MARKET UPDATE - JULY 2021

Shippers continue to face a variety of cost constraints and capacity issues across all major transportation modes.  Below are highlights of recent market trends and information by mode:


Trucking:

  • Spot Load Postings were down 19% from May to June 2021
  • Spot Load Postings for June 2021 were up about 75% compared to those from June 2020
  • When comparing load-to-truck ratios for June 2021 vs June 2020, Van ratios were up 50%, Flatbed up 178% and Reefer up 99%
  • In June 2021, spot rates were up around 50% compared to June 2020 in all 3 equipment types.  All 3 equipment types remained around their all-time highs in the month of June
  • Diesel fuel remained at elevated levels, as it has increased 38% since October 2020
  • On June 11th, FedEx Freight notified about 1,400 customers that their shipments would not be picked up at certain locations due to congestion at nearby terminals.  Less than 2 weeks later, FedEx Freight relaxed that embargo and will take a more precise approach regarding which accounts will be suspended


Ocean:

  • Shippers continue to face record-high rates as well as congestion at many ports, and carriers continue to limit inland bookings due to bottlenecks at rail yards.  The port of Yantian has fully reopened and cleared the backlog of vessels
  • For Asia to North America, a July 1st GRI and PSS was seen in the spot market.  Space remains at critical levels, pushing out transit times across all lanes
  • For Asia to Europe, significant rate increases were implemented on July 1st, with additional increases expected throughout July.  Severe equipment shortage remains across all Asia origins
  • Rates out of Europe to North America are expected to face further increases in July as a new GRI and PSS take effect.  Capacity only seems reliable by paying premium rates.  Blank sailings are expected to reduce capacity to USWC in weeks 29-31
  • Rates out of North America to Asia and Europe are holding fairly steady, however, a higher BAF was implemented on July 1st.  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:  China air exports are increasing in demand due to ocean backlogs.  SE Asia demand also remains strong due to reduced capacity.  Overall, rates remain very high, however, the Taiwan to US rates have fallen by $3-4 per kg as demand has dropped due to reduced factory output from COVID restrictions
  • Europe:  Demand appears to be holding fairly steady, and there seems to be enough capacity to meet the demand.  It is still advisable to book early for the best rates, and for larger shipments, shippers should consider splitting them across 2-3 uplifts
  • Americas:  US export capacity remains very well utilized, with USWC to Europe being the most constrained (Midwest and USEC are more manageable).  Larger shipments are taking 2-3 days from booking to uplift to key European destinations.  Space to India, Nepal, Bangladesh and Indonesia is very constrained due to COVID aid/relief shipments taking up space.  LAX and ORD ground handlers continued to face backlogs and are reporting 2-5 day lags in breaking down import freight (export cargo cannot be tendered earlier than 2 days before departure).  100% screening for all airfreight cargo took effect on July 1st


Parcel:

  • Both 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 May 23rd, UPS increased these charges out of China, Hong Kong and Taiwan.  On June 13th, UPS also increased the charges out of Japan to the US
  • Effective June 21st, FedEx increased their published fuel application by adding 1% point to the surcharge (i.e. – if the previous FSC was 8%, it will now be 9% going forward).  For Express Freight services, $0.016/lb was added to the FSC
  • Effective July 5th, UPS will be increasing their fuel application by adding 1% point to the air surcharge and 0.25% to the ground surcharge
  • FedEx implemented an increase to their Peak Surcharges on June 21st as follows (effective until further notice):
    • Residential Delivery:  Doubled from $0.30 to $0.60 per package
    • Additional Handling:  Went from $3.00 to $3.50
    • Ground Economy (formerly SmartPost) Surcharge:  Went from $0.75 to $1.00
    • Oversize:  Remained at $30
  • UPS announced a staggered increase on their Peak Surcharges with the first one being effective 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
  • In order to compete in the growing package market, the USPS has begun to replace its fleet and has outlined a 10-year/$40B business plan for various modernization projects
  • As shippers continue to look towards regional providers to help cover their parcel shipment needs, some of these carriers are looking towards expansion.  LaserShip extended their service offerings to include Tennessee as well as several other zip codes, increasing their direct coverage by 18%.  LSO, who primarily services Texas and Oklahoma, has announced plans to include Louisiana, Arkansas, Missouri, Illinois and Kansas in their service footprint starting in September


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.