MARKET BRIEF | January 2021
Insights and stories for the logistics, shipping, and transportation industry.
OCEAN SHIPPING UPDATES
Rate Increases
With terminals continuing to work through their respective backlogs, compounded by rail delays and berthing delays, rates will continue to be high. This could extend into March, which marks the beginning of the traditional service contract negotiation season. This is when things will get interesting, as shippers could demand service enhancements, and other assurances, if carriers continue to demand higher rates.
NVOCCs
In the Non-Vessel Operating Common Carrier (NVOCC) market, bookings remain strong, and will continue to into February. Even though the year-end through beginning-year period is historically a downtime, the market experienced unusual peaks.
Carriers
The carriers are tightening their port rotations in order to get equipment repositioned back to Asia. They are also skipping certain Asian “dead ports” who lack sufficient equipment. This enables them to deliver containers to North America quicker.
Ports
Congestion is still prevalent, especially in Long Beach/Los Angeles. This is due to vessel delays, shortage of terminal labor, terminal appointment times not being honored, single transactions over dual transactions, chassis shortages (and chassis hoarding), truck driver shortages, and importers keeping equipment out for 10 to 14 days.
Rate Increases
With terminals continuing to work through their respective backlogs, compounded by rail delays and berthing delays, rates will continue to be high. This could extend into March, which marks the beginning of the traditional service contract negotiation season. This is when things will get interesting, as shippers could demand service enhancements, and other assurances, if carriers continue to demand higher rates.
NVOCCs
In the Non-Vessel Operating Common Carrier (NVOCC) market, bookings remain strong, and will continue to into February. Even though the year-end through beginning-year period is historically a downtime, the market experienced unusual peaks.
Carriers
The carriers are tightening their port rotations in order to get equipment repositioned back to Asia. They are also skipping certain Asian “dead ports” who lack sufficient equipment. This enables them to deliver containers to North America quicker.
Ports
Congestion is still prevalent, especially in Long Beach/Los Angeles. This is due to vessel delays, shortage of terminal labor, terminal appointment times not being honored, single transactions over dual transactions, chassis shortages (and chassis hoarding), truck driver shortages, and importers keeping equipment out for 10 to 14 days.
FULL TRUCKLOAD MARKET UPDATES
Capacity
We are starting to see capacity returning to the market after the holidays. This is great news, as December marked the fourth straight month of shrinking capacity, according to the Logistics Manager Index. Carriers are continuing to offer higher driver pay, as well as bonuses, to attract more drivers, due to the driver shortage. Federal regulators also issued a ruling that third-party CDL instructors can now offer, both, the instructional portion, as well as the qualifying skills test to CDL applicants, to help ease a backlog of testing for new drivers.
Class 8 Sales Up
Class 8 truck sales had the fourth highest month on record, for December, at 50,900, which is a 153% increase year-over-year. In 2020, truck manufacturers were having issues delivering trucks that had been ordered, but in 2021, the issue will be finding drivers to put in these newly purchased trucks. (Figures provided by ACT Research.)
Volume
Q1 is typically the slow season for the Full Truckload market. This year, we are starting off with a higher volume compared to years past. We expect the volume to remain high, with a lower inventory-to-sales ratio than we have seen since 2014. E-commerce remains high, with the passing of a second stimulus and potentially a third. The Industrial and Auto Production sectors are also poised for a strong rebound, which should keep volume levels high into Q2.
Capacity
We are starting to see capacity returning to the market after the holidays. This is great news, as December marked the fourth straight month of shrinking capacity, according to the Logistics Manager Index. Carriers are continuing to offer higher driver pay, as well as bonuses, to attract more drivers, due to the driver shortage. Federal regulators also issued a ruling that third-party CDL instructors can now offer, both, the instructional portion, as well as the qualifying skills test to CDL applicants, to help ease a backlog of testing for new drivers.
Class 8 Sales Up
Class 8 truck sales had the fourth highest month on record, for December, at 50,900, which is a 153% increase year-over-year. In 2020, truck manufacturers were having issues delivering trucks that had been ordered, but in 2021, the issue will be finding drivers to put in these newly purchased trucks. (Figures provided by ACT Research.)
Volume
Q1 is typically the slow season for the Full Truckload market. This year, we are starting off with a higher volume compared to years past. We expect the volume to remain high, with a lower inventory-to-sales ratio than we have seen since 2014. E-commerce remains high, with the passing of a second stimulus and potentially a third. The Industrial and Auto Production sectors are also poised for a strong rebound, which should keep volume levels high into Q2.
AUTOMOTIVE CHIP SHORTAGE
With the increase in auto production comes an unfortunate, global shortage of semiconductors. Industry titans Daimler, Nissan, Honda, Ford, Fiat Chrysler, Mercedes-Benz, and Volkswagen are all affected. A big reason for the shortage is the consumer electronics boom of 2020. Chipmakers reassigned some of their production capacity towards that category, which made them unprepared for the ramp-up of the automotive market.
Automakers grapple with the
current semiconductor shortage.
current semiconductor shortage.
With the increase in auto production comes an unfortunate, global shortage of semiconductors. Industry titans Daimler, Nissan, Honda, Ford, Fiat Chrysler, Mercedes-Benz, and Volkswagen are all affected. A big reason for the shortage is the consumer electronics boom of 2020. Chipmakers reassigned some of their production capacity towards that category, which made them unprepared for the ramp-up of the automotive market.
AERONET SPOTLIGHT: E-COMMERCE FULFILLMENT
Aeronet Worldwide continues to increase its proficiency in e-commerce fulfillment. Recently, the Aeronet Los Angeles facility began processing orders of inline and quad skates and accessories. In December, the team handled 25,000 orders, and filling an outgoing 53-foot trailer, daily.
Aeronet’s e-commerce fulfillment capabilities include:
Aeronet Worldwide continues to increase its proficiency in e-commerce fulfillment. Recently, the Aeronet Los Angeles facility began processing orders of inline and quad skates and accessories. In December, the team handled 25,000 orders, and filling an outgoing 53-foot trailer, daily.
Aeronet’s e-commerce fulfillment capabilities include:
- High-volume e-commerce processing
- Retail / wholesale order processing
- Retail-compliant UCC label library
- Kitting
- 24/7 access to dashboards displaying inventory on-hand, activity, receipt, and orders
- Custom API / EDI connections
- Transloading
- High-volume shipping rollouts
- Variable B2B and B2C delivery solutions
For more information on Aeronet Worldwide, visit Aeronet.com.
