eShipping’s Monthly Industry Update – October 2022

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: 

LTL pricing stays resilient as other US transportation segments soften.

▪ While most LTL carriers saw inflation-driven growth in revenue and some smaller players did see y/y growth in tonnage during July and August, a handful of the LTL heavyweights saw their shipments and tonnages decline in that same period. (Freightwaves)

▪ Continued investments in tech and automation, as well as consolidation of service platforms, are nevertheless signaling a retention of bullishness among these major carriers. (Freightwaves)

▪ Signs are beginning to show that LTL rates could soon more closely follow the ailing truckload markets. (Freightwaves)

Full Truckload: 

FTL contract market rates remain at elevated levels but are starting to decrease.

▪ As shippers continue to re-price their contractual lanes through RFP’s and “mini-bids”, we expect the gap between contract and spot market rates to narrow further.

▪ Hurricane Ian, while very destructive and tragic, has not had a meaningful impact on FTL market rates like what we have seen with other significant storms in prior years.

▪ OPEC recently announced plans to cut oil production by 2 million barrels per day. These production cuts will substantially increase fuel costs as we start the 4th quarter. Prior to the announcement we had started to experience slight declines in fuel prices.

▪ Class 8 truck orders increased significantly to 56,500 units in September (highest month ever) representing the strong demand for new tractors according to FTR.

▪ The spike in orders is largely reflective of pent-up demand (vs. a signal of additional capacity entering the market) according to FTR.

▪ OEM’sare still experiencing supply chain challenges (I.e.semiconductors, labor) to meet the demand. The chart below from FTR reflects the year over year Class 8 truck orders by month.

International: 

US imports sink in September as rates continue to fall from historic highs

▪ According to Descartes, inbound volumes to all U.S. ports totaled 2,215,731 twenty-foot equivalent units in September. That is down 11% year on year and 12.4% from August. (JOC)

▪ Biggest decline isdrivenby imports from China collapsing.Laborcontractdiscussions continue to happen worldwide

▪ Shipping industry officials say the negotiations between U.S. West Coast dockworkers and employers are at a virtual standstill with the sides locked down by local concerns and unable to move to contentious wage and automation issues. (WSJ)

▪ It’s not just a potential U.S. rail strike putting supply chains at risk. Air traffic controllers in France are taking Friday off, and dockworkers at Felixstoweand Liverpool scheduled work stoppages. (Freightwaves)

Peak season push did not increase air cargo rates because of lower demand from shippers.

▪ FreightosAir Index data shows that, like in ocean freight, air cargo rates are much lower than a year ago. China -N. Europe rates were at $4.93/kg this week, 37% lower than last year and transpacific prices of $6.16/kg were down nearly 50%, leaving many in the industry pessimistic that much of a peak season will materialize in air cargo this year either. (Freightos)

▪ Analysis by WorldACDshows tonnage and prices slipping marginally again in the second half of September. Volume is down 12% from last year despite a 6% increase in capacity. Its data also reflects a 10% decline in spot rates to an average of $3.46 per kilogram.(AmericanShipper)

Parcel: 

FedEx announces largest general rate increase in its history.

▪ FedEx announces 6.9% general rate increase in 2023 for services except its less-than-truckload service, FedEx Freight. Increases there will range between 6.9% and 7.9%, depending on the customer’s transportation rate scale, the company said. (FedEx & Freightwaves)

▪ UPS has yet to announce GRI for 2023.

▪ Shipments moving under the Postal Service’s Retail Ground product must be tendered by Dec. 17 to arrive by Christmas, the Postal Service said. Retail Ground targets users shipping heavier packages who are willing to sacrifice faster transit times for lower rates. (Freightwaves)

Warehousing: 

Warehouse space is nearly full across the US and labor shortages continue.

▪ After seeing record imports for so many months, most warehouses in the US are full. eShipping Distribution Services was able to add a facility in September in North Kansas City which adds another 150,000 sf of space to its growing network. In addition to this expansion, several thousand pallet rack positions have been installed which has really helped organize the influx of inventory from current customers.

▪ Across the US, we are finding that many of the personnel that once lined up for warehousing positions are choosing different industries and thus has not helped with our ability to find people willing to work in a warehouse environment.

▪ Work from home positions and gas prices has the workforce re-thinking how they make a living.

▪ Despite wages being 10%-30% higher than other industries, warehouse and manufacturing jobs are not the preferred job choice of most Americans.

▪ Most warehouse work in today’s environment is not done manually. Therefor the industry is in desperate need of people with a good understanding of tech-enabled warehouse systems and good communication skills.

Click Here To Download The Full October Industry Update Report.