MARKET UPDATE - AUGUST 2021

The constraints on the global supply chain in 2021 continue, resulting in reduced capacity and delivery performance, as well as continuing the upward pressure on shipping rates.  Below are highlights of recent market trends and information by mode:


Trucking:

  • Spot Load Postings were down 37% from June to July 2021
  • Spot Load Postings for July 2021 were up only about 11% compared to those from July 2020
  • When comparing load-to-truck ratios for July 2021 vs July 2020, Van ratios were up 30%, Flatbed up 51% and Reefer up 66%
  • In July 2021, spot rates were up between 30-40% compared to July 2020 in all 3 equipment types
  • Van and reefer rates reached all-time highs once again in July 2021.  Flatbed rates were about 1% off their all-time highs
  • Diesel fuel remained at elevated levels, as it has increased 40% since October 2020
  • Most of the major trucking companies continue to report record earnings in 2021 Q2 as well as raising their 2021 outlook


Ocean:

  • Shippers continue to vie for vessel space, however, many are getting priced out of the market.  The Freightos Baltic Daily Index showed Asia-USWC rates at $18,345 (six times higher than a year ago) and rates to the USEC at $19,620 per 40’ container
  • For Asia to North America, an August 1st GRI was implemented, with another expected on August 15th, as well as a PSS on September 1st.  Space remains at critical levels, pushing out transit times across all lanes
  • For Asia to Europe, rates remain at record-high levels.  Severe equipment shortage remains across all Asia origins and many shippers are dealing with their containers being rolled
  • A GRI was implemented August 1st for Europe to North America.  Space remains very tight and capacity is guaranteed only by paying premium rates
  • Rates out of North America to Asia and Europe are holding fairly steady, however, many carriers have announced another GRI for either mid-August or early September.  Capacity is the tightest out of the USWC, as USEC is showing signs of improvement.  Equipment and chassis availability is tight at the majority of ports and ramps
  • Booking is recommended 5+ weeks in advance in the following lanes:
    • Asia to Europe
    • Asia to North America
    • Europe to North America
  • Booking is recommended 4+ weeks in advance in the following lanes:
    • North America to Asia
    • North America to Europe (5-6+ weeks from USWC)


Air Freight:

  • Asia:  Rates are holding at higher levels.  The effects of Typhoon In-Fa did create some additional rate increases, especially out of Shanghai.  Demand is expected to remain high through the rest of the year, so rates and transit times are likely to continue increasing
  • Europe:  Rates are holding steady, and demand should drop slightly as factories reduce production for the August holidays.  While there appears to be capacity to handle the demand, shippers are advised to build in extra lead time to account for delays at overseas hubs
  • Americas:  The 100% screening on US export airfreight cargo has created additional delays as screeners adjust to the new requirement.  US export demand remains strong while no additional capacity has been added.  Larger shipments are taking 2-3 days from booking to uplift to key European destinations.  West Coast and Midwest gateways are heavily constrained while East Coast capacity is more manageable.  Space to India has opened up, while Nepal, Bangladesh and Indonesia are still constrained due to relief efforts to those regions.  Ground handlers at LAX/ORD/JFK are reporting 2-5 day backlogs on imports


Parcel:

  • FedEx and UPS continue to apply the COVID/Peak 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 with those continuing to rise).  On July 4th, UPS increased these charges out of China, Hong Kong and Taiwan
  • Both FedEx and UPS also made changes to their fuel application within the last 2 months.  On June 21st, FedEx increased their published fuel application by adding 1% point to the surcharge.  On July 5th, UPS increased their fuel application by adding 1% point to the air surcharge and 0.25% to the ground surcharge
  • FedEx continues to charge the following Peak Surcharges (effective until further notice):
    • Residential Delivery:  $0.60 per package
    • Additional Handling:  $3.50 per package
    • Ground Economy (formerly SmartPost) Surcharge:  $1.00 per package
    • Oversize:  $30 per package
  • UPS announced a staggered increase on their Peak Surcharges with the first effective back on July 4th, followed by another increase on October 3rd.
  • The high-volume (any shipper with 25K+ shipments in any week after February 2020) UPS Ground Residential and SurePost Surcharge will remain at $0.30 per package through October 30th.  Effective October 31st, the surcharge will include Air Residential shipments and increase exponentially depending on each shipper’s peak volume levels.
  • Due to capacity issues, UPS and FedEx have trended towards limiting or shifting away from certain lower-margin portions of the business and focusing on more profitable accounts
  • The USPS is planning on raising the costs of its mail services on August 29th.  Stamps will increase from $0.55 to $0.58, and general mail products will increase by an average of 6.6%
  • As shippers continue to look towards regional providers to help cover their parcel shipment needs, some of these carriers are looking towards expansion.  LaserShip, who recently extended their service offerings to include Tennessee as well as several other zip codes, is looking to expand to Chicago and possibly Texas, along with broadening their coverage in several existing states.  LSO plans to expand into Missouri, Illinois and Kansas by early September as well as grow their coverage in Louisiana, Oklahoma and Arkansas


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, market studies, carrier strategy/negotiation, etc.  For more information, please contact Jeremy Levesque at jeremy.levesque@data2logistics.com or 704-992-8016.