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This edition looks at the impact of an increasing transition of U.S. consumer demand from goods to services, COVID-19 outbreaks at ports in southern China, and the leveling off of truckload rates.
But first, a high-level recap of what’s happening in the market:
Read on for additional insight into these numbers and current events!
With higher rates of vaccination, states fully reopening, and money to spend, U.S. consumers are once again flocking to airports, sporting events, gyms, and restaurants. The scales are shifting – but to what extent remains to be seen.
U.S. importers may experience another wave of difficulty keeping up with soaring consumer demand after recent COVID-19 outbreaks in Southern China. More than 25% of the country’s exports travel through these ports. With Chinese dockworkers forced to quarantine due to concern over new variants of the virus, U.S. ports are bracing for a ripple effect they know only too well. Once China fully resumes port operations, the influx of ships and containers will create a strain at U.S. ports, fueling a supply chain backlog. The Port of Los Angeles, for example, is just now recovering from significant bottlenecks it experienced at the beginning of 2021. According to this Yahoo! Finance article, in May 2021 the port of Los Angeles processed more than a million container units, marking the busiest month in the port’s 114-year history.
Rates appear to be leveling off and should remain near current levels in the short term. With the exception of the 4th of July, dry van rates should stay at current levels, or even drop slightly, while reefer and flatbed rates are expected to stay at current levels or increase slightly.
After reviewing industry data, Armstrong believes the industry is near, or at the plateau of, rate increases and expects rates to be fairly level for Q3. During Q4, the industry may see another surge in rates as volumes potentially spike again for holiday shipping.
Dry Van volumes are down 30% month-over-month (MoM) but still up 44% year-over-year (YoY). This drop has caused available equipment postings to be the highest they have been all year. Rates have flattened out over the month but are still $0.76 higher YoY and $0.38 higher than in 2018. (Image source: DAT)
Reefer volumes are down 10% MoM but still up 53% YoY. This drop has caused available equipment postings to be the highest they have been all year. The border and port markets are the highest. California, Arizona, and Texas are seeing increased rates due to large import volumes. Rates have flattened out and even dropped about $0.05/mile week-over-week but are still near all-time high levels up to $0.79/mile YoY and $0.37 higher than 2018. (Image source: DAT)
Flatbed volumes are down 8% MoM, the first time they have dropped since November 2020. This drop has caused available equipment postings to be the highest they have been all year. Rates are evening out and have only increased $0.01 MoM but are still $0.84/mile higher YoY and $0.23/mile higher than 2018. (Image source: DAT)
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