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CALM BEFORE THE STORM?

It’s been several months since I had to utter that dreaded word we all learned back in mid-2020. Yes, I am talking about the word Covid. But unfortunately, it is having an impact on freight flows, particularly import freight from Asia. While China has roughly 90 percent of its 1.4 billion residents fully vaccinated, the country takes extreme measures when outbreaks happen. Most recently, in early spring, China once again instituted varying levels of lockdowns for many of its major cities and provinces. This has impacted all parts of China – from manufacturing & production to transportation. And this slowdown in activity can clearly be seen in import activity to the U.S. 

From Figure 1.1, you can clearly see that things were humming along, then the lockdowns started to occur, and import freight has been on a steady decline for the past 9 weeks. Eventually, things will see some sense of normalcy with activity in China, and this will mean the typical peak season may look even more like a peak as delayed shipments add to the normal freight mix heading to our U.S. ports.  

WHAT’S GOING ON AT THE PORTS?

With the expectation of expanded volume, many importers are conscientious of the ongoing labor negotiations on the west coast. Over the last 10 weeks, as indicated in Figure 2.1, inbound freight shipments have begun to look at ports on the eastern side of the country. Savannah has shown an increase it’s TEU market share by seven percent and Norfolk is up to nine percent versus their traditional volumes. LA/LB will continue to lead the way, but as shippers become ever more sensitive to delays at larger volume ports, anticipate volume to be shifted to less busy locations.

A QUICK BREAK ON TENDER REJECTIONS

Finally, we are seeing rejection rates begin to plateau. Reefers and Vans are slightly below a 10 percent rejection rate, and flatbeds continue to hold steady in the high 20 percent range (Figure 3.1).  As port activity increases, expect it to pull capacity away once again from the market and rejection activity to tick upwards, especially on the Van side. Flatbeds will most likely continue their strong rejection rate as industries reliant on that type of transportation stay strong in our economy.

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