• Uber Freight is acquiring Transplace. The $2.25 billion acquisition of Transplace jumps Uber deeper into the shipper market and the managed transportation sector.
• U.S. Xpress’s Dive Insight provided to SupplyChain Drive, offers agreement that our heightened rate and volume will persist through 2021 with Q1 illustrating a downturn.
• UPS is expecting the 2021 peak season to exceed 5 million packages per day. Peak season planning expectations show that the projected delivery capacity will be short 7.2 million parcels ahead of the 2020 peak season.
• The Ningbo Meidong Container Terminal suspended operations at 0330 on Tuesday after a worker for a carrier tested positive for C19. As of Wednesday, there were 28 container ships awaiting load out.
• Additional reports from China illustrate that air cargo service to and from the U.S. and Europe has been suspended until the end of August. Specifically, China Eastern has canceled all belly
lights to major U.S. and European airports until August 30th. Estimates are forecasting a 30% drop in air capacity.
• In financial reports, HMM, the ninth-largest container shipping line, posted $2.06 billion in operating profit for the first half of 2021. The highest operating profit in its history. Hapag-Loyd also reported robust earnings with the first half of 2021 reporting $3.3 billion.
Truckload rates continue to hold with July’s Rockfarm cost per mile index of $3.15 illustrating a slight decrease of $.02 per mile compared to the average from May and June. The continued pressure on available capacity with the increasingly higher cost of diesel and projections are illustrating the reality of higher rates through year-end. Midway through August the national average for diesel has hit its highest level since October of 2018 when diesel also peaked at $3.36. Pricing within key lanes from ports and railheads continues to illustrate tightened capacity. Spot market intermodal rates have surpassed spot market truck rates in the LAX Basin, pushing an uptick in trans-loading from intermodal to truck in LAX to eastern markets. The challenge now arises with the influx of trainloads from containers to over-the-road trailers. How many 53’ trailers are available to meet the demand? Adding to the congestion, order patterns are increasing as companies look to build safety stock for the peak season.
Freight expense continues to impact the overall costs of goods as seen in the latest price indexes. The CPI rose again in July and has now risen 5.4% over the last 12 months. The U.S. import price index illustrates an advancement of 10.2% over the past year that includes fuel imports. Non-fuel imports have risen 6.3% over the past year in line with the CPI. A bit of good news has been export prices, which have risen 17.2% with industrial supplies and materials leading the index at a 40% increase in prices this past year.
Inventory levels remain very low as reported by the U.S. Census Bureau. The inventory to sales ratio finished at 1.09 in May up .02 from April’s all-time low. There are signs that consumers are shifting spending to services as the C-19 restrictions let up. This has resulted in lower retail sales for goods such as furniture and new autos. As peak season heats up, the consensus remains. Retailers will continue to fight for capacity as inventory levels continue to build through the first half of next year.
_______________________________________________________
Brad’s journey into logistics began as a Marine Officer and transitioned from the LTL docks to the non-asset side within the logistics service provider arena. As a co-founder of Rockfarm, Brad drives our business development efforts and delivery of our promise. An Arizona native, Brad enjoys spending time outdoors in his home state with his wife and family.
“Our approach to the market allowed us an opportunity to push forward in 2008 and enable our mission, “lower the cost to serve” to stand as a cornerstone to our company today.”
_______________________________________________________
Knowler, Greg. (2021 August). Ningbo terminal shutdown fell fears of China port congestion spread. https://www.joc.com/port-news/ningbo-terminal-shutdown-fuels-fears-further-port-congestion_20210811.html
Cassidy, William B. (2021 July). Uber Freight to buy Transplace for $2.25 billionhttps://www.joc.com/trucking-logistics/trucking-freight-brokers/uber-freight-buy-transplace-225-billion_20210722.html
Stinson, Jim. (2021 August). US Xpress projects tight truckload market will push up contract
rates https://www.supplychaindive.com/news/US-Xpress-Q3-2021-rate-forecast/604878/Garland, Max. (2021 July).
UPS: Peak demand projected to exceed capacity by 5M packages daily
https://www.supplychaindive.com/news/ups-earnings-peak-capacity-volume-carol-tome/603908/
Container News. (2021 August). HMM achieves record profits and increased volumes during 2021 H1
HMM achieves record profits and increased volumes during 2021 H1
Container News. (2021 August). Hapag-Lloyd’s H1 profit increases almost tenfold
Ashe, Ari. (2021 August). SoCal truck demand spiking on record intermodal rates, rail yard congestion
https://www.joc.com/trucking-logistics/truckload-freight/so-cal-truck-demand-spiking-record-intermodal-rates-railyard-congestion_20210813.html
Bureau of Labor Statistics. (2021 August).
https://www.bls.gov
