MARKET UPDATE - FEBRUARY

Capacity remains tight throughout most of the shipping community, and shippers continue to face rate pressures as uncertainty continues:


Trucking:

  • Spot Load Postings for January 2021 were up nearly 70% of those from January 2020
  • Flatbed load-to-truck nearly doubled in January 2021 as compared with January 2020, indicating a continued shortage in this equipment type
  • National rates for van and reefer dropped somewhat in January, coming down from all-time highs in November/December.  Flatbed rates remained at their peak levels
  • Spot market activity was also up in the last week of January compared with the prior week, as demand has steadily increased since the new year
  • Analysts are expecting 2021 to be a bull market for trucking, especially LTL.  As the demand for LTL continues to increase, many shippers are attempting to build up inventory and look for opportunities to shift to FTL where feasible


Ocean:

  • Rates out of Asia have stabilized, but they still remain at extremely high levels.  A GRI was anticipated for the month of February, but the carriers have decided not to proceed with it
  • An equipment shortage in Asia remains, and is expected to continue through the end of Q1.  Many shippers are diverting cargo from feeder ports in China to the main ports for more reliable service
  • In Europe, demand continues to remain at elevated levels.  Many vessels are full up to 4 weeks in advance of departure date.  This strong market is also expected to continue through the end of Q1
  • Rates out of North America to Asia saw increases.  Chassis availability at most US ports and rail ramps is extremely tight
  • Booking is recommended 3 weeks in advance in the following lanes:
    • Asia to Europe
    • Asia to North America
    • Europe to North America
  • Booking is recommended 10-14 days in advance in the following lanes:
    • North America to Asia
    • North America to Europe
    • India to North America


Air Freight:

  • Asia:  Capacity out of Asia is tightening up ahead of Chinese New Year (CNY).  Rates out of Asia are seeing heavy increases.  Stricter testing protocols for flight crews could potentially reduce availability of flights
  • Europe:  While many passenger (PAX) flights are suspended due to new regulations, capacity is available via freighter and/or dedicated PAX-freighters
  • Americas:  US to Asia, Europe and LATAM all appear to have availability (excluding parts of Central America).  Some capacity will be removed due to the upcoming CNY. Also, expect a shift of some European capacity to the perishable market ahead of Valentine’s Day


Parcel:

  • The General Rate Increase (GRI) for 2021 is now in effect for both FedEx and UPS.  This includes an average of 4.9% on the base rates, as well as increases to the majority of their main accessorials, with most ranging between a 5-10% increase
  • The USPS implemented their general rate increase on January 24, 2021.  While most of the increases were fairly mild, shippers and consumers need to be aware that lightweight e-commerce parcels (Economy “Parcel Select Lightweight”) went up by almost 19%
  • 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)
  • On January 18th, FedEx implemented the following Peak Surcharges (effective until further notice):
    • $30 Peak Oversize
    • $3 Peak Additional Handling
    • $0.75 SmartPost Surcharge
  • On January 17th, UPS implemented the following Peak Surcharges (effective until further notice):
    • $31.45 Large Package
    • $3 Additional Handling
    • $0.30 Ground Residential and SurePost Surcharge
  • As we move into 2021, the national carriers cannot expect customers to continue to accept rate increases and randomly applied accessorial fees (such as the newly implemented “Peak Surcharge”).  Also, regional providers like LaserShip, LSO and OnTrac may become a more viable option as UPS and FedEx continue to alter the rules and become somewhat less reliable
  • While many regional providers stayed away from new volume in 2020 due to capacity constraints, when the market steadies and volume becomes more predictable (as is expected), regional carriers should be more prepared to take on additional volume.  This could start to add pressure to the national carriers to renegotiate to remain competitive, most likely by early Spring


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.