Issue 110

House Sets Up FAA Reauthorization:

According to House Aviation Subcommittee Chairman Garrett Graves (R-LA) and Full Committee Ranking Member Rick Larsen (D-WA), the House Transportation and Infrastructure Committee is set to markup the FAA reauthorization this week. The official date of the markup is yet to be determined, but the expectation is either June 14th or 15th.

The bill is expected to begin its journey to the President’s desk in the House Transportation and Infrastructure Committee. The Senate Commerce Committee also anticipates its markup in the coming weeks. With opposing parties controlling the other chamber in Congress, the likely scenario is both chambers will pass different versions of the bill and hash out the difference in a Conference Committee. This is the usual path for large packages regardless of who is in control of the two chambers.

The current FAA bill expires on September 30, 2023. TIA will keep you updated with any further developments.

REGISTRATION IS OPEN FOR POLICY FORUM

Julie Su To Assist in Port Negotiations:

On Wednesday last week, acting Labor Secretary Julie Su stated that she is paying close attention to ongoing talks between West Coast port operators and unionized dockworkers.

Discussions have been taking place between the Pacific Maritime Association, which represents operators of ports, and the International Longshore and Warehouse Union for almost a year following the expiration of the previous contract.

Some significant issues have seen tentative agreements between the parties, including the utilization of automated machinery. However, there is limited indication of how close the two sides are to reaching a final agreement.

Recent tensions have arisen as cargo companies expressed dissatisfaction with work stoppages and other disruptive actions that have strained operations at multiple ports involved in the negotiations.

Business groups have started expressing concerns about the progress of the talks due to the critical role of West Coast ports in the country's supply chain. They are urging the Biden administration to become more involved and help resolve the deadlock.

TIA will update you as needed.

Air Cargo Market Struggling:

According to a market analysis by CLIVE Data Services, the global air cargo market is experiencing increasing tension as rates continue to decline. In May, general airfreight rates reached their lowest level since March 2020, falling 40% compared to the previous year. This decline is attributed to softening global air cargo demand and an increase in capacity, resulting in downward pressure on rates. The dynamic load factor, which measures the volume and weight of cargo flown compared to available capacity, was 5% lower than in May 2022 at 55%.

Niall van de Wouw, Chief Airfreight Officer at Xeneta, explains that the restlessness in the market is not only due to rising capacity but also driven by ambitious forwarders seeking to grow their business. Many forwarders are looking to take a larger market share, leading to competitive pricing and lower rates. Shippers are also going to the market to renegotiate their rates, further contributing to the decline in overall rates. The decline in freight rates on major fronthaul lanes, such as Southeast Asia to the US and Europe, Northeast Asia to the US, and China to the US, outpaced the industry average.

The market sentiment among airlines and forwarders is shifting, with growing nervousness and a diminishing expectation of an uptick in peak season demand later in the year. The situation is characterized by a "stick or twist" dilemma, where companies must decide whether to aggressively pursue volumes or wait for market conditions to improve. The impact of some goods switching from ocean to air freight, which briefly benefited the air cargo market in May, is expected to be short-lived and have limited global significance.

Overall, the global air cargo market faces challenges as rates continue to decline, capacity increases, and market players navigate the uncertainties of demand and supply dynamics.

If you have any questions about this newsletter or TIA 2023
Policy Forum, please email advocacy@tianet.org

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