MARKET BRIEF | February 2021
Insights and stories for the logistics, shipping, and transportation industry.
ALERT: CONTINUED U.S. PORT CONGESTION
The persistent congestion at U.S. ports is causing further delays, and even affecting inland points and rail transportation. Equipment issues, limited trucking availability, and winter storm delays are adding complexity to the situation. Vessels arriving at East Coast ports are waiting between 5-10 days to berth, while an overload of incoming vessels, and labor shortages, are causing delays of 3-4 weeks at the Ports of Long Beach and Los Angeles. We have more detail, below.
OCEAN SHIPPING UPDATES
Ports of LB & LA Being Skipped
With the ongoing congestion at Long Beach and Los Angeles ports, those harbors are now being skipped. The suggestion from the Federal Maritime Commission (FMC) is for ships inbound from Asia to divert north to the ports in Oakland, Seattle, and Tacoma. Although perhaps not ideal, these ports provide a viable option to help relieve the pressure prevalent on the West Coast. There is no set timetable for the congestion situation to be resolved, but it is expected to last through, at least, the first quarter of the year.
California Trying to Help Agriculture Exporters
The State of California is urging regulators to step in regarding port congestion, to help mitigate damage to the agriculture industry. Exporters are experiencing rising costs and delays during a peak season for several commodities, including dried fruit and nuts. These commodities account for $3.8 billion (about 17%) of California’s annual exports. However, the solution is far from simple, and the FMC has initiated a probe into ocean carriers’ operational issue and practices.
Port of LB “State of the Port”
The Port of Long Beach held its annual meeting, which was virtual this year. You can view it here.
Ports of LB & LA Being Skipped
With the ongoing congestion at Long Beach and Los Angeles ports, those harbors are now being skipped. The suggestion from the Federal Maritime Commission (FMC) is for ships inbound from Asia to divert north to the ports in Oakland, Seattle, and Tacoma. Although perhaps not ideal, these ports provide a viable option to help relieve the pressure prevalent on the West Coast. There is no set timetable for the congestion situation to be resolved, but it is expected to last through, at least, the first quarter of the year.
California Trying to Help Agriculture Exporters
The State of California is urging regulators to step in regarding port congestion, to help mitigate damage to the agriculture industry. Exporters are experiencing rising costs and delays during a peak season for several commodities, including dried fruit and nuts. These commodities account for $3.8 billion (about 17%) of California’s annual exports. However, the solution is far from simple, and the FMC has initiated a probe into ocean carriers’ operational issue and practices.
Port of LB “State of the Port”
The Port of Long Beach held its annual meeting, which was virtual this year. You can view it here.
OCEAN SHIPPING UPDATES
Ports of LB & LA Being Skipped
With the ongoing congestion at Long Beach and Los Angeles ports, those harbors are now being skipped. The suggestion from the Federal Maritime Commission (FMC) is for ships inbound from Asia to divert north to the ports in Oakland, Seattle, and Tacoma. Although perhaps not ideal, these ports provide a viable option to help relieve the pressure prevalent on the West Coast. There is no set timetable for the congestion situation to be resolved, but it is expected to last through, at least, the first quarter of the year.
California Trying to Help Agriculture Exporters
The State of California is urging regulators to step in regarding port congestion, to help mitigate damage to the agriculture industry. Exporters are experiencing rising costs and delays during a peak season for several commodities, including dried fruit and nuts. These commodities account for $3.8 billion (about 17%) of California’s annual exports. However, the solution is far from simple, and the FMC has initiated a probe into ocean carriers’ operational issue and practices.
Port of LB “State of the Port”
The Port of Long Beach held its annual meeting, which was virtual this year. You can view it here.
Ports of LB & LA Being Skipped
With the ongoing congestion at Long Beach and Los Angeles ports, those harbors are now being skipped. The suggestion from the Federal Maritime Commission (FMC) is for ships inbound from Asia to divert north to the ports in Oakland, Seattle, and Tacoma. Although perhaps not ideal, these ports provide a viable option to help relieve the pressure prevalent on the West Coast. There is no set timetable for the congestion situation to be resolved, but it is expected to last through, at least, the first quarter of the year.
California Trying to Help Agriculture Exporters
The State of California is urging regulators to step in regarding port congestion, to help mitigate damage to the agriculture industry. Exporters are experiencing rising costs and delays during a peak season for several commodities, including dried fruit and nuts. These commodities account for $3.8 billion (about 17%) of California’s annual exports. However, the solution is far from simple, and the FMC has initiated a probe into ocean carriers’ operational issue and practices.
Port of LB “State of the Port”
The Port of Long Beach held its annual meeting, which was virtual this year. You can view it here.
FULL TRUCKLOAD MARKET UPDATE
The FTL market is “trucking” right along and is starting to normalize. We have seen a slight decline in volume, which is typical for January, although year-over-year we are at much higher volume levels. The OBTVI (Outbound Tender Volume Index) fell 1.7%, but is still up 18% year-over-year. OBTRI (Outbound Tender Rejection Index) is still high, at 22.4%. With this amount of volume being moved, the rejection rate may just stay elevated. We are also seeing more capacity slowly leak into the market after months of high class 8 sales, so trucks are becoming easier to find. Rates are continuing to fall, and should continue to do so until late February.
The flatbed market is on the rise, and has surpassed dry vans in rate per mile. Flatbeds are closely tied to industrial production and construction. Expect this to continue to rise into the spring, as the warmer weather allows more construction projects to be started. Industrial production is also expected to rise throughout the year.
The FTL market is “trucking” right along and is starting to normalize. We have seen a slight decline in volume, which is typical for January, although year-over-year we are at much higher volume levels. The OBTVI (Outbound Tender Volume Index) fell 1.7%, but is still up 18% year-over-year. OBTRI (Outbound Tender Rejection Index) is still high, at 22.4%. With this amount of volume being moved, the rejection rate may just stay elevated. We are also seeing more capacity slowly leak into the market after months of high class 8 sales, so trucks are becoming easier to find. Rates are continuing to fall, and should continue to do so until late February.
The flatbed market is on the rise, and has surpassed dry vans in rate per mile. Flatbeds are closely tied to industrial production and construction. Expect this to continue to rise into the spring, as the warmer weather allows more construction projects to be started. Industrial production is also expected to rise throughout the year.
IMPACT OF CHINESE NEW YEAR
The Chinese New Year celebration is in its final days. This year, their government has encouraged people to remain local, and not travel. This is one of the factors contributing to factories closing for less days than usual during the holiday. The outcome is that production will be higher than normal, compared to Chinese New Year periods of the past. However, due to a shortage of truck drivers, warehouse workers, and terminal workers, this increased production could cause an additional backlog of exports from China.
The Chinese New Year celebration is in its final days. This year, their government has encouraged people to remain local, and not travel. This is one of the factors contributing to factories closing for less days than usual during the holiday. The outcome is that production will be higher than normal, compared to Chinese New Year periods of the past. However, due to a shortage of truck drivers, warehouse workers, and terminal workers, this increased production could cause an additional backlog of exports from China.
AUTOMATION & A.I. IN LOGISTICS
As with most industries over the past couple of decades, the logistics industry has seen a significant digital transformation. The next step is perfecting the incorporation of artificial intelligence (AI) and “big data” into operations and procedures. These concepts have already been common in tracking freight across trucking, rail, and ocean — utilizing GPS. That is becoming more refined, and AI is being used for predictive analytics for more efficient route and supply chain planning. Big data is being leveraged to analyze patters, provide insight, and contribute to more comprehensive supply chain strategies. The events of 2020 have accelerated digital commerce exponentially, producing a higher frequency of consumer transactions, and also a higher volume of product added into the queue. This scale has required the sophisticated incorporation of AI in order to fortify supply chain systems. The affordability and accessibility of AI is making it possible for companies, large and small, to be to integrate this into their operations. Real-time data, weather data, fleet schedules, and inventory counts are all components that can be combined with historical trends and virtual models, so that routes can be optimized, and supply chains are not disrupted or caught off-guard. 2020 has taught many of us a lesson in staying agile. Company dedicating themselves to the disciplines of AI and big data will be the ones best equipped to moving forward and being successful.
As with most industries over the past couple of decades, the logistics industry has seen a significant digital transformation. The next step is perfecting the incorporation of artificial intelligence (AI) and “big data” into operations and procedures. These concepts have already been common in tracking freight across trucking, rail, and ocean — utilizing GPS. That is becoming more refined, and AI is being used for predictive analytics for more efficient route and supply chain planning. Big data is being leveraged to analyze patters, provide insight, and contribute to more comprehensive supply chain strategies. The events of 2020 have accelerated digital commerce exponentially, producing a higher frequency of consumer transactions, and also a higher volume of product added into the queue. This scale has required the sophisticated incorporation of AI in order to fortify supply chain systems. The affordability and accessibility of AI is making it possible for companies, large and small, to be to integrate this into their operations. Real-time data, weather data, fleet schedules, and inventory counts are all components that can be combined with historical trends and virtual models, so that routes can be optimized, and supply chains are not disrupted or caught off-guard. 2020 has taught many of us a lesson in staying agile. Company dedicating themselves to the disciplines of AI and big data will be the ones best equipped to moving forward and being successful.
For more information on Aeronet Worldwide, visit Aeronet.com.
