Everybody’s got a lot on their plate right now, so here’s a way for you to stay up-to-date on the latest news without the extra hassle. Introducing…the eShipping Industry Update Report. Each month, our team sits down to comb through the metrics, trends, and key takeaways on the state of the logistics industry to help your business plan for the coming months.
Less Than Truckload:
Capacity is softening slightly heading into 2023 but pricing remains strong.
▪ LTL carrier have built capacity into their networks by adding docks doors and terminals.
▪ Tractors/Trailers orders have started being fulfilled ▪Carriers General Rate Increases are still aggressive in the 5-7% for 2023.
▪ Carriers still have increased costs in labor, insurance, equipment.
Diesel fuel falls for 4thstraight week.
▪ Fuel is trending down but compared to the same week a year ago, this week’s diesel average is up $1.293, down from the $1.421 annual increase, for the week of November.
Full Truckload:
FTL spot market pricing has remained relatively stable as we approach the end of the year.
▪ FTL contract pricing remains at elevated levels and has just recently started to slightly trend downward.
▪ FTL spot market pricing is expected to remain stable going into 2023 with slight increases projected for the 2nd half of 2023.
Class 8 tractor orders decline in November.
▪ This represents a decline of 20% month-over-month but a 254% increase year over year for November.
▪ Class 8 orders are typically a leading indicator of capacity entering the market –however the strong year over year results are largely attributed to the pent-up demand as Class 8 OEM’s were previously challenged with supply chain issues.
International:
Rail strike averted due to government intervention.
▪ President Biden signed the legislation forcing freight railroad workers to accept the terms of a tentative contract agreement. (WSJ)
▪ The threat of a rail strike is over but that hasn’t solved all the labor problems at the U.S. freight railroads. Railroad operators say they have had insufficient numbers of train and engine workers, and unions representing other types of railroad hands say they too have shortages (WSJ).
Chinese New Year falls early in 2023.
▪ Since CNY falls early in 2023 (1/22/23), there has been a spike in demand. Space is tight and with frequent rolled bookings especially via Hapag and MSC. The temporary decrease in vessel availability has more to do with the significant capacity cuts by carriers in December, but not a real recovery of overseas demand (HLS).
Ocean carriers continue to cancel sailings.
▪ As of Nov. 28, carriers had scheduled blank sailings equal to 17.5% of total trans-Pacific capacity for December. Carriers will likely skip more sailings during December and January than they have announced publicly; some sailings are canceled with no advance notice (JOC).
Volumes continue to decline in Q4
▪ November air cargo volumes declined 8% YoY and were down 2% on October, while the dynamic load factor –based on weight and space –was down 5 % points on last year at 61% (CLIVE).
Additional Market Notes
▪ Cargo volumes at Cathay Pacific in October continued a pattern of double-digit (25% in October) contraction as strict China COVID policies hamper flight operations and the traditional fall surge in airfreight activity ahead of the holidays failed to materialize. (FreightWaves).
▪ In the absence of a traditional peak season bounce ahead of the holiday shopping season, the best that can be said about the air cargo market is that the year’s deterioration in volumes and rates bottomed out in August. (American Shipper).
Parcel:
▪ UPS 2023 Increase goes into effect 12/26.
▪ FedEx’s new rates go into effect 1/2/2023.
Holiday Shipping Performance:
▪ So far, so good for this year’s holiday shipping, as FedEx, UPS, and USPS have all performed better in the early holiday period than in 2021.
On time performance for 11/24 –11/30:
▪ UPS –96.6%
▪USPS –95.8%
▪ FedEx –95.3%
Money Back Guarantees: UPS has decided to maintain their money-back guarantees for domestic and international next day air shipments during peak season. FedEx’s program is suspended from 12/13 –1/2.
Warehousing:
Inventories remain at record levels.
▪ One could translate this uptick in inventory as somewhat of a bullwhip effect of 2021. In talking with most customers, they would admit that they over-purchased in the past 12 months as they were unsure if pent up demand on hard goods would continue. They were also unsure as to when these goods would finally be manufactured due to backlogs overseas and steamship line or port congestion. They are now left with skyrocketing inventories that have filled their warehouses and overflowed into any space available. (EDS).
▪ As outbound order volumes drop, we expect to see inventory drops as well. We expect markets where warehousing construction has been strong to appear somewhat “overbuilt”. We are already seeing this softening in some key markets.
Click Here To Download The Full December Industry Update Report.
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