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We are back from our short break. Sometimes the logistics of moving > personal energy. Happy to be back, lots has happened, let’s get into it.
— Maddie
Market Update
Both arrows red. WCI jumped 12% on early peak season surcharges and carrier EFS/PSS implementation. Brent up 8.1% as Hormuz stays effectively closed and the IEA warned the market could stay undersupplied through October.
Liable
The Supreme Court ruled 9-0 on Thursday that freight brokers can be sued under state law for negligently hiring unsafe carriers. If you're one of the 28,000 licensed freight brokers in the US who relied on federal preemption as a legal shield, that shield is gone.
For decades, the argument worked like this: a broker picks a carrier, that carrier causes a catastrophic crash, and the broker points to the FAAAA and says "we're just the middleman, you can't touch us in state court." It was a comfortable legal position, and a lot of contracts were built around it.
The case that ended it started in 2017. Shawn Montgomery lost his leg when a Mack truck operated by Caribe Transport veered into his tractor-trailer on an Illinois highway. His lawsuit named C.H. Robinson, the nation's largest freight broker, arguing the company should have known the carrier had a "conditional" safety rating and a documented history of driver-qualification problems.
It took nine years to reach the Supreme Court, and all nine justices sided with him (a rarity for a court that can't agree on much else lately). Justice Barrett held that the FAAAA's safety exception preserves states' authority to regulate safety "with respect to motor vehicles," and that requiring ordinary care in carrier selection falls squarely within it.
Here's what changes: 28,000 brokers now owe a legal "duty of ordinary care" when selecting carriers, which means insurance premiums will rise, vetting protocols will tighten, and every broker-shipper contract in America is getting a second look from legal counsel. The brokers who were already checking safety records won't feel much, but there are a lot of contracts in circulation right now that were written on the assumption this ruling would never happen.
What Else is Moving
🛢️ Iran just built a toll booth on international waters. Tehran created the "Persian Gulf Strait Authority", a formal government agency that screens every vessel with 40+ questions and collects up to $2 million per passage. Don’t think pocket change will cover this toll. For countries that have sanctioned the IRGC, payment of this toll could be considered funding of terrorism. America’s Project Freedom lasted less than 48 hours before Trump paused it, rejected Iran's counterproposal, and sent a new nuclear proposal on May 16.
⚖️ The tariff that wouldn't die finally got a ruling. The CIT ruled 2-1 on May 7 that Trump's 10% global tariff under Section 122 is unlawful, which would be a bigger deal if it applied to more than three plaintiffs. The Federal Circuit stayed the ruling five days later, so tariffs keep collecting for everyone else during the appeal. On the brighter side, CAPE Phase 1 has cleared $35.5 billion in IEEPA refunds, and first ACH payments started hitting bank accounts on May 12, so refund checks are literally going out while the government is still collecting the tariff they're refunding.
📦 Amazon quietly opened its logistics network to every company on earth two weeks ago, and the stock market is still processing it. Amazon Supply Chain Services now offers freight, distribution, fulfillment, and parcel delivery to anyone, not just Amazon sellers. P&G is already moving raw materials through it. 3M is shipping finished goods on it. UPS fell 10.47%, FedEx dropped 9.1%, GXO lost 13% on announcement day, probably because 80,000 trailers, 24,000 intermodal containers, and 100+ aircraft is a staggering amount of infrastructure to suddenly find yourself competing against.
By The Numbers
Decline in Canadian maritime trade capacity between 2016 and 2023, according to a Bank of Canada study published this month. Deadweight tonnage through Canadian ports fell from 167 million to 119 million metric tons. All five of Canada's largest ports lost connectivity to global shipping networks.
The reason is almost embarrassingly simple: ships got bigger and Canadian ports didn't. The world's mega-ships now carry 20,000+ TEU, and Canada's largest ports max out at 15,000 TEU, so the ships started going to ports that could actually fit them, and nobody noticed for seven years until the central bank published a study about it.
Water Cooler Ammo
✈️ The Trump-Xi Beijing summit wrapped with 200 Boeing jets ordered, a tariff truce "stabilized" but not extended, and a Taiwan warning from Xi. The market had priced in 500 jets, so Boeing shares fell 4% on what was technically a win.
🚛 FedEx's board approved the Freight spinoff on May 12, giving North America's largest LTL carrier its own ticker (FDXF), a NYSE debut on June 1, and a $4.1 billion parting gift from its parent. Shareholders get one Freight share for every two FedEx shares they hold.
🧱 Deputies in the Mojave Desert found two stolen trailers full of $1 million in Lego products and three men fleeing in box trucks. The cargo was stolen mid-transit from Fort Worth to Moreno Valley, making it one of the more elaborate ways anyone has ever tried to get free Legos.
The Last Mile
That's the week. Go do something that doesn't involve a shipping lane.
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