit surcharge of $40 per TEU, effective January 1, 2019. (Targeted routes are Asia to US)
Air Cargo Market Trends
Update on Canada Post Strike
Approximately 55,000 Canada Post employees returned to work on Tuesday (May 19), ending a more than month-long strike following a return-to-work order from the Canada Industrial Relations Board. Negotiations to continue until the end of May to reach a new labor agreement under the CIRB's proposal.
FedEx Announces Spinoff of LTL Trucking Division
FedEx announced today that it will spin off FedEx Freight, its less-than-truckload (LTL) transportation division. FedEx Freight is the largest LTL carrier in North America with $10.2 billion in revenue in 2023 and is expected to have a market value of $40-50 billion when it goes public. The spin-off is expected to take 18 months to absorb and integrate the LTL business, which is currently split between FedEx Express and FedEx Ground, and is expected to be completed in mid-2026.