North America Shipping Update
Tight rail capacity in the Los Angeles-Inland Empire area coinciding with a massive wave of U.S. imports is driving up spot truckload rates. We do not expect to see any relief for truckload rates until we see a reduction in congestion on the rail roads. Port volumes are expected to be strong through the rest of 2021.
The global supply chain bottle necks have been reducing the effective capacity and putting upward pressure on shipping rates which are currently at record rates. Carriers have no extra ships to meet the current freight demand, containers cannot get repositioned quickly enough, there are equipment shortages in certain markets, and destination ports are becoming extremely congested from the record volumes.
There continue to be extreme delays from China, currently, an average of 2-to-3-week delays for exports. All of this has been exacerbated by a series of weather and COVID related events.
We are seeing space guarantee surcharges on the trans-Pacific trade lane for $2,000-$8,000 per container and some include cancellation fees as well (this does not always guarantee equipment for the shipment).
The main reason for the current shipping environment in North America is the growth in consumer spending. Consumer spending has increased import levels by 10% in the first half of 2021 compared to 2019. This demand is pulling vessels and equipment from other areas of the world, creating a shortage in those regions.
Consumer spending in the European Union is up 1.4% in 2021 compared to 2019 (comparable to normal annual growth).
The record level of imports is affecting every area of the supply chain from ocean and air transportation, to rail and trucking transportation, to warehousing and distribution. Carriers have also cancelled many sailings in an effort to restore vessel schedules.
Additional factors of the bottle necks include:
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Mitigation strategies might include, booking smaller LCL shipments, moving air freight, selecting alternate ports at either end of the origin / destination equation, making quick decisions when space offers come around, using multiple sources to find and secure space and of course a ready supply of cash to make those all important booking security deposits.
If you have any questions, please contact us today.