MARKET BRIEF | January 2023
A BRIEF look at what’s happening in the logistics and shipping industry.
CARGO LOSS AT WEST COAST PORTS
West Coast ports are losing cargo due to the concern over the ILWU’s (International Longshore and Warehouse Union) ongoing contract negotiations. Concern over rail and drayage capacity at the Ports of Los Angeles and Long Beach also adds to the problem. Shippers and carriers will continue to route much of their discretionary cargo through East Coast and Gulf Coast ports, as an alternative. That means the West Coast’s portion of imports from Asia will continue to decrease in the first quarter of this year, and possibly longer, until a new contract is agreed upon.
AN OVERSUPPLIED MARKET FOR FULL TRUCKLOADS
The full truckload (FTL) market is currently oversupplied. Historically, the FTL market has cycles of being oversupplied and undersupplied. FTL volume closely follows the economy, specifically retail. When the economy is good, there is more volume. With more volume comes higher spot rates, as shippers start to compete to move goods. Trucking companies will attempt to capitalize on these high rates by buying more trucks to put on the road, which results in an oversupplied market. There are also new entrants into the market that have been buying trucks to put on the road in the last two years. However, once there are too many trucks in the market, or volume starts to drop, the outcome is an oversupplied market, which leads to a drop in the spot rate. The market will eventually correct itself, but the cycle is mostly likely to repeat in a few years.
2023 BRINGS AN UPDATE TO THE AUTOMATED EXPORT SYSTEM
The Automated Export System (AES) has updated the Schedule B, Harmonized Tariff Schedule (HTS), and HTS Codes not valid for AES. This went into effect January 1, 2023. AES will accept shipments with outdated codes during a grace period that will last the first 30 days of January. After that, reporting outdated codes will result in a fatal error. The same goes for the Automated Commercial Environment (ACE) AESDirect program, which also has the same 30-day grace period. More detailed AES information — including lists of codes — is available from the U.S. Census Bureau.
West Coast ports are losing cargo due to the concern over the ILWU’s (International Longshore and Warehouse Union) ongoing contract negotiations. Concern over rail and drayage capacity at the Ports of Los Angeles and Long Beach also adds to the problem. Shippers and carriers will continue to route much of their discretionary cargo through East Coast and Gulf Coast ports, as an alternative. That means the West Coast’s portion of imports from Asia will continue to decrease in the first quarter of this year, and possibly longer, until a new contract is agreed upon.
AN OVERSUPPLIED MARKET FOR FULL TRUCKLOADS
The full truckload (FTL) market is currently oversupplied. Historically, the FTL market has cycles of being oversupplied and undersupplied. FTL volume closely follows the economy, specifically retail. When the economy is good, there is more volume. With more volume comes higher spot rates, as shippers start to compete to move goods. Trucking companies will attempt to capitalize on these high rates by buying more trucks to put on the road, which results in an oversupplied market. There are also new entrants into the market that have been buying trucks to put on the road in the last two years. However, once there are too many trucks in the market, or volume starts to drop, the outcome is an oversupplied market, which leads to a drop in the spot rate. The market will eventually correct itself, but the cycle is mostly likely to repeat in a few years.
2023 BRINGS AN UPDATE TO THE AUTOMATED EXPORT SYSTEM
The Automated Export System (AES) has updated the Schedule B, Harmonized Tariff Schedule (HTS), and HTS Codes not valid for AES. This went into effect January 1, 2023. AES will accept shipments with outdated codes during a grace period that will last the first 30 days of January. After that, reporting outdated codes will result in a fatal error. The same goes for the Automated Commercial Environment (ACE) AESDirect program, which also has the same 30-day grace period. More detailed AES information — including lists of codes — is available from the U.S. Census Bureau.
For more information on Aeronet Worldwide, visit Aeronet.com.
