The combination of pent-up demand, high personal savings, and consumers eager to purchase retail for the forthcoming holiday season suggests that supply chain disruptions may become even more common. This occurs at a time when retailers are still struggling to meet consumer demand.
It’s only 95 days until Christmas. With periodic shutdowns of the world’s factories and ports in Asia, the backlog of giant container ships waiting to unload continues to increase.
Note: All rates exclude fuel unless otherwise noted.
Following a week of new records being established for boats in port, at anchor, and in drift zones, 65 ships were waiting outside California ports to unload containers earlier this week. Industry analysts estimate that the current scenario will not improve for another six months, with ports already at capacity and the chassis scarcity only getting worse.
Lars Jensen, CEO of Vespucci Maritime and analyst for the Journal of Commerce (JOC), says:
“There are over 400,000 TEU simply sitting there [off the coast of Southern California].” The vessel bunching is caused by unprecedented import quantities for 14 months in a row, while delays at warehouses and interior rail hubs also contribute to port congestion.”
North America will not see relief from this “great peak” until late in the first quarter of 2022, according to Jensen. When factories close for the traditional Lunar New Year celebrations this week, production across Asia is expected to slow. It will be at least six months before there is any possibility of things returning to normal.”
This means increased freight volumes for truckload carriers in port markets, which are strongly related to the ebbs and flows of container import levels.
Truckload volumes were up 8% last week, with capacity continuing to tighten, following the port shutdown in Philadelphia immediately after Labor Day in an effort to clear a backlog of shipping containers.
Last week, dry van spot rates rose $0.04/mile to an average outbound cost of $2.59/mile. The Philadelphia market has now increased for four weeks in a row. Last week, load traffic from Philadelphia to Chicago increased by 31%, while capacity remained stable at roughly $2.00/mile.
As the peak-shipping season from Asia kicks into high gear on the West Coast, new records are being set on a regular basis. As of earlier this week, 65 huge container ships had been waiting an average of 8.7 days for a berth to unload. As shippers contend with high intermodal congestion at inland ports, more containers are finding their way to the truckload market when they are unloaded.
Last week, truckload traffic in Los Angeles increased by 41%, with e-commerce volumes dominating on the following lanes:
- Stockton, California (+35%)
- Atlanta is up 22%, while Dallas is up 24%.
- Chicago is up 23%.
Last week, rates from Los Angeles to Stockton increased $0.41 per mile to an average of $4.32 a mile for the 338-mile journey. This is a new 12-month high and a $1.18/mile increase over the same period last year.
Rates on the spot
Following a $0.05/mile increase the week before, dry van spot rates stayed unchanged at $2.51/mile last week. Dry van rates are still $0.35/mile higher than the same period last year.
Spot prices for our top 100 lanes (in terms of loads moved) are as follows:
- On 21 lanes, the speed limit has been raised (compared to 40 the week prior)
- On 35 lanes, remained neutral (compared to 31)
- On 44 lanes, the speed limit has been reduced (compared to 26)
Source: DAT Solutions, LLC
How to Read a Rate Prediction:
- DAT’s main forecasting model is Ratecast.
- Short-Term Scenario: Previously known as the pessimistic model, this scenario focuses on a more recent historical record.
- Blended Scenario: Longer-term models are more heavily weighted in this scenario.
- Blended Scenario v2: The shorter-term models are more heavily weighted.
