MARKET UPDATE - AUGUST
Although the reopening of many parts of the Economy has led to some encouraging changes in the freight market, second spikes in COVID-19 and continued uncertainty has had varying effects on the pricing and capacity in the market:
- The load-to-truck ratio continued to climb for all major equipment types, indicating ongoing increased demand. Load-To-Truck ratios were up 10+%. Spot Load Postings were up 20+% YOY, as many shipments that would normally move under contract rates are being forced to move at spot rates.
- Forecasts still predict 2020 ending the year aligned with 2019 demand levels.
- National rates for van, flatbed and reefer all climbed from June to July, a time when rates typically decline. Van rates saw the largest average increase at about 12%.
- Rates continue to hold steady across the majority of lanes
- Vessels remain full out of the major Asian and European ports to US
- Booking is recommended 3 weeks in advance in the following lanes:
- Europe to US (both East and West coasts)
- Asia to Europe
- Expect to book 10-14 days in advance on the following lanes:
- US to Asia
- US to Europe
- China/Hong Kong: After rates dropped considerably from their highs around 3 months ago, they are on the rise again and this is expected through peak season. Capacity is expected to remain tight throughout the rest of 2020.
- Americas: Airlines do not expect a significant increase in passenger traffic until the summer of 2021, which will keep a lot of aircraft sidelined and lead to ongoing capacity issues.
- Europe: Market remains fairly stable as the slight increase in capacity is being balanced out by additional demand from opening economies.
- Both FedEx and UPS continue to apply the COVID-19 surcharges on international shipments (the costs vary, starting at around $0.10/lb on most shipments, but substantially higher out of places like China and Hong Kong).
- FedEx and UPS continue to charge additional “peak” surcharges that were added in June, to include additional costs on items like Large Package/Oversize, Residential Delivery and SmartPost/SurePost packages.
- E-commerce demands remain at elevated levels, although the commercial market has bounced back considerably from the April lows. Parcel shippers had to make adjustments for the much higher ratio of residential and last-mile deliveries. This has also led to numerous shippers looking at alternate solutions to manage capacity, such as using regional providers like LaserShip and OnTrac, or even focusing on postal-type services such as USPS, UPS Mail Innovations or DHL SmartMail.
Data2Logistics has a dedicated “Professional Consulting Services” team that can help you identify opportunities across all modes. We provide various services such as data metrics/analytics, benchmark/market studies, carrier strategy/negotiation, etc… For more information, please contact Jeremy Levesque at [email protected] or 704-992-8016.