MARKET UPDATE - OCTOBER 2021

As port congestion worsens, especially in China and the US, and demand for air freight increases, capacity remains tight and rates continue to face upward pressure.  Below are highlights of recent market trends and information by mode:


Trucking:

  • Spot Load Postings down 21% from August to September 2021
  • Spot Load Postings for September 2021 were up only 5% compared to those from September 2020
  • When comparing load-to-truck ratios for September 2021 vs September 2020, Van ratios were up 12%, Flatbed up 15% and Reefer up 37%
  • In September 2021, spot rates were up 19% on Van, 28% on Flatbed and 26% on Reefer compared to September 2020
  • Van and reefer rates reached all-time highs once again in September 2021.  Flatbed rates were about 2.5% off their all-time highs
  • Diesel fuel remained at elevated levels, as it has increased 42% since October 2020
  • Predictions continue to point towards further rate increases in 2022, likely establishing new highs again for the industry


Ocean:

  • For Asia to North America, an October 1st GRI was implemented by most carriers.  Space is already severely under capacity, and with so many vessels awaiting berth at both origin and destination, availability is expected to worsen and continue to be an issue, at least through the New Year
  • For Asia to Europe, rates remain at record-high levels but only saw a marginal increase in early October.  Most carriers have extended their premium rates.  Severe equipment shortages are being faced across all Asia origins.  With continuous vessel delays and overbookings, schedule reliability is very low
  • Rates for Europe to North America remain at record high levels and even took another increase on October 1st.  Capacity remains an issue on both North Europe and Mediterranean services.  Congestion at destination ports and terminals is worsening and is not expected to ease until at least the end of the year
  • For India to North America, rates are increasing during the first half of October.  Global congestion is creating issues with blank sailings and adjusted schedules.  Space remains extremely constrained, and there is a lack of equipment available at the various ports and inland depots
  • North America to Asia is expected to incur GRIs on October 15th.  Space is still tight for USWC, and the USEC is worsening due to blank sailings and schedule delays.  There is a deficit on containers and chassis at most inland ramps, however, equipment at ports is not much of an issue (excluding special equipment)
  • For North America to Europe, rates are holding steady.  Capacity is the tightest out of the USWC, but adequate capacity seems available from USEC and USGC.  The biggest issue remains the availability of equipment at the inland terminals
  • Booking is recommended 5+ weeks in advance in the following lanes:
    • Asia to North America
    • Asia to Europe
    • Europe to North America
    • North America to Asia
  • Booking is recommended 4+ weeks in advance in the following lanes:
    • India to North America
    • North America to Europe (4 weeks USEC/USGC, 4-6 weeks USWC)


Air Freight:

  • Asia:  Capacity in the market continues to be constrained.  Several carriers have canceled flights to China due to numerous flight re-routings to HKG (because of increased Covid cases in China).  Some supply is expected to return to the market after Golden Week (10/1-10/7), which may help rates to start decreasing.  For Taiwan and Southeast Asia, ocean to air conversions are starting to place an additional strain on an already tight market.  Rates out of these origins are expected to climb during the next month
  • Europe:  Rates remain steady as there is adequate capacity to meet demand, however, shippers are still experiencing delays due to high volume at ground handling terminals.  Additional Trans-Atlantic passenger flights are expected to be introduced starting in November, adding more capacity that will help stabilize the market during peak.  It is still recommended to book at least 7 days in advance for optimal rates and routings
  • Americas:  US export demand remains stable with only mild capacity constraints.  Larger shipments from the major gateways can still take 2-4 days to uplift.  Ground handlers at LAX/ORD/JFK continue to face backlogs of inbound cargo, which is also impacting exports, therefore, it is recommended to book early due to unreliable dwell times at airports


Parcel:

  • FedEx announced their 2022 General Rate Increase (GRI), which will average 5.9% across their parcel services.  FedEx will also charge a $1 fee on all Ground Economy deliveries and returns going forward.  They will also begin applying a zone-based charge to their Additional Handling and Oversize surcharges, increasing the cost of some by over 30%
  • FedEx and UPS continue to apply the COVID/Peak surcharges on international shipments (the costs vary, starting at around $0.10/lb on many shipments).  On October 4th, FedEx further increased the charges from Taiwan, China and India
  • Effective November 1st, FedEx will be increasing their domestic fuel application by adding 1.75% points to the surcharge (i.e. – if the previous FSC was 9%, it will now be 10.75% going forward).  For domestic Express Freight services, $0.028/lb will be added to the FSC.  No changes are announced for US Export or Import services
  • FedEx has begun applying their “Holiday” Peak Surcharges as follows (effective 10/4/21 to 1/16/22):
    • Additional Handling = $5.95 per package
    • Oversize Charge = $62.50 per package
    • Ground Unauthorized Charge = $350 per package
  • In addition, FedEx has also announced the following changes to some of their other Peak Surcharges:
    • Ground Economy Surcharge:  11/1/21-11/28/21 = $1.50 per pkg, 11/29/21-12/12/21 = $3.00, 12/13/21-1/16/22 = $1.50
    • Residential Delivery Charge, effective 11/1/21-1/16/22 (for customers who ship more than 25K weekly residential packages)
    • On 1/17/22, the Residential Delivery Charge will revert back to $0.60
  • Effective October 3rd, UPS increased their Peak Surcharges have increased
  • 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.  Many regional carriers have also put a halt to any new business, at least through the end of peak season
  • Western US parcel carrier OnTrac began charging peak surcharges on October 3rd, effective until January 15th (https://www.ontrac.com/updates.asp)
  • After just raising the costs of its services on August 29th, the USPS has also implemented a temporary rate increase for October 3rd to December 26th, with package prices increasing as much as $1
  • Starting October 1st, the USPS began slowing mail deliveries while they attempt to overhaul their system in an effort to reduce costs
  • 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 began expansion into Missouri, Illinois and Kansas and is continuing to 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 Dan Leva at daniel.leva@data2logistics.com or 973-222-5882.