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Over the last few months, the freight market, while robust, has been relatively unchanged (Figure 1.1). And rejection rates from carriers have been consistent as well, just shy of one out of every four shipments being rejected. We do expect the Labor Day dip to drop volumes by roughly 15 percent of what we have been seeing, but a rebound will most likely happen before the week is over.
We are keeping a very close eye on the container volume coming into U.S. ports, with the LA/LB port expected to handle the highest volume of freight coming from China. As indicated below (Figure 1.2), peak season is upon us with inbound containers from China up almost 70 percent from this time last year. For an operation that is already operating close to 106 percent, the impending surge will no doubt create more delays as ships wait at anchor (currently 46 ships sit waiting for a dock off the coast), truck turn times at the port are increasing, by 10 percent from July to August, and port services continue to experience labor challenges. With 21 ships expected to make their way into the San Pedro Bay by week’s end, the LA/LB port is well on its way to handling over 20 million containers in 2021, almost 3 million more containers handled versus 2020.
Overall, there are 121 ships in U.S. ports. Currently, there are 440 ships waiting to load and sail in China alone. Much of that freight will make its way to the U.S. Once this freight has been processed from the containers, the over-the-road truck volume will surge and capacity will be further strained in the surrounding markets.
In addition to the import surge being seen on both coasts, shippers will feel the impact of the most recent hurricane. The lack of capacity will not just be seen in hard-hit areas like Louisiana, but throughout the southeast and into the northeast, capacity will be challenged. Shippers should prepare for spot rates to tick up, anywhere from 5-8 percent. But this will not just be a regional impact. As capacity shifts to, and in some cases from, impacted areas, the imbalance and rate impact will be felt across the U.S. Extending lead times and securing capacity sooner versus later will greatly benefit shippers as the movement of goods reaches a high point.
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Russ Felker, former Chief Technology Officer (CTO) of GlobalTranz, now joins Trinity Logistics as their CTO.
What’s new in the freight market entering 2022? Demand and rates remain high, capacity stays tight, and the ports are still facing issues.
Trinity Logistics has acquired Scottsdale, Arizona-based Team Eagle Logistics and will become Trinity’s seventh Regional Service Center.