Market Update: May 16, 2018
Ocean, trucking, and air freight rates and trends for the week of May 16, 2018.
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Ocean Freight Market Updates
Brazilian Customs Offices Hit With More Strikes
The National Union of Fiscal Auditors began a 30-day walk out on Monday, which will affect operations across all customs offices in the country. The union approved a continuous shutdown on May 7th, but “essential” services will continue to be provided.
A statement from the union says these efforts are linked to “non-compliance” with laws surrounding the regulation of workers’ rights. Please be aware that there may be delays for any freight moving through Brazil.
GRI Announcements for May 14th, May 15th, & July 1st
A General Rate Increase (GRI) has been announced for the following lanes and dates:
- Transpacific Eastbound (TPEB): May 31st
- Transatlantic Westbound (TAWB): July 1st
- India - US: June 1st
*California Exports Surge in April *
A sign that shippers are preparing for trade restrictions, California ports experienced a 13-month high for exports to Asia. Los Angeles and Long Beach, the biggest U.S. West Coast ports, reported that loaded container exports increased 12% year-over-year in April from a year ago.
According to Jock O’Connell, an international trade economist based in California, “Anxiety is driving the export trade. Shippers want to get their goods on the high seas and to their final destinations before the gates close on U.S. exports.”
India - U.S. East Coast: New Service in June
Pacific South Loop (PS3), the first direct service from Northern India to the USWC, will begin in June.
Air Freight Market Updates
Boeing Plans to Ramp Up Production of 767s
Betting on the air freight market, Boeing plans to increase production of 767s from 2.5 to 3 a month, starting in 2020. In a recent earnings call, Boeing's CEO Dennis Muilenburg said, “We do see long-term strength in the (air cargo) market.”
Air freight demand is growing at its fastest rate since 2010, the International Air Transport Association reports. The growth of e-commerce and temperature-sensitive goods has also benefited passenger planes, as they’re “filling their bellies with more cargo.”
Air Freight Demand Increases With E-Commerce Trend
According to a recent UPS study, online shoppers are increasingly looking to international vendors when shopping. The e-commerce trend places pressure on air freight, as shoppers look for fast delivery times. The increase in demand could lead to rate increases and capacity shortages.
Trucking Market Updates
Shipments Move From Highways to Rails
As trucking companies struggle to recruit and retain drivers, businesses are turning to railroads to move their products.
While rail is typically cheaper, it is also slower, which means it can’t be used for many time-sensitive goods. But with spot-market trucking prices up, shippers with costs on their mind are using rail to move goods that aren’t time-sensitive.
In an attempt to keep up with the rapidly growing demand in U.S. freight, trucking companies are seeking new drivers, and ordering big rigs at a record pace.
LA-LB Terminals Agree to Restructure PierPass Program
Assuming the Federal Maritime Commission approves the restructuring, the new pricing will take effect in August 2018.